Changes to Mortgages Are Affecting YOU

By
Real Estate Broker/Owner with Taylor-Brown Real Estate

The truth about mortgages is that it has changed, but has it changed for the better.  If the change is for the better remains to be seen, but it is important to note that change has occurred.  The changes are:

  • Your credit score must be 620 or higher
  • You can not do any other business  like purchase a car, open a new credit card during the purchasing process or suffer consequences to your credit
  • You will pay a down payment of as much as ten percent
  • The home you are purchasing will have a least two appraisal and may have three broker price opinion
  • The purchase process may take as long as 60 to 90 days for conventional finances and 90 to 120 days for FHA/VA finances
  • You may have to attend a require home buyer seminar given by HUD approved organization

 

The end of February beginning of March of 2009, the lenders increased the minimum credit score to 620.  Lenders increased the minimum credit score to this amount due to changes to the secondary lender market.   The lenders viewed this increase in credit score limits as a safeguard to the uncertainty of the secondary lender market.   The lenders feared that by the time a loan was ready to close and it was time to sell it to the secondary market that the borrowers could no longer qualify for the longer due to regulatory changes to credit score and lending guidelines. 

 

Incidentally, how lending works is that a front line lender like Chase finances your loan, then sell it to the secondary market, Fannie Mae or Freddie Mac for a portion of what the original loan is so that Chase can have cash available to make the next loan. 

 

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