Virginia Beach Home Loans: 680 for 100%, FHA finally has a true purpose...

680 for 100%, FHA finally has a true purpose...

And what I mean by that is that FHA is not some kind of a spectacular loan program. It is very useful in certain situations, but most often the best way to go is conventional if you qualify. Conventional offers the best rates and terms avaiable which is why it is reserved for those with good credit and income qualifications.

I get people coming to me all the time who have been sold by someone who later denied them on an FHA program. Sometimes the person coming to me is qualified for conventional financing, and I ask them "why FHA". I usually get the same response. Something along the lines of "I am a first time home buyer" or some other irrelavent speech about why FHA is so great.

Often times the file is denied for one reason or another, most often because the person in need of financing was not properly qualified. Most deals that can go through FHA can also go through conventional with better terms. Traditionally FHA is utilized for the credit challenged or those with unestablished credit. No score programs are great for people who have zero establish credit and no derogatory tradelines. FHA really filled in some of the gaps when the subprime crisis hit.

Still, most deals that would've gone through a subprime category back when loans were easy and loan officers were lazy could've also gone through Fannie Mae. Prior to the PMI companies stepping in and laying out some heavy restrictions, I could get people with low 500 scores approved and closed through Fannie Mae.

Now that PMI companies are refusing to insure loans for low credit score borrowers with high LTV's (I don't blame them) FHA offers some attractive alternatives. As of today MGIC is refusing to insure any loan that is over 95% LTV if the borrowers credit score is under 680...

Still, the products to get the deal done are out there, you just need to find them and sometimes you need to be more creative.

Christopher Ohlsen

37 Boynton Ave

(845) 243-5293 (Office)

(518) 565-0799 (Cell)

www.plattsburghmortgage.net

chris.ohlsen@guaranteedrate.com

 

 

Comment balloon 6 commentsChristopher Ohlsen • March 04 2008 03:18PM

Comments

Good Blog, just got word at our meeting this morning about the 680 Score.  We also discussed the Ameridream and other similar programs that are also available.  Your right you just have to be creative and investigate. 

 

 

Posted by Tom and Stephanie Hansson, Hansson and Hansson Real Estate Team (Cortiers Real Estate) over 9 years ago

PMI killed below 620 borrowers yesterday...good info on MGIC - I dont use them that often but good to know.

Posted by JDo Doe over 9 years ago

Stephanie - Thanks, yeah I got the word this morning too. Ameridream is a good program and there are quite a few out there like that. Another good thing about FHA is that you can go to 97.75% LTV, and you can give a lender credit of up to 3%. The only stipulation with the credit is that it combined with the sellers concession cannot be over 6%. That is not counting one of those gift programs though, so feasibly you can bring a borrower to the table with very little out of pocket. The problem is that HUD banned gift programs effective Oct. 1 2007. There is litigation pending that may reverse that decision. Still with the lender credit, seller concession, and high LTV this is a great optino for a lot of people who cannot be approved for conventional financing.

 Nathan - Mgic is ahead of the curve for the most part. MGIC instituted that restriction a few months ago and now the rest are following their lead. I watch MGIC to see what the rest will be doing in a couple months.

Posted by Christopher Ohlsen (Credit Werx, LLC.) over 9 years ago
There is no single product that is universally best for borrowers. Each client comes with unique circumstances to consider. That's where you come in. You consider individual circumstances, weigh options, and recommend the best product.
Posted by Rosario Lewis, GRI, SRES - DDR Realty - Orange County, NY (DDR Realty) over 9 years ago
Rosario -  Your definitely right about that. Thats why it is so ridiculous when people call up and the first thing out of there mouth "what is your rate". Everyone has different qualifications and therefore qualifies for different rates and term. Someone calling me up and asking what my rate is is like me calling up a prospect and asking them what their credit score is before even saying hi. Good point Rosario, thanks.
Posted by Christopher Ohlsen (Credit Werx, LLC.) over 9 years ago

Save Ameridream and other Down Payment Assistance programs
If you haven't done so, go to this website, http://www.rallyforhomeownership.org/

It only takes 30 seconds.  This form will go to your local Congressmen and Senators.
CONGRESS MEETS ABOUT THIS TODAY! 

HUD should modify to lessen the risk BUT don't get rid of it.  This is one of the last loan programs out there right now that can get buyers into a home with no money.  (They still have to credit and income qualify)

http://activerain.com/blogsview/605114/Down-Payment-Assistance-Congress

Posted by BJ Matson (The BJ Matson Team) over 9 years ago

Participate