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Did you know that a single domino is capable of bringing down another domino that is actually 50% larger. With this random fact in mind, think of this…
If you started with a single domino that was only 2 inches high, and then each domino after that was 50% bigger, the 23rd domino would be taller than the Eiffel Tower. The 31st domino would loom over Mount Everest by almost 3,000 feet. Number 57 would practically bridge the distance between the earth and the moon!
When I heard this, I thought of the power of choice. Instead of doing the same thing everyday the same way and being dissatisfied with the results we create, what if today, we took one step differently than we did the day before. What if we took one step toward a different result. It’s just one little step, one little change. What might result from pushing that domino over that could change our path, results, and realty. When it falls, you’ve unleashed a power that can reach the moon!
FHLMC is expanding Conventional conforming homeownership opportunities to more borrowers without credit scores. Until now, at least one borrower was required to have traditional credit scores in order to be approved for a Conventional loan by Freddie Mac’s Loan Product Advisor. This loosening of the credit guidelines is effective beginning with home loan applications submitted on or after May 14, 2017, with settlement dates on or after June 26, 2017.
No borrower will be required to have a traditional credit score in order to be approved by the Loan Product Advisor. There are, however, a few requirements:
- Must be a one unit home purchase or refinance and cannot be a manufactured home.
- All borrowers must occupy the property.
- A minimum borrower downpayment of 5% is required.
- Must be a fixed rate loan below standard Conventional loan limits. Currently $424,100.
- All borrower’s must provide at least two current payment references of at least 12 month’s.
- No more than one 30 day late in the last 12 months will be allowed.
- No 60+ day late payments will be allowed.
- At least one borrower must include a housing payment history as one of their payment references. The history must be documented with copies of 12 months canceled checks or written management company verification.
- No 30+ late payments will be allowed.
- No non-medical collections, judgments, or tax liens filed within 24 month’s will be allowed.
- If no borrower has a traditional credit score, at least one borrower must complete a certified Homebuyer Education course prior to close of Escrow.
- Loan Product Advisor Accept/Eligible and underwriter approval are required.
- Other restrictions and conditions may apply.
This is a huge break for people and families who stay away from using credit or just have not had the need for traditional credit accounts before. Paying cash for your expenses is no longer a barrier to purchasing a home of your own.
I have not seen the rates yet that will be offered for this program but can assure you they will be higher than loans approved with traditional credit scores. This is due to Loan Level Price Adjustments imposed by FHLMC when purchasing loans of this nature.
I highly recommend building traditional credit profile when time allows. This can often be achieved in 30 to 90 days as explained in the Hack Your FICO report.
It’s that time of the year for you to start your DIY projects. The first thing on the list is painting. You want to do something different than just splash the walls. There are many fixtures and objects in the home that can be jazzed up with paint.
Just look around — you can pick almost anything. But not all paints are the same and neither are all surfaces. Prepare before you start dipping the brush into the paint can.
#1: Concrete: Concrete is a surface that is often overlooked when it comes to painting. But don’t count it out! Concrete walls and floors can be painted. Painting concrete does require a few more steps than your average paint job. However, the job is easy to do and inexpensive.
Before painting concrete, the surface must be clean and completely dry. When working on floors they must be sanded and primed. It is best to use floor, acrylic or epoxy paint to cover the surface.
#2: Metal: When painting metal, you want to make sure that all rust has been removed. If necessary, rust can be removed using sandpaper or a wire brush. Next, prime the metal; it helps protect the surface and provides a good base.
Use paint with rust inhibitors or spray paint to coat the surface. Multiple layers will need to be applied. A layer of gloss or satin is generally applied last if you want a shiny finish.
#3: Wood: Wood is one of the easiest surfaces to paint. Wood is extremely absorbent and will easily soak up paint. Clean the surface and remove any buildup first. It is best to sand any rough or jagged areas before continuing.
A primer can be applied but is not required. It is most common to use an eggshell paint instead of semigloss on interior wood surfaces. Eggshell is more durable and has a slight sheen.
