640 Is Becoming the New 620 for FHA Mortgages Starting Tomorrow!!!!!

By
Mortgage and Lending with Guaranteed Rate NMLS# 2611 NMLS #151088

Several changes to FHA loans will take effect tomorrow, October 4, 2010.  The Upfront Mortgage Insurance Premium will be reduced by about 55% on many loans.  All FHA loans will see the monthly mortgage insurance premiums rise by around 60%. 

More on this at: HUD Announces Changes to FHA Mortgage Insurance Premiums - Effective October 4, 2010

Starting tomorrow, for the very first time, HUD also has credit score minimums that will go into effect.  Prior to tomorrow, HUD has never had a credit score minimum.  Lenders, however, have their own minimum credit score requirements. 

More on this at: Before You Get Too Excited, No HUD Has NOT Lowered FHA Credit Score Requirements

From a qualifyingperspective, one of the biggest changes is coming directly from lenders.  Many lenders have made their own announcements regarding credit scores.  Beginning tomorrow, borrowers with credit scores of 620-639 will be getting a higher interest rate than those borrowers with 640+ scores.  This change will typically increase the borrower's interest rate by around .25-.50%. 

Some mortgage lenders have announced that they will raise their minimum credit score required  for FHA financing from the current 620+ up to 640+ beginning tomorrow.  Those mortgage companies doing so will no longer issue mortgages to borrowers with credit scores 639 and under. 

Most mortgage companies have had a 620+ minimum credit score for the last 1 - 1 1/2 years.  Changes like this are directly tied to the payment performance of the mortgages issued to borrowers with credit score credit scores under 640.  Mortgages issued to borrowers with 620-639 credit scores still continue to perform worse than their peers with higher scores. 

Some people outside of the mortgage industry will argue that these changes will further limit sales.  Yes, it will.  None of those people, however, will actually incur any losses themselves when a borrower defaults on a mortgage.  It's easy to be on that side when you you will not have to bear the cost of the loss.

The reality is that if those borrowers are not going to perform and stand a significant chance of going into foreclosure, then those loans do no need necessarily need to be approved.  Yes, there are borrowers with 620-639 credit scores that will pay their mortgage on-time.  Everyone needs to keep in perspective that they already have some credit issues if their scores are that low.  Home ownership is still something to be earned.  It is not a right for everyone.  Some people are just not responsible enough for home ownership.

 

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It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!

 

Also check out:

Conventional Financing Mortgage Program Overview/Updates

FHA Financing Mortgage Program Overview/Updates

USDA Financing Mortgage Program Updates  

 

Programs Include:

 

  • Conventional (Fannie Mae & Freddie Mac)

  • FHA, USDA, & VA

  • Jumbo to $3,000,000

  • Bank Statement Program for Self-Employed Borrowers

  • Foreign National Program

  • Investor Cash Flow

  • Non-Warrantable Condos

  • Georgia Power Leaseholds for Lake Burton, Rabun, & Seed

 

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  • Rodney Mason is a Licensed Branch Manager located in Atlanta, GA.   He can be reached at (404) 591-2453.
  • Providing financing for all cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.

    Providing financing for all cities across Alabama including:
    Alabama Port, Anniston, Athens, Auburn, Bessemer, Birmingham, Boaz, Bridgeport, Cedar Bluff, Chickasaw, Clayton, Coden, Dauphin Island, Decatur, Dothan, Eufaula, Fairfield, Fairhope, Florence, Foley, Forestdale, Fort Morgan, Fort Payne,Gasden, Grand Bay, Gulf Shores, Heron Bay, Homewood, Hoover, Jasper, Josephine, Madison, Meadowbrook, Midfield, Mobile, Mon Louis, New Hope, Orange Beach, Oxford, Oyster Bay, Phenix City, Prichard, Rainbow City, Saraland, Satsuma, Scottsboro, Selma, Troy, Theodore, Tillmans Corner, Trussville, Tuscaloosa, Vestavia Hills, Warrior and many more.

  • Providing financing for all cities across Florida including: Altamonte Springs, Atlantic Beach, Boca Raton, Bradenton, Cape Coral, Clearwater, Coral Springs, Daytona Beach, Delray Beach, Destin, Fort Lauderdale, Fort Myers, Fort Walton Beach, Gainesville, Hollywood, Homestead, Jacksonville, Jupiter, Key Largo, Key West, Lake City, Largo, Marathon, Mexico Beach, Miami, Naples, New Smyra Beach, Ocala, Orlando, Palm Coast, Panama City Beach, Pensacola, Pompano Beach, Port St Joe, Sanibel Island, Sanford, Sarasota, St Augustine, St Petersburg, Tallahassee, Tampa, Vero Beach, West Palm Beach, & Winter Park, and many more.

 

  • Providing financing for all cities across South Carolina including: Aiken, Anderson, Beaufort, Bluffton, Charleston, Columbia, Conway, Edisto Island, Florence, Greenville, Hilton Head, Johns Island, Myrtle Beach, North Augusta, Orangeburg, Rock, Hill, Spartanburg, Sullivans Island, Summerville, and many more.  
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    Providing financing for all cities across Tennessee including: Athens, Brentwood, Bristol, Chattanooga, Clarksville, Cleveland, Cookeville, Dyersburg, Franklin, Gatlinburg, Greeneville, Johnson City, Kingsport, Knoxville, Maryville, Memphis, Morristown, Murfreesboro, Nashville, Newport, Oak Ridge, Pigeon Forge, Sevierville, and many more

 

All mortgage lending guidelines are accurate at time of post, but are subject to change without notice.  Please call for the most current information.

    

           

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