Home Loan Facts
A survey was recently conducted where people were asked about the current home lending environment. The results showed many are under the impression that it is very difficult to qualify for a loan. While it is true that lenders require more documentation than in previous years, the guide lines regarding credit scores, debt ratios and down payments are not as strict as one might think.
Here are some facts:
1. Borrowers do not need pristine credit to obtain a home loan. In fact, they do not need to have a credit score at all. Many lenders offer loans to borrowers with 580+ scores. And, if they do not have a score, the home buyer just needs to provide some alternative credit references with the main one being a good rental history for at least 12 months.
2. Most people do not have a 20% down payment. Loans are readily available with 15, 10, 5, 3.5, 3%, and even zero down. Conventional loans allow as low as 3% down. FHA has 3.5% down. And VA and USDA do not require a down payment at all.
3. People that have had serious derogatory events can get back into purchasing a home after just a few years. Chapter 7 Bankruptcy: 4 years after discharge for conventional, 2 years after discharge date for FHA and VA, and 3 years for USDA. Chapter 13 Bankruptcy: 2 years from date of pay out period for conventional, 1 year for FHA, VA and USDA. Foreclosure: 7 years from completion date for conventional, 3 years for FHA and USDA and 2 years for VA. Short sales and loan modifications allow relatively short waiting times as well.
4. FHA allows for non-occupying co-borrowers. This is a huge help to potential home buyers that may not earn quite enough to qualify for the home they desire. Adding a non-occupying co-borrower fills in that gap.
5. Sellers help toward home buyers’ closing costs is sometimes overlooked but can help immensely to structure the sale of the home. This helps the buyers not have to have as much money out of pocket. The seller can still net as much at closing by increasing the purchase price by the amount of the closing cost help.
6. Investors looking to get back into flipping or renting can obtain loans with as little as 15% down. Some lenders allow for 5-10 properties to be financed.
There are many ways to structure sales contracts and loan requests to help home buyers reach their goals. Talk with a trusted mortgage professional to find out how you can effectively position yourself to make your real estate dreams come true.
Written by: JoAnn Moore, Licensed Mortgage Professional, Certified Military Housing Specialist. President and Owner of The Mortgage Market of Delaware, Georgetown and Seaford, Delaware. Office 302.855.1306, Cell 302.236.1229, MMODJoAnn@aol.com, www.TheMortgageMarketofDelaware.com