Can You Get A Mortgage With Bad Credit?

Great question.

With all the changes in the mortgage industry it was thought that if you didn’t have impeccable credit you wouldn’t qualify for a mortgage.  What, you ask, are impeccable credit scores?

Really good credit would be credit scores over 720.

But what if your credit scores are below 620?  Can you get a mortgage?  The answer is yes.

As long as your credit scores aren’t below 550, and you have some money to put down, you’re still eligible under the government FHA program for a 30 or 15 year fixed mortgage.

With a credit score of 550, for example, you would need to put down at least 10% of the purchase price.

However, if your credit scores are 580 or higher, you can still qualify for a FHA mortgage with 3.5% down payment – and the mortgage rate will be competitive.  Not subprime or hard equity rates.

Under the FHA 30 or 15 year fixed programs, there are still debt to income ratios that have to be met for qualifying.  So, for example, your total monthly installment debt can’t exceed 43% of your gross monthly income.

But as long as the debt to income ratio doesn’t exceed 43 and you have 3.5% down payment, you should consider the FHA 30 year or 15 year fixed mortgage.

Call me with any additional questions at 561-350-7684.


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How To Avoid A Payment Increase If Your Mortgage Is An Adjustable Rate Mortgage (ARM)

Is your mortgage an adjustable rate mortgage, also known as an ARM?

If it is, you want to know – if you don’t already – that your mortgage rate and payment can change.

This isn’t necessarily a bad thing, especially if the rate and payment go DOWN.

However, the interest rate market is slowly trending upwards.

What does this mean for you?  It means that once your fixed period in your ARM is up, you are looking at a rate and payment increase.  It’s just a matter of time.

If you plan on keeping your home the ARM is tied to, you want to avoid payment and rate increases.

The only way to do that is to refinance the ARM into a fixed rate mortgage.

A fixed rate mortgage – whether a 30 year, 20 year, 15 year or 10 year fixed mortgage – will give you payment and rate stability.

This is important if you plan on keeping your home.

In all likelihood your current ARM rate is low.  Know that over time, it will increase.  If your intention is to sell your home in the next 3 years, it probably doesn’t make sense to refinance into a fixed rate mortgage and have to incur closing costs.

But if your plan is to keep the home, refinancing into a low fixed rate mortgage (while fixed rates are still low) would be smart.

In conclusion, to avoid a payment increase in your ARM you will have refinance out of your ARM and go into a fixed rate mortgage, whether fixed for 30 years or a shorter term.

Schedule a time to talk to me and I’ll give you my view on whether refinancing into a fixed rate mortgage will benefit you.

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Here’s How I Help Realtors Sell More Listings

Who do you know who has tried to buy a new home but didn’t qualify for a mortgage because they didn’t have enough money to put down?

One of the problems with selling homes now-a-days is that many home buyers cannot get approved for mortgage financing. 

Either they don’t qualify because the debt to income ratios are too high or they are required to pay PMI because they don’t have enough down payment and the mortgage payment is too high.

Obviously, if the home buyer can’t get a mortgage and is unable or unwilling to pay cash for the home, there is no sale.

Realtors, in order to open up your pool of prospective home buyers, I can help you sell more of your listings if the property  you’re listing for sale is located in a designated LMI or Low to Moderate Income Census Tract.

If your listing is located in a designated LMI area, I can offer 97% financing for single family homes and 95% financing for approved condos with NO PMI.  Putting down 20% is NOT required.

This is a big deal. 

Let’s say you have a listing that’s located in a LMI area.  Let’s also say the listing is for $435,000.

I am able to provide 97% financing to the prospective buyer – as long as the loan amount doesn’t exceed $417,000 – with no private mortgage insurance. 

This is will benefit the home buyer and you.  97% financing with no PMI. 

Generate more prospective buyers for your listings by letting home buyers know that there is a mortgage product available that offers 97% financing (or 95% financing for condos) with no PMI.

