From low down payment options to jumbo loan options for move-up buyers, here’s what a few lenders are offering buyers.

Chase’s DreaMaker loan is geared for low to moderate income borrowers and first time buyers. Funds are available for up to 95% of the home’s value and there is no upfront PMI (Private Mortgage Insurance). In some cases this might be cheaper than an FHA loan.

Chase just introduced jumbo loans with a maximum 85% LTV. With a 740 FICO score, the maximum loan amount is $1.5 million.

Guaranteed Rate is offering 80-10-10 jumbo loans of up to $1 million.  You’d put down 10% of the home’s value, with a mortgage for 80% and a second mortgage for the remaining 10%.  This would require about 1/8 % more in your interest rate.

HomeTrust Mortgage Corp is offering a Launch Loan. The loan requires only 5% down (which can be a gift), and the PMI will be waived for a nominally higher interest rate os 1/8 to 1/4 %.  This can considerably lower monthly payments.

You can read more about this by clicking here.

A higher credit score means better loan options with better rates, that lower your payments and save you money.  Your credit score is determined by:  payment history, amounts owed, length of credit history, new credit, and types of credit used.

FIVE WAYS TO IMPROVE YOUR CREDIT SCORE

1. Keep balances low on credit cards. High outstanding balances in relation to your maximum credit limit can lower your score.  For example it is better to have a $2,500 balance on a $10,000 limit, than a $475 balance on a $500 limit.
2. Pay off debt. Do not move it around.
3. Don’t open up many new accounts in a short period of time.
4. If you have a credit card that has a good history, use it. Buy groceries, then pay it off.  An inactive card is not helping your credit score.
5. If you are deciding to pay off a car loan/student loan early or paying down a credit card, put more money toward the credit card.  Why? Car loans, personal lines of credit and student loans are “installment accounts.” The payment is the same every month. Paying these demonstrates being able to handle credit responsibly. Paying a credit card off or down improves your score.

Fear and finger-pointing are gumming up the system according to this  Washington Post story: Credit scores remain a high hurdle for many mortgage applicants as banks stay gun-shy. Homeownership is now at 64.8 percent, its lowest level since 1995, in part because so many consumers can’t get past lenders’ severe underwriting tests.  Lenders are looking for scores no lower that 740 in many instances.

One way to be sure your credit score is high, especially if you are younger, is to be sure your monthly rental payments are included in your score. For many this can make the difference and raise your score to desirable, lendable levels.  Talk with me about this. I’d be happy to share insights on how to be sure you have a strong score.

Mortgage rates have remained steady in recent weeks, keeping borrowing costs near 2014 record lows.  Freddie Mac reports the following national averages for mortgage rates ending July 31st.

30-year fixed-rate mortgages averaged 4.12%.  Last year at this time rates averaged 4.39%.

15-year fixed-rate mortgages averaged 3.12%.  Last year at this time rates averaged 4.39%.

Debt ratios, not credit scores, are the most worrisome factor for mortgage applicants – The Washington Post.

For some home purchasers, qualifying for a mortgage is a tough road to travel and sometimes ends unhappily with rejection.  These rejections are typically from low credit scores, inadequate documented income and little or NO savings.

What really causes a mortgage lender to say no? It’s usually not your income or savings or even a less than ideal credit score.  It’s your DTI; your “debt-to-income ratio.”  This is the most reliable indicator in whether you’ll be able to repay the loan.

To learn more about DTIs and to discover yours, go to Fannie Mae’s “Know Your Options” site:  www.knowyouroptions.com.  You’ll find helpful tools here.

Many new homebuyers underestimate some costs associated with buying a home. Borrowers are usually required to get Private Mortgage Insurance (PMI) if the loan exceeds 80 percent of the home’s value. This insurance protects the lender in the event that a homeowner defaults on the loan.  There are mortgage products that will allow a lower downpayment without the additional PMI.  As you shop for a mortgage, it is extremely important to inquire about this.

Here is some good news in lending. The New York Times (May 29, 2014) is reporting that lenders are easing up on jumbo mortgages.  “Over the last few months, lenders have begun approving loans for jumbo borrowers who don’t strictly meet the usual rules for, say, income documentation or credit score minimums, but can compensate for these shortfalls in other ways.”  In the Metro DC market, jumbo loans are mortgages of $625,500 or higher.

The New York Times has a great article on Low-Down-Payment Loans. This article focuses on the New York market, but similar programs exist here in the DC Metro area too.  Remember when purchasing a house, you are also shopping for a mortgage and the right mortgage broker is a must for a successful transaction.

If you are “sitting on the fence” about whether it is time to purchase a home,  or you just are not sure where you stand in terms of your finances, you are just like most home buyers.

Many people don’t hesitate to do nothing!  If you are unsure where you stand in qualifying, give this great article in The Washington Post a read, and feel better.  Then give me a call and I’ll put you in touch with great lenders.

The first thing to realize when purchasing a home, is that you are really shopping for two different things: a new home AND a mortgage. As your Realtor, I can recommend banks and brokers based on professional experience.

Interest rates are not very likely to return to the lows of 2012 when we were seeing rates in the 3% range for 30-year fixed mortgage rates.   Here are the mortgage rates by decade.

Freddie Mac is projecting an increase in Mortgage Rates for 2014 and 2015.

Experts at Fannie Mae and the Mortgage Bankers Association are alerting the market that the expectation is a rise in 30 year fixed rates into 5 to 5.7% range over the next year.

What does this mean for buyers?  As you wait to join the homeowner market, the amount of home you can afford shrinks. Buyers who act now benefit from lower mortgage rates and lower home prices, as both are predicted to rise.