From the San Francisco Business Times:
Posts Tagged ‘mortgage’
If you are currently seeking a mortgage or just thinking about it, we ran across 5 good tips that could help you know what to expect. The biggest take-away from this info? Take note of the credit thresholds that lenders use. For example, did you know that if your credit score is 719 (versus 720), you can count on an additional eighth of a point added to your mortgage? This could cost you thousands over the long haul.
This brings me to another piece of advice (might as well, since I’m thinking about it). If you’re thinking of buying a home, be sure you inspect your credit reports NOW. If there is an error, or you need something altered, it can take the bureaus around 90 days to reflect changes you request today. Always get your credit ironed out first before jumping in! A few simple tweaks to your credit can save you some big time cash.
Here are the 5 tips, courtesy of the Chicago Tribune:
- Down payments are critical. Borrowers should expect to put down at least 10 percent for a “conforming loan” – a mortgage that Fannie Mae and Freddie Mac will purchase. [Editor's Note: We are seeing 20% in most cases. Also, the more you borrow, the more down payment you will need. TIC's are requiring higher down payments as well.]
- Credit scores count. A 720 [Editor's Note: we think they mean 740 here] on the 850-point FICO rating scale will get a borrower access to the best rates. Rich Bira, branch manager of FCM Direct Lender in Chicago, says: “A score between 720 and 739 gets 0.125 percent added to the rate, a score between 700 and 719 gets 0.375 percent added to the rate, and a score between 680 and 699 gets 0.5 percent added to the rate.”
- Consider VA and FHA. Borrowers without down payments or with less than stellar credit scores should consider these government-insured loans offered through the Federal Housing Administration or the Veterans Administration.
- Unearth the records. Before applying, borrowers should organize tax, banking and other records that prove income, savings and debts. They should also expect to be patient about what may seem to be endless requests for information.
- Get rid of debts. Limiting debts, including what borrowers expect to pay for the mortgage, to less than 43 percent of gross income is important.
Source: Chicago Tribune, Mary Umberger (02/15/09)
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This post is to anyone out there who was counting on the $729,750 loan limit lasting until December 31, 2008. While it’s true that the official cut-off date is the end of the year, many lenders are already making the transition to the new $625,500 limit now. They are requiring folks to go ahead and lock in. How do you lock in? The short answer is: you have to be in contract on a place. If you are one of the people that could be affected by this, you may want to call your lender as soon as possible to see if you’re going to be able to squeeze under the $729,750 cap before it expires. We’ve heard some lenders are sunsetting $729,750 as early as this Friday, and most by next Friday! Ouch baby, very ouch.
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