#4: Drywall: Drywall must be clean and smooth before painting. Otherwise, it should be sanded. Primers are not required but are recommended. Latex, high-sheen and satin finishes are more commonly used on drywall. Each paint type offers a different finish, so which one you choose will depend on the area or room you are painting and the effect that you are going for.
#5: Tile: Painting tile can be fun. Tile can be very glossy and resistant to most common paints like latex. The tile must be cleaned with sugar soap and white spirit to remove soap scum. It is important that you use a special glass or tile paint. Otherwise, the paint may slide right off.
Almost anything can be painted! However, there are a few places that you may want to leave off the list. Kitchen sinks and counter-tops are not the best places to paint. The consistent moisture doesn’t make these areas a good canvas. This goes for the bathtub as well. Some surfaces may require special chemicals, so leave them to the professionals.
After the real estate crash, to cover their losses and continue to offer the FHA loan program, HUD raised the Mortgage Insurance Premium fees they charge to borrowers to insure FHA loans.
HUD just announced that they will be lowering those fees again beginning January 27th. Here is a simplified chart to show the improvements:
The biggest winners though may be those that are able to refinance right now. Most people getting an FHA loan made a small down payment with a 30 year loan at 0.85% annual MIP. On a loan amount of $200,000, that’s $141.66 monthly MIP. With home appreciation and monthly payments, most people will have over 5% equity built up so refinancing simply to reduce the MIP would save $41.66 per month at the new reduced MIP amounts.
Do you wonder about people who use the phrases “To tell the truth, …” or “Honestly, …”?
I wonder why they need to specify that this time, they are telling the truth or being honest. Is that unusual for them? Are they saying “Listen up! I’m going to tell the truth this time and you don’t want to miss it” It makes me wonder if the last 20 minutes of conversation we just had was not so honest.
Maybe most people are only emphasizing that although it may sound untrue, they should be believed but, honestly?
I have heard these phrases many times in my career and a vast majority have been used to correct an error or assumption I had made. For example,
- To tell the truth, those are our collections after all but we don’t want to pay them.
- Honestly, there may have been a few times we missed the payment on that after all.
- To tell the truth, the home we are trying to refinance actually belongs to my girlfriends step-mom.
- Honestly, they said I was getting a raise but I just don’t have it yet.
- To tell the truth, Ray, we won’t keep paying for the other house after we get the new one.
- To tell the truth, my brother is really buying the home but he doesn’t have a job right now.
It’s pretty hard to fool lenders these days so just be honest and let us help you. You may legitimately qualify for more then you think!!
For a long time now, people without credit have had a really hard time getting a mortgage. FHA, USDA & VA loans were the only real options. Conventional (Fannie & Freddie) loans were all but out of reach if you did not have a significant ‘traditional’ credit profile.
That all ends June 25th 2016. Fannie Mae is now building into their automated underwriting engine (Desktop Underwriter) the ability for people with blank credit to receive an automated mortgage loan approval!! You no longer need to be in debt and pay ridiculous interest rates in order to qualify for a Conventional mortgage loan.
The credit qualification requirements are pretty fair in my opinion:
1) Must be to purchase or refinance a one unit, owner occupied home.
2) Must be a fixed rate loan.
3) A minimum 10% down payment or equity is required.
4) Applicants must evidence a 12 month housing payment history with a Management Company verification or 12 canceled checks.
[Insider Advice: Pay rent with a personal check or bank draft and not money orders or cash]
5) Applicants must also evidence one additional monthly payment account such as phone, power, TV, etc…
6) Your new home payment cannot exceed 40% of your gross income.
Please take a number, we can start processing your applications after June 1st with approvals issued on June 27th.
Trended Credit Data (TCD) is a new Fannie Mae underwriting yard stick. TCD is basically a two year history of each monthly payment we have made. Did we pay the minimum balance, the full balance or some other amount? The credit bureaus already collect data on our monthly payment habits but have not included ‘how much’ we pay each month until now.
