Will I be able to Qualify?

I had a couple borrowers call who were worried about qualifying under the new guidelines that everyone is hearing about. So this month I wanted to cover a couple of changes to mortgage lending guidelines, at least as they stand today.

The first thing many self employed borrowers want to know is if “stated income” loans still exist. The answer is absolutely they do. However, both Fannie Mae and Freddie Mac (the agencies) have officially dropped their version of this popular program. On the other hand, I have seen numerous underwriting decisions from both agencies that merely require a phone verification of the business’ existence, rather than full sets of tax returns and income statements. In addition, the standard debt-to-income ratios allowed can vary widely based upon a borrower’s FICO scores. These two facts make me think that the agencies are attempting to accommodate this deserving class of borrowers. So overall you may have to pay a small premium in rate if you can’t get approved through one of the agencies programs, but with good credit it shouldn’t be much of one.

The other BIG change here in mortgage world is the tiering of prices based upon FICO scores. If the current rate for a borrower with a 720+ FICO score is at 6%, someone with a 620 score can expect upwards of 6.75% for the same loan. Other industries are already following suit and everything from credit cards to insurance rates will vary widely based on this single figure. So it is more important than ever that you maintain your good credit, or fix any deficiencies you may have in this regard.

For expert advice on any aspect of home or business finance (YES, I DO COMMERCIAL LOANS TOO!), call the professional. Dan Smith can be reached at 303-674-0201 or visit him on the web at www.ColoradoHomeLoans.com anytime!