Two of the largest FHA-approved lenders have backed off their controversial “overlay” requirements on FICO scores (lender overlays are qualification requirements that can be more stringent than FHA’s own requirements). Wells Fargo and Quicken Loans confirmed last week that they will now lend to applicants with 580 FICO scores and 3.5 % down payment which could help you purchase a Thornton Colorado home.
Racing for a New Loan
For first time home buyers, there are still CHAFA funds for helping with the 3.5% down payment. If the buyer can get help with closing costs from the seller, the may have to put only a minimum amount down to get into a home. With interest rates still at all time lows, this is still a great time to buy even without any tax credit. Their revised standards conform in most respects to FHA’s own minimums and may be able to open financing to large numbers of buyers whose credit scores have sagged during the recession to buy a Thornton Colorado home. Wells Fargo is the largest originator of FHA insured loans and Quicken is in third place.
For buyers who are trying to move to a different Thronton Colorado home there can be some challenges if they owe more on the home than it is currently worth. I have had home owners sell a current residence in Erie and bring cash to the table in order to buy a larger home in the Boulder Valley school district. If this sounds like a situation that might work for you, give me a call and we can see what your solution might be in this housing market.
Some home owners are trying to rent out their current residence and then move up to a larger Thornton Colorado home. Many lenders have been requiring a 30% equity value in the rental home in order to accomplish this. Sometimes, you can get around this if you have a rental history on other properties. Check with your local lender to see what they can do with your unique housing position.
Credit has always been hard to get for those with low FICO scores. For example, borrowers with scores between 500-579 may need a 10 percent down payment from their personal resources. They may not be able to use gift money from relatives, friends or a charitable down payment assistance program to meet the 10 percent upfront equity test.
Home buyers with scores of 580-599 may need 5 percent down payments, and will be prohibited from supplementing their own cash with gifts. Borrowers with FICOs above 600 may qualify for 3.5 percent down payment FHA deals, but will be allowed to use gift money to purchase a Thornton Colorado home.
Contributions from Thornton Colorado home sellers to defray buyers’ closing or loan origination costs will be limited to 3 percent. The debt-to-income ratios will be tight: 31 percent for monthly housing-related expenses, and 43 percent for total household debt service.
Bob Walters, Quicken’s vice president for capital markets and chief economist, said his firm will now accept FICO scores down to 580, but no lower. Quicken also insists on key underwriting restrictions on debt-to-income ratios and limits on gift funds. ”The idea is not to have habitual late-payers” get FHA-insured mortgages to purchase houses, Stevens said, but rather to provide homeownership opportunities to genuinely qualified buyers who simply have temporarily depressed credit scores. ”Anybody who is lending” during the current environment of falling home prices and high unemployment “has to be extremely careful about making policy changes that add to their risks, but we also need not to exclude qualified families from access to homeownership,” Stevens said.
An important thing to keep in mind is that you may need to reach out to loan officers to inquire about any policy changes for Thornton Colorado homes. No one currently is letting very many people know about the changes. Check with your lenders before going ahead with any real estate transaction.
This article is based on one written by Ken Harney who writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.
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