If you’d like to know whether your listing is located in an approved LMI area, give me a call and I’ll email you a map outlining the LMI approved tracts.  This is a great opportunity to sell more of your listings.

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What Are Some Myths Surrounding The Florida Bond Program?

There are many misconceptions about the Florida Bond Program, also called the Florida Down Payment Assistance Program.

Here are a few myths that I’ve exposed.

1. Myth: The Florida Bond Program is only a down payment assistance program

Fact: Florida Housing First-time home buyer program is a first mortgage program  that also provides down payment assistance.  The home buyer cannot use the down payment assistance without utilizing the first mortgage program.

2. Myth: The Florida Bond Program is a sub prime loan for homebuyers with poor credit.

Fact: The mortgage is a conventional or government loan underwritten according to Fannie Mae, FHA or VA guidelines and requires a minimum credit score of 640.  It is not a sub prime loan.

3. Myth: The Florida Bond Program is for low-income homebuyers only.

Fact: The income limit for a 1-2 person households 100 to 115% of the Area Median Income for the county the property is located in.  So, for example, in Palm Beach county FLorida, the household income limitation for a 1 to 2 person household is $82,440.  For a 3 person household in Palm Beach County Florida the income limitation increases to $96,180, which would be 120 to 140% of the Area Median Income for the county.

4. Myth: The Florida Bond Program forces homebuyers to live in the home for a certain amount of time.

Fact: Homebuyers can sell their homes whenever they want.

5. Myth: The Florida Bond Program slows the closing process down.

Fact: Florida Housing Bond loans usually take between 45 and 60 days to close.  Things such as taking the first time home buyer class, potential appraisal issues or contract negotiations are some factors which could delay the process.

Should you have any additional questions about the Bond Program or would like to see whether you’re eligible, feel free to schedule an appointment to talk to me!

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What Exactly Is The Florida Housing First-Time Homebuyer Bond Program?

Specifically, the Florida Housing First-Time Homebuyer Bond Program was created by the United States Congress to provide down payment assistance to first time homebuyers and Veterans.

The U.S. Congress created tax-exempt bonds also known as Mortgage Revenue Bonds to stimulate and promote affordable housing.  Although Congress created the Mortgage Revenue Bonds, Bond programs are actually created by the individual State governments.

Since the Bonds are tax exempt, the program rules are based in part on IRS regulations and can’t be changed.

Here’s how it works and some of the basics:

The Florida Housing Finance Corporation issues bonds that create a pool of funds which buy mortgages that are originated by lenders who particiapate in the program.  These lenders have to be trained and approved to particiapte in the program.

1. This is a first mortgage program that provides $10,000 in down payment and closing cost assistance in the form of a second mortgage.  The $10,000 is only repaid when the home is sold, the loan is refinanced or the 30 year term is up.  It’s a 0% interest loan.  No payments are required.

2. The rate is determined by the Florida Housing Finance Corporation, not the individual lenders.

3. Homebuyer education is required. This usually takes about 6 hours.

4. The buyer must be a first time homebuyer, unless they are a Veteran, who are exempt from the first time homebuyer rule.

5. Income limits vary according to the county the property is located in and the number of people living in the household.

6. The program requires the homebuyer to provide copies of their last 3 years tax returns.

7. The property must qualify.  There are sales price limits and eligible/ineligible property types.

8. The buyer must occupy the property as their primary residence within 60 days of closing.

If you have any additional questions about the Florida Housing First Time Homebuyer Program or would like to know whether you qualify for the program, schedule a time to talk to me.  I’m happy to answer your questions!

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Are There Household Income Limits To Qualify For The Florida Bond Program?

In order to qualify for the Florida Down Payment Assistance program, also known as the Florida Bond Program, the borrower’s household income cannot exceed a certain amount.

So, yes, there are income limitations to qualify for the Florida Bond Program.

For instance, let’s say that the husband is on the loan and is buying a new home with his wife. But his wife’s credit is poor so she cannot go on the loan; otherwise, the loan wouldn’t qualify due to poor credit scores. (To qualify the credit scores cannot be below 640.)

