Stick To The Facts

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Stick To The FactsAs much as some things change, the more they remain the same.  I keep hearing  banks have tighten the available funds for mortgages, and that interest rates are impacted by credit scores.  I have been hearing these statement for a long time, and it concerns me, because they are being made by those in Real Estate Industry sho are not familiar with the Lending side of the industry.  They have an understanding of their area of the Real Estate Industry, but do not have a good understanding of the Lending side of the Industry.  These statements are concerning, because those who they are made to, trust what is being said is fact.  After all they are being made by someone who is precived as a Real Estate expert.  However, even though they may be an expert in their area of the Real Estate Industry, they have little understanding of the Lending side of the Industry, and fail to Stick To The Facts

Lenders make money by making loans, not by restricting funds for loans.  There is plenty of available funds for loans, but what has tightened is the guidelines to qualify for those funds.  However, even though there is plenty of money available for mortgages, there are many Borrowers who cannot qualify for a mortgage.  This takes us to the second incorrect statement, which is the one I really want to talk about, credit scores and interest rates.

Credit scores impact a Borrower's ability to qualifying for a Loan Program, and the points a Borrower may pay once they qualify for the Loan Program, BUT they do not impact what the Interest Rate will be within the same loan program.  For example, if a Borrower needs a minimum credit score of 640 to qualify for a Loan Program, it does not matter if their credit score is 640 or 800.  Once the Borrower qualifies for the Loan Program the Interest Rate will be the same regardless of the credit score.  What is impacted by the credit score is the points a Borrower will pay.

Fannie Mae is very credit score sensitive, and the points a Borrower will pay will depend on the credit score.  For example if a Borrower qualifies for a conventional mortgage backed by Fannie Mae they will have the same interest rate regardless of their credit score.  However, Fannie Mae will assess points based on the credit score.  So if a Borrower qualifies for a mortgage and has a 20% down payment, Fannie Mae will hit them with the following points based on their credit score:

  • 740+           .500 points
  • 739-720     .750 points
  • 719-700   1.250 points
  • 699-680   1.750 points
  • 679-660   3.000 points
  • 659-640   3.250 points
  • 640-620   3.250 points

As you can see every time the credit score drops by 20 points. the points Fannie Mae charges go up.  The Interest Rate stays the same as long as the credit scores stays within the Loan Program qualifying limits.  However, as the credit scores drops the Borrower's closing cost and out of pocket money goes up.  This in turn impacts the Borrower's ability to qualify for a mortgage if they do not have enough money for closing costs.

There is enough miss information out there.  We do not need more miss information which is far from the truth.  People need to Stick To The Facts by taking the time to learn what they are passing on to others.  This should be the standard especially for those who are in the Real Estate Industry.  Before stating information they are not familiar with, they need to take the time to learn what the facts are, or better yet put them in touch with someone who knows the facts.

 

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George Souto   I do not offer advice on loans, nor on inspection or even legal opinions.  I know enough about them to refer that to people who do it on a daily basis

Jan 15, 2017 07:12 PM #1
Rainmaker
3,553,525
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

I stick to the facts and [oint people in the direction of where the facts could be

Jan 15, 2017 07:16 PM #2
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Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900
Get Results Team...Just Call (408) 252-8900! - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

I prefer to point people directly to good lenders and to follow their advice!

Jan 15, 2017 07:31 PM #3
Rainmaker
2,674,135
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

George I always appreciate your candid posts and I do not prescribe medicine because I am not a Doctor and I do not speak about loans but refer my clients to good lenders.... on a side note loved the title reminded me of the show Dragnet:))Endre

Jan 15, 2017 09:28 PM #4
Rainmaker
2,135,868
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

This is excellent information, George.  Probably facts many didn't know!  I like that little chart that shows the relationship with credit scores to points.

Jan 16, 2017 05:34 AM #5
Rainmaker
2,135,868
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS George, on having this blog FEATURED in the Old Farts Club group!    

Jan 16, 2017 05:35 AM #6
Rainmaker
850,282
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Good info to differentiate the "Facts" for borrowers.

Jan 16, 2017 06:06 AM #7
Rainmaker
4,204,082
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning George.  Unfortunately, all too many people don't want their opinions to be changed because of facts.

Jan 17, 2017 06:38 AM #8
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