Ask the "Mortgage Man": BUYERS WITH CREDIT SCORES BELOW 620 ARE FINANCABLE...

Ask the "Mortgage Man": BUYERS WITH CREDIT SCORES BELOW 620 ARE FINANCABLE...: Does your lender finance anything  below a 620/640? FHA/VA/ USDA loans are all regulated by the government.  They don't truly have minim...

SATISFYING JUDGMENTS ON YOUR CREDIT

Have you ever heard of someone paying their judgment and it still is being shown as unpaid?

This is a common occurrence.  Creditors are eager to take your money, but they have no incentive to go to the trouble of removing the judgment, or at least showing it as being paid.  Once you pay them it is too late to negotiate with them.  They can still continue to show the judgment as being unpaid for up to 10 years!  If a potential home buyer is attempting to purchase a home, and a judgment shows as being unpaid, even if the lender is willing to give a mortgage, the title company can't get clean title for the borrower without proof the lien is paid and satisfied in the courthouse.

You owe it to yourself to follow these simple steps if paying off an old judgment:
1. Contact the creditor who filed the judgment against you. ( Don't call the magistrate or courthouse)
2. Get a bank or cashier's check for the entire amount owed, made payable the plaintiff.
3. Set up a time to meet with the creditor at the courthouse in the county in which it was filed.
4. Pay them at the same time they go to the clerk of courts to file the "Satisfaction Piece".
By following these simple steps insures that your lien will show as satisfied anywhere from 30-90 days after it is filed.

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
(484) 695-5972

COULD THIS BE THE TURNING POINT IN CREDIT SCORING?

FICO scores will be rescored as of the fall of 2014.  For a long time, unpaid collection accounts have been the thorn in the sides of many borrowers looking to purchase their first home.  They have unknown unpaid bills appearing on their credit report causing their scores to plummet.  Many of these are final utility bills that have never been forwarded to the borrower's new address, and more are from hospital bills that were never paid by their medical insurance carriers. Some collection accounts are called charge-offs, because they may have had a car loan or a revolving charge card that went unpaid for a long period of time. After this period of non payment, the creditor places the account in an inactive status, and they write the debt off their books as being "unable to be collected".
As of this fall, the scoring agencies are revamping their scoring models, and changing the way that borrowers will be assessed.

Medical collection accounts will  not count against a person's credit score.  For years, whenever mortgage underwriters saw medical collection accounts on a person's credit report, they overlooked them in determining a borrower's willingness to pay bills.  When underwriters had the ability to overlook these, regardless of their impact on a borrower's credit scores, loans continued to get approved, and subsequently many buyers purchased homes.  Since the real estate market contraction in 2008, many lenders haven't had the ability to approve these types of buyers. This is due to the fact that these same underwriters who were approving borrowers manually, who had decent credit but outstanding medical bills, were unable to approve them with a lower credit score.  As soon as a medical collection appeared on a report, the credit score would drop anywhere between 50-125 points, depending on the number of bills and good credit references appearing on a person's overall credit report.  For instance, if a buyer has 12 references, all good, with low balances on their credit cards, but one medical collection account suddenly appears on their report, I've seen scores drop from 725 to 650 and lower. Needless to say, this inability to overlook these accounts took many potential buyers out of the market. From this point forward, any medical bills appearing on the credit reports will not affect a borrower's credit score at all.

Up until now, paying off other types of collection accounts have had no impact on a person's credit score.  I have been heavily involved in helping people rehab their credit in the hopes of turning them into future home buyers.  I've seen people improve their scores very rapidly, with the help of paying down debt, disputing late payments, etc. The frustrating part has always been that paying off collection accounts, and charge-offs haven't had a positive affect on their credit scores.  Even though the potential buyers were doing the right thing, doing so didn't benefit them in any way.  With the latest changes to the credit scoring algorithms, paying off collection accounts and charge-offs will boost their scores by as much as 50 points.  This affirms to a borrower that by doing the right thing they will benefit, and eventually realize the dream of becoming  homeowners.

Andy Williams
President
Abacus Regional Mortgage
NMLS 118317
(484) 695-5972

Ask the "Mortgage Man": Effective Financing for Foreclosures with NO PMI i...

Ask the "Mortgage Man": Effective Financing for Foreclosures with NO PMI i...: Do you ever see a property cheap enough to buy, but needs thousands of dollars in minor cosmetic repairs?  You don't have much money for...

Effective Financing for Foreclosures with NO PMI insurance!

Do you ever see a property cheap enough to buy, but needs thousands of dollars in minor cosmetic repairs?  You don't have much money for a down payment because you want to save some of your money to fix up the home.  Usually an FHA loan is the best way to finance a property so that you can keep your down payment to a minimum. FHA requires certain repairs and defects to be completed prior to a new buyer taking ownership of a property.  Perhaps it is a bank-owned property who won't allow you to make any repairs or alterations to the property prior to taking ownership.  A simple solution would be an FHA 203K loan.  This product allows a buyer to finance the required repairs into the mortgage, with all of the work being done after the closing.
Lately, more and more people are upset about FHA's version of PMI insurance.  It is called Risk Premium.  It is the most expensive monthly PMI insurance on all types of mortgages.  The cost is anywhere between 125% to 250% higher than PMI insurance on conventional mortgages.  We offer conventional loans with as little as 5% down with NO PMI insurance.  Since most conventional mortgage underwriters normally don't call for cosmetic repairs to be completed prior to closing, this is a better alternative with properties that don't need major structural repairs.  So if you don't want PMI insurance on your loan, and wish to do as little as 5% down payment, this is a better alternative for many buyers.

Andy Williams
NMLS #118317
President
Abacus Regional Mortgage
NMLS # 113984
(484) 695 -5972
www.abacusmort.com

USDA loans are quicker than normal

As of last week, USDA has not only caught up in their underwriting department, but they are way ahead of their normal time frame.  They are taking only 2 business days from the time the final files are submitted to them for a final approval.  Most loans are closed within 4 business days of final loan submission. This means that buyers can move in to their home in much less time than usual.

For your next USDA loan, please call me.

Andy Williams
President NMLS 118317
Abacus Regional Mortgage NMLS 113984
484 695 5972

Ask the "Mortgage Man": What is with this QM change to lending?

Ask the "Mortgage Man": What is with this QM change to lending?: I've been in the lending business since 1986 and I've found out that things are always changing in this industry. Although guideline...