To answer the question, TCD will be used in Fannie Mae automated underwriting starting June 25th. Transunion and Equifax will begin to include TCD data on their Fannie Mae reports. TCD currently has no impact on Freddie Mac, FHA, VA, USDA or any other loan programs.
TCD proponents claim that it will “boost mortgage availability for responsible borrowers and lessen future mortgage defaults.” The logic is that borrowers making only the minimum payments on revolving accounts are higher default risks than those paying their full balances monthly. A borrower who is just short of qualification can now be pushed over the line into an approval if their history shows minimal balances carried form month to month because they make larger than required payments.
What TCD will do:
- Include 24 months of actual payment amounts on revolving accounts.
- Improve “full payers” odds of being approved through Desktop Underwriter. A marginal “full payer” borrower who wasn’t approved by DU before, might be approved on loans after June 25th.
- Hurt cash challenged borrowers who make the minimum payments while carrying high balances on revolving accounts. Under current DU risk assessment, they might be approved, but TCD’s addition of their actual payment amounts could change those findings.
What TCD will not do:
- It will NOT change borrower credit scores. Fannie Mae predicts that borrowers paying their full balances monthly (“full payers”) will be 60% less likely to have mortgage delinquencies but it will not impact the current credit scoring models.
- It will NOT help marginal borrowers whose credit scores are below Fannie Mae’s required minimum (620). While TCD may boost a 621 score, “full payers” loan approval odds, it won’t for a 619 “full payer” whose scores don’t meet Fannie’s minimum requirement.
- It will NOT impact FHA, VA, or Freddie Mac loan approvals. Fannie Mae is the only loan guarantor using TCD to gauge risk, for now. Working with experienced, professional Loan Officers who know the differences between Fannie Mae and Freddie Mac guidelines will become even more mission critical when applicants are choosing their mortgage company.
Depending on the Fannie Mae results go forward, it seems likely that eventually TCD will factor it into borrowers’ credit scores. In the mean time, we can add paying balances off each month as goal when thinking about getting any kind of mortgage financing. Please, do keep in mind that paying accounts off and not using them will still reduce your credit score over time.
INSIDER TRICK: I recommend setting up auto-pay on your utility bills, insurance, etc to go each month onto one of your credit accounts. Make sure each credit account has at least one bill charged to it each month. You now have up to 30 days to pay that balance in full before finance charges are accessed. You will also get whatever cash-back or miles/points benefits that the credit account offers. The next step is key. Now setup auto-pay of the entire balance of each credit account from your checking account when the credit account payment is due. It’s a win-win-win: All your bills will always be paid on time. You maximize your credit score as well as your TCD rating. You get cashback or bonus rewards from the creditors.
Ray Jones – http://www.oneray.com
We have seen about 8 years of tightening guidelines and increased borrower costs. Are you ready for a change? USDA is giving us just that! Beginning October 1st, 2016, USDA is lowering the Guarantee Fees. (Mortgage Insurance) The upfront guarantee fee is being reduced from 2.75% to only 1.0%.
But wait! It gets better. The annual 0.50% fee paid each month with your house payment is being reduced to 0.35%.
On a $200,000 home, this equates to about $3,500 lower loan amount and about $25 per month lower payment. Thank you USDA!!
USDA is a rural community loan program that offers 100% financing with no down payment or borrower investment required. It is not restricted to first time home buyers but you typically cannot own another home. www.oneray.com/USDA
You do NOT need 20% down payment to buy a home.
We offer 100% purchase options and numerous options to make only 3% to 5% down payment. First Time Buyers AND previous home owners may apply.
The “catch” or “price” you pay for these loan options is “Mortgage Insurance” or “Guarantee Fees” of some sort. In exchange for not making a 20% down payment, you basically provide insurance that the Lender will not lose money if you stop paying your mortgage.
This insurance cost is often added to the loan balance so that your out-of-pocket cost is minimized. There may also be a monthly premium paid with your loan payment.
Attached is a chart to show the most common options.