In order to qualify for the $10,000 in Down Payment Assistance offered by the State of Florida, the husband’s and the wife’s income must be verified, even though the wife’s income won’t be used for the debt to income ratio underwriting analysis.

The household income limitations vary depending on how many people will be living in the new home.

For example, in Palm Beach County Florida, the household income limitation for a 1 to 2 person household in a non-targeted lending area is $82,440 per year. If the household has 3 or more people – like 2 adults and 2 children – the household income cannot exceed $96,180.

The household income limitations vary according to the county the property is located in.

If you have any questions about what the household income limitations are for the county you wish to buy in or if you have any other questions about the Florida Bond Program, feel free to schedule an appointment to talk to me.

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Florida Bond Program To Increase The Downpayment For Fannie Mae Mortgages

Beginning January 26, 2014, the first mortgage amount allowed under the Florida Bond program for a conventional Fannie Mae mortgage will drop from 97% to 95%.

This means that instead of putting only 3% down on a new home purchase, the first time home buyer will have to put 5% down payment.

The FHA first mortgage down payment hasn’t changed, however. So if 5% down payment isn’t feasible, then you can apply under a FHA first mortgage and only put down 3.5%.

Whether you put down the 3.5% under FHA mortgage or 5% for a conventional Fannie Mae mortgage, the $10,000 in down payment assistance is still credited to you.

One of the main differences between the FHA mortgage and conventional mortgage is under FHA more of the $10,000 will be applied to down payment and costs as there is less down payment required: 3.5% as opposed to 5% down.

There are many financing options available for first time home buyers and Veterans that allow you to buy a new home with very little money out of pocket.

If you have any questions about the Florida Bond Program or Veteran VA loans, schedule a time to talk to me.

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Why Buying A Fannie Mae HomePath Approved Home Is A Great Deal For Home Buyers

A property approved for a Fannie Mae HomePath Mortgage is a great deal for home buyers.

What is a Fannie Mae HomePath Home?

A Fannie Mae Homepath home is a foreclosed home or a home that was voluntarily given back to Fannie Mae in lieu of a foreclosure. 

Why are Fannie Mae HomePath homes so attactive? 

The homes are usually sold at below market values, which make them a great deal for home buyers!

In addition, a Fannie Mae HomePath property will be approved for a HomePath mortgage.

What is the Fannie Mae HomePath Mortgage?  The Fannie Mae Homepath mortgage allows a homebuyer to finance 95% of the purchase price without having to pay Private Mortgage Insurance, also known as PMI.  This is a big deal and will save the home buyer thousands of dollars!

Also, no appraisal is needed with the Fannie Mae Homepath mortgage, saving the home buyer at least $365 in appraisal fees.

What types of properties are eligible for the Fannie Mae HomePath mortgage?

The Fannie Mae HomePath property can be a primary residence, second home or investment property.

Also note: there are two types of HomePath mortgages: one is for conventional financing at 95% of the purchase price, the other HomePath loan provides additional money for small renovations or repairs.

Do you need great credit to qualify for the HomePath mortgage?

The minimum credit score to qualify for a HomePath mortgage is 660 if the home buyer is putting down less than 20%.  The minimum credit score is 620 if the home buyer is putting down more than 20%.

Moreover, Fannie Mae will allow up to 6% in seller closing costs credit to be applied towards paying closing costs!

The Fannie Mae HomePath Mortgage is a great loan type.  If you’re able to locate a Fannie Mae HomePath property, take a close look at it as you maybe purchasing a home below market value and get in with only 5% down payment and not pay PMI with no appraisal required!

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Why It’s Going To Be More Difficult To Get A Mortgage In 2014

As we all know, mortgage underwriting since the financial and housing bubble collapse in 2008 has gotten more strict.

While thousands of mortgages have been originated and closed since 2008, Fannie Mae and Freddie Macs’ as well as the individual lender guidelines have tightened considerably.

The Consumer Protection Finance Act, also known as the Dodd-Frank Wall Street Reform Act created in 2010, has legislated what’s called a “Qualified Mortgage” or “Abilty To Repay” standard that goes into effect January 10, 2014.

What this means is that underwriting guidelines have been legislated from the Federal government and follow an “ability to repay the mortage” standard.

In the past, a mortgage underwriter would follow Fannie Mae, Freddie Mac, FHA or VA or their individual lender guidelines when underwriting a mortgage.  Those guidelines were somewhat flexible.

What the Qualified Mortgage or Abilty to Repay standard does is limit debt to income ratios to no higher than 43%.

In addition to the 43% cap in debt to income ratios, there are eight criteria that have to be met to satisfy the Qualified Mortgage/Ability to Repay standard.

Here they are:

1. your current income

2. your current assets

3.  your credit

4. the monthly payment for the mortgage

5. your monthly payment on other mortgages you may have

6. your monthly payments for taxes and insurance for other properties you may own

7. your other debts

8. your other debt in comparision to your income or how much money you’ll have left over after your monthly debt has been paid.

While the intent of the Qualified Mortgage makes sense, it will make it more difficult for some home buyers to qualify for a mortgage.

For example, if a borrower does not have established employment or whose income is unstable or who may not have suffient savings (i.e. cash), the mortgage application may be declined as not meeting the Qualified Mortgage standard.

Now the lender can originate a non Qualified Mortgage; however, the lender must make a reasonable determination that the borrower shows an abilty to repay the mortgage. 

Given my experience in the mortgage banking industry, the borrower will have to have overwhelming compensating factors to alleviate an underwriter’s conservative view of the file. 

In conclusion, the Qualified Mortgage rule or Ability to Repay standard will certainly reduce the number of future mortgage defaults, but it will also make it more difficult for borrowers or home buyers to obtain and qualify for a new mortgage.

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What Is The Mortgage Rate For A 30 Year Fixed Under Florida Housing’s First Time Home Buyer Program?

Happy New Year!

As of today, January 2, 2014, the current mortgage rate for a first time home buyer under Florida Housing’s First Time Homebuyer Program is 4.5%. 

The 4.5% is for first time home buyers who qualify for the Florida Bond loan as well as the Florida closing cost assistance program.

The loan type is a FHA 30 year fixed mortgage.

For Veterans, the mortgage rate for a 30 year fixed loan is 4.25%.  This mortgage is aimed at both veterans and active military duty personnel and is designed to help them obtain affordable housing.

The 30 year fixed rate at 4.25% is used with Florida Housing’s down payment assistance and closing cost assistance programs.

This loan type is a VA 30 year fixed mortgage.

For conventional mortgages, which are mortgage where the first time home buyer puts down 5%, the mortgage rate for a 30 year fixed is 5.00%.  This loan is also used with the Florida Down Payment Assistance program and the closing cost assist programs.

Florida’s First Time Home Buyer Program (FTHB) only offers the 30 year fixed mortgage. 

However, if you’re not a first time home buyer, you can still qualify if the property you want to buy is located in a federally designated target area or if you’re a Veteran.

The Florida First Time Home Buyer Program uses income and purchase price to tell whether the home buyers qualifies.

As I’ve noted in my post entitled “What is the Florida Down Payment Assistance Program,” you need to have a minimum credit score of 640 and you have to complete a 6 hour first time home buyer class.

Also note that you have to put down at least $1000, which can be a gift from a family member.

The income limits vary according to how many people living in the home.  For example, for 3 people buying a home in Palm Beach county, the income limitation is $96,180.

Together with the First Time Home Buyer Program, Florida Housing offers down payment assistance and closing cost assistance.  The down payment assistance comes in the form of a second mortgage that is only repaid when the home is sold or the mortgage refinanced.  Also, the bill rate is 0 and no monthly payments are made on it!

Call me at 561-379-8013 to see if you’re eligible!

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