Mortgage Guideline Tip - Buying a home? On Maternity Leave?

Maternity leave from work is generally short in duration and borrowers on temporary leave may or may not be paid during their absence from work.

Employment Requirements.

If a lender is made aware that a borrower will be on maternity leave at the time of closing of the mortgage loan and that a borrower's income is needed to qualify for the loan, the lender must determine allowable income and confirm employment as described below.

• The borrower's employment and income history must meet standard eligibility requirements.
• The borrower must provide written confirmation of his or her intent to return to work.
• The lender must document the borrower's agreed upon date of return by obtaining, either from the borrower or directly from the employer (or a designee of the employer when the employer is using the services of a third party administer employee leave)
• The lender must receive no evidence or information from the borrower's employer indicating that the borrower does not have the right to return to work after leave period.
• The lender must obtain a verbal verification of employment.  If the employer confirms the borrower is currently on temporary leave, the lender must consider the borrower employed. 

If you have any questions or concerns about being on leave during your home buying process feel free to call or email me!

Mortgage Guideline Tip - Student Loan Payments

FHA has taken away the option to not count student loan debt against borrowers if the student loans are deferred or in forbearance, effective September 14, 2015.

Mortgage Application with Contracts Before 9/14/2015

• Will use actual documented loan payment
• If deferred for less than 12 months at closing, will use 5% of balance owed if future payment can not be proved with documentation
• If deferred for more than 12 months at closing, debt is not counted

Mortgage Application with Contracts On Or After 9/14/2015

• Will use actual documented loan payment
• If deferred (regardless of how long), will use future payment amount
• If loan is in deferment and future payment cannot be determined, will use 2% of the balance owed
• If student loan is currently on an income-based repayment plan and payment is zero, use zero for qualifying
• If student loan is currently on a graduated payment plan, use payment for qualifying

Mortgage Guideline Tip - Fico Scores and the 5 Categories

Understanding Your Fico Score

 FICO scores are used to determine if you are creditworthy when applying for a loan.  My team and I believe the first step to enhancing your credit score is understanding what factors are driving your score.  Today I am going to focus on 5 categories that are used to determine your FICO Score.

Before I zone in on the 5 categories I want to make sure you understand that evaluating credit varies from person to person.  For example, a borrower who has not been using credit long will be factored differently than those with a longer credit history.  For some people, one factor may have a larger impact than it would be someone with a different credit history.  So it is safe to say, it is impossible to calculate the exact impact of every single category used to calculate your credit score without looking at your entire credit report.  

The 5 categories are as follows:

Payment History - This is one of the most important factors used to determine your FICO score.  Any lender will want to see that you have a history of paying on time.  Not paying on time will negatively impact your score.

Length of Credit History - Typically, a longer credit history will positively impact your FICO score.  However this goes back to what I previously mentioned.  It is possible for those who have not been using credit long to have a high FICO score, if the rest of their credit report looks good.  When looking at the length of credit history, your entire credit history is taken into account as well as each specific account.

Amounts Owed -  Having high balances on your accounts, or having them maxed out, will have a negative affect on your score.  However, owing a lot of money on them does not automatically make you have a lower credit score.  Again, it depends on your whole report.

Types of credit accounts - Having a mix of accounts such as credit and retail accounts, student loan accounts, auto loan accounts, and mortgage loans will determine your FICO score.

Inquiries -  Several new accounts or inquiries can negatively impact your FICO score.  If a borrower has multiple new accounts they can be viewed as a high-risk borrower.  This is even more true for people who do not have a long credit history.

Hope this information helps! It is important to understand to help enhance or maintain your credit score.  Any credit questions?  Contact me today!

ref: MyFico.com

China Does It Again; Mortgage Rates Holding Steady

CHINA DOES IT AGAIN

We’re lucky that mortgage rates aren’t rising on pace with China’s economic influence.

In fact, rates aren’t rising at all, because last week the People’s Bank of China devalued its’ currency twice in two days. This makes Chinese exports cheaper in the U.S. and Europe, while raising the cost of U.S. and European exports. It also caused the yield on the U.S. 10-year note to plunge. Amid these events, we firmly believe that the devalued yuan is keeping 15 and 30 year loans at rates under 4 percent.

We pointed out in last week’s article that two weeks ago, experts thought there was a 33% chance that the Fed would raise rates. Last week it was a 50% chance. Now, we don’t see the Fed raising rates until December.

In short, mortgage rates have been given a reprieve. Whether refinance or purchase, now is the time to act. Sub-4% on the 30-year loan looks like a gift. We say that because the long-term impetus is still for rates to rise, so no one knows how long today's rates will last. Always keep in mind that sentiment can change in a heartbeat, and it frequently does.

SOMETIMES GOOD IS GOOD ENOUGH

Last Friday’s employment numbers weren’t spectacular, but they were solid. