If your score is 620 and you are only borrowing up to 60% of the equity in your home there is very low pricing adjustments on a 30 year fixed rate mortgage of $417,000 or less. Believe it or not, that goes for both rate & term refinance as well as CASH-OUT!

The better news is that if  your score is 620 and you do need to borrower more than 60% of your homes equity but not more than 75% and you can afford a 15 year fixed, you will get the same rate as someone with an 800 score on a rate & term refinance. If you can afford a 15 year fixed and you need cash-out there is a small adjustment up 60% of equity and a bit larger one to 75% but, still much less than the 30, 25 or 20 year fixed.

If you need to 80% of equity for rate & term or a cash-out refinance with a 620 – 660 credit score then, the best option is a portfolio lender as they make there own rules. If you show strong assets such as stock, bonds, or CD’s and you have an excellent mortgage history they will approve the loan.

Let an experienced mortgage professional review your specific situation to best determine which course of action to take. Yes, obtaining a mortgage has definitely become more difficult then in past recent years but, proper guidance to help navigate all of today’s option will certainly increase your chances of hearing the words, “your approved!”.

Jim Guerriero

First Lenders Mortgage

800-280-APPROVED

The last year and a half or so has seen a unprecedented chain of events occur in the mortgage industry with the closing of hundreds if not thousands of companies and the elimination of many of the so-called “exotic” products.

When the dust finally settled only the strong have remained ready willing and able to lend to qualified borrows. We are proud to be among those standing tall and offering the very best of what is available today for the consumer. Along with standard conventional, jumbo and FHA mortgages that we have available, we are among the few remaining companies that can offer No Income Verification and Stated Income Verification loans to our highly qualified New Jersey, New York and Pennsylvania borrowers.

What distinguishes “No Income Verification” from “Stated Income” loans?

The answer is that true “No Income” allows for the verification of a borrowers employment while allowing the income section of the application to remain blank. A “Stated Income” loan on the other hand, requires a borrower to “state” an income to be used on the application but, not be verified. It must however, make sense for line of work that the borrower is in. In both cases, asset verification is required and must be significant enough to warrant approval of the loan. There is no set calculation as only common sense will prevail. It is important to note that these products are for owner occupied properties ONLY and the borrower MUST be self-employed or retired.

What is the advantage of going with a “No Income” or “Stated Income” loan?

With the changes that have taken place in the industry there is no longer a higher level of automated underwriting approval that allows for income to be accepted as stated therefore, the only options available for the self-employed or retired borrower are those previously mentioned. Stated Income loans are allowed up to 70% loan to value (LTV) while No Income loans are limited to 60% LTV.

What make these products excellent as well is that the interest rates are very similar to Fannie Mae and Freddie Mac income verified loans. The add-on to the interest rate is .375% for No Income and .25% for Stated Income loans. To be more specific a 30 year fixed rate as of this blog posting would be 5.50% up to $417K for No Income and 5.375% for Stated Income. These options are available for our 5/1, 7/1, 10/1 ARMS as well as our 10, 15 and 40 year fixed.

Remember the days when someone with a 500 credit score could qualify for a New Jersey FHA mortgage? Well over the past year, FHA credit score requirements have been increasing. Nearly 20% of FHA loans are currently in default causing FHA lenders to be more cautious.

In this current mortgage market, to even be considered for a FHA mortgage, you MUST have a 620 minimum credit score. But we are seeing a trend that many other FHA lenders are now following.

Now, FHA lenders are looking for 640-660 credit scores for FHA financing. While there are still many who still require a 620 minimum credit score, NJ FHA lenders are imposing “pricing hits” to consumers who fall below 660 credit scores. So obviously there is an upward trend happening here with consumers looking to apply for an FHA loan.

In the future, don’t be surprised if down payment requirements increase again and credit score minimums gradually increase as well. With rising unemployment and foreclosures, it is causing FHA lenders to alter their lending guidelines going forward.

Keep in mind, there are a “small few” of portfolio FHA lenders that will go below the standard 620 minimum credit score requirement. BUT they are hitting consumers with HEFTY pricing adjustments to get an FHA loan with credit scores below 620.

So if you are looking to obtain an FHA loan, be sure to check your credit scores early enough in the mortgage process, to give yourself ample time to see what you need to do to get your credit scores high enough today to avoid any and all pricing adjustments when applying for a New Jersey FHA mortgage. Also many mortgage companies can assist you in credit repair if necessary. Many mortgage companies will offer this at no cost. Be sure to ask!

When was the last time you checked your credit reports and found out what your current FICO scores are? And I don’t mean the last time you ordered your credit scores from annualcreditreport.com or any other “consumer” credit score version company. Keep in mind the credit scores these companies sell to you are NOT your true FICO scores that mortgage lenders use to determine if you qualify and most important, what “pricing” tier do you fit into.

The only website that did sell all three FICO scores was MyFico.com. Remember I said “did”. Experian just recently pulled out of myfico.com so you can only order your real FICO scores from Equifax and Transunion.

So what does that mean to the everyday consumer? The only way to find out your 3 FICO scores is to have a mortgage lender pull your scores. Why do you want to know your FICO scores as early as possible? Because for one, you “NEED” to know what pricing tier you currently are in when it comes to getting accurate mortgage rate pricing.

Did you know Fannie Mae and Freddie Mac will hit you with a pricing adjustment is your score falls BELOW 740?  Just falling short of that 740 by ONE point can cost you depending on the loan to value. Most people looking to purchase a home or refinance wait until they are ready to apply for their mortgage before checking their credit scores.. Most often times if there is something on their credit reports that they are unaware of, like a $50 collection from a past phone bill ( which can lower your score by as much as 40-50 points), they will not have enough time to get it straightened out before they close on their loan, causing them to pay more in rate and fees.

Now of course too many mortgage companies pulling your credit reports will add to the inquiries and also could lower your credit scores. So I suggest having ONE mortgage lender pull your credit scores early on in the mortgage shopping process to find out what your 3 FICO scores are. You can then use the middle score to compare other lenders. You just inform the other lenders that you just had your credit scores pulled and they will be able to quote you pricing based on that middle score you already have.

Another advantage of checking your credit scores early is if there is a mistake(s) on your reports, you will have enough time to have them resolved and  have your credit scores checked again right before applying which could put you in the next “pricing tier” which could save you on your interest rate and costs.

Here is how Fannie Mae and Freddie Mac breakdown their credit score pricing tiers:

• 740+ credit score (best pricing and rates)
• 700-719
• 680-699
• 660-679
• 640-659
• 620-639

Below 620  (cannot even get a conventional loan )

For example: If you are looking to purchase a home and you are putting down 20% and you have your credit scores pulled and your middle score is 679. Guess what, Fannie and Freddie are going to hit you with a 2.50% pricing adjustment. WOW!  What that means to you is if someone had a 740 score, they could get a 30 year fixed rate at 4.875% NO POINTS. But because your score is 679, that same 4.875% will cost you 2.5 POINTS. If you were applying for a $300,000 loan, having a 679 credit score would cost you $7500.

Most consumers are not aware of these pricing tiers until they apply for a mortgage. Every lender will impose these pricing adjustments unless you go with FHA financing. But even with 20% down, you have to pay monthly mortgage insurance AND pay a one time 1.75% upfront mortgage insurance premium with FHA too.

So give yourself plenty of time, check your credit scores as early as possible (not on your own) and hopefully you have enough time to raise your scores before you actually apply for your mortgage if you fall into any of these lower pricing tiers.

Some mortgage companies can actually help you raise your scores during the process as well. Always ask if they offer such services. You will be glad you did!

Nowadays, New Jersey home buyers are always looking for the best deal and price. Who isn’t?  They usually call several New Jersey Mortgage lenders to find out who has the best rates and lowest fees. That is another topic I will cover shortly about the proper way to do so.

This topic is focusing on how to properly choose the right attorney and title insurance company. Most often times, the only question a New Jersey home buyer would ask an attorney is, “What is your attorney fee?”. What most people do not understand is that is just the tip of the iceberg when trying to find out what are their“actual fees and costs .

In New Jersey, the average attorney fee ranges from $750-$1200 for a home purchase transaction. But they often have many other fees/charges that you will not find out until you are sitting at the closing table looking over the final HUD (all closing costs associated with your mortgage).

Some questions you should ask your attorney/title company are:

1)   What other fees will I have to pay besides your attorney fee?

2)   Do you charge Title Exam fees, Title review fees, etc ?

3)   What are the recording fees? Attorneys in New Jersey are permitted to “overinflate” the recording fees. The average recording fee for a typical home purchase in New Jersey is about $250. I have seen recording fees in excess of $500 from attorneys.

4)   How much do you charge for email fees/overnight fees/photocopy fees/courier fees/wire fees, and any other miscellaneous fees?

5)   Do you charge a doc prep fee?

6)    Do I actually need to order a survey? Most often times it is up to the investor that you are using if they “require” a survey to close your New Jersey Mortgage loan. Most often times, they DO NOT. But most attorneys do not take the responsibility to call your mortgage lender to see if they require a survey. That phone call most often times can you save up to $700 if a survey is not required. If it is not required, it would be up to the home buyer to decide if they want to order a survey.

TIP:You should use the same approach when comparing lenders by asking for a Good Faith Estimate to see all their fees. Ask your attorney to see a breakdown of ALL their fees. You might be surprised at what they total too and they might be thrown off guard wondering how you knew about all these “other” fees.

Also remember YOU always have the choice to choose which title company you wish to work with. You will ALWAYS save money by using the title company your mortgage lender uses because they often have lower fees because they receive so much business from that mortgage lender that they extend those lower fees to you.

The attorney will usually always try to steer you into using his title company but remember that is YOUR choice not his. Keep in mind, the attorney works for YOU!

If you have any other questions, please feel free to contact me

Written by

John Mattsson

Senior Loan Officer

First Lenders Mortgage

(732) 275-1600

www.firstlendersmortgage.com