Monday, May 3, 2010
Monday, April 5, 2010
Good Credit Translates into Lower Rates for the Consumer
Part I: Good Credit Translates into Lower Rates for the Consumer
In the 1960s, Fair Isaac Corporation started working on a system lenders could use to evaluate the likelihood of receiving repayment on loans. Prior to that, it was really a matter of trusting an individual to be a "man of his word," so to speak. Fair Isaac sought to take human error out of the equation with a reliable system that could determine whether or not consumers were truly worthy of credit, and thus FICO was born. This evolved to become the standard for lenders by the 1980s.
Credit scoring has an enormous impact on a borrower's ability to purchase a home. It can mean the difference between getting a good interest rate and the home of their dreams, or whether they even qualify at all. For this reason, it is important for borrowers to understand the credit scoring process, and to know what their credit score is when they look to obtain mortgage financing.
What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between a low score of 350 and a high of 850. The higher the client's score is, the less likely they are to default on their loan. Only a rare one out of approximately 1300 people in the United States have a credit score above 800. These are the slam-dunk clients that walk away with the best interest rates. On the other hand, one out of eight prospective home buyers are faced with the possibility that they may not qualify for the loan they want because they have a score between 500 and 600.
Stay tuned for Credit Scoring, Part II: The Five Factors of Credit Scoring
Written by my friend:
Jennifer Heishman
Loan Officer
IHS Mortgage
Mobile: 512-376-1277
Phone: 512-668-4159
jenniferh@ihsloans.com
In the 1960s, Fair Isaac Corporation started working on a system lenders could use to evaluate the likelihood of receiving repayment on loans. Prior to that, it was really a matter of trusting an individual to be a "man of his word," so to speak. Fair Isaac sought to take human error out of the equation with a reliable system that could determine whether or not consumers were truly worthy of credit, and thus FICO was born. This evolved to become the standard for lenders by the 1980s.
Credit scoring has an enormous impact on a borrower's ability to purchase a home. It can mean the difference between getting a good interest rate and the home of their dreams, or whether they even qualify at all. For this reason, it is important for borrowers to understand the credit scoring process, and to know what their credit score is when they look to obtain mortgage financing.
What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between a low score of 350 and a high of 850. The higher the client's score is, the less likely they are to default on their loan. Only a rare one out of approximately 1300 people in the United States have a credit score above 800. These are the slam-dunk clients that walk away with the best interest rates. On the other hand, one out of eight prospective home buyers are faced with the possibility that they may not qualify for the loan they want because they have a score between 500 and 600.
Stay tuned for Credit Scoring, Part II: The Five Factors of Credit Scoring
Written by my friend:
Jennifer Heishman
Loan Officer
IHS Mortgage
Mobile: 512-376-1277
Phone: 512-668-4159
jenniferh@ihsloans.com
Thursday, March 11, 2010
Those Who Wait Will Pay Thousands More This Spring
Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.
If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business.
Jennifer Heishman
Loan Officer
IHS Mortgage
Mobile: 512-376-1277
Phone: 512-668-4159
Fax: 512-795-1807
jenniferh@ihsloans.com
www.ihsloans.com
Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.
If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business.
Jennifer Heishman
Loan Officer
IHS Mortgage
Mobile: 512-376-1277
Phone: 512-668-4159
Fax: 512-795-1807
jenniferh@ihsloans.com
www.ihsloans.com
Friday, February 26, 2010
First time home buyers tax credit
First Time Home Buyer Tax Credit Information:
What is the deadline?
Buyers must have a binding written contract by April 30th and the closing must happen by July 1st.
How much is the credit?
The maximum credit is $8000 for first time buyers. The maximum for repeat buyers , "long-time residents" is $6500.
What types of properties qualify?
Primary residences qualify, including single-family homes, condos, town-homes, and co-ops.
How do buyers actually get the credit?
The credit can be applied to your 2009 tax return, an amended 2009 return filed later or your 2010 tax return.
Who can qualify for the tax credit?
To qualify for the "first-time home buyer" credit you must not have owned a home during the 3 years prior to the purchase. To qualify for the "repeat buyer" credit you must have used the home being vacated or sold as your principal residence for 5 consecutive years, out of the last 8.
What are the income limits?
The full credit will be available to those who's modified adjusted gross income is $125000 or less, or $250000 or less for joint filers. A reduced credit is available for those with incomes between $125000-$145000 or $225000-$245000 for joint filers. If you make more than that, you are not eligible.
I hope this helps. If you have any questions or need further explanation please feel free to call or email me.
Phillip Baird
Austin Real Estate Shop
phillipdbaird@gmail.com
512-289-5738
What is the deadline?
Buyers must have a binding written contract by April 30th and the closing must happen by July 1st.
How much is the credit?
The maximum credit is $8000 for first time buyers. The maximum for repeat buyers , "long-time residents" is $6500.
What types of properties qualify?
Primary residences qualify, including single-family homes, condos, town-homes, and co-ops.
How do buyers actually get the credit?
The credit can be applied to your 2009 tax return, an amended 2009 return filed later or your 2010 tax return.
Who can qualify for the tax credit?
To qualify for the "first-time home buyer" credit you must not have owned a home during the 3 years prior to the purchase. To qualify for the "repeat buyer" credit you must have used the home being vacated or sold as your principal residence for 5 consecutive years, out of the last 8.
What are the income limits?
The full credit will be available to those who's modified adjusted gross income is $125000 or less, or $250000 or less for joint filers. A reduced credit is available for those with incomes between $125000-$145000 or $225000-$245000 for joint filers. If you make more than that, you are not eligible.
I hope this helps. If you have any questions or need further explanation please feel free to call or email me.
Phillip Baird
Austin Real Estate Shop
phillipdbaird@gmail.com
512-289-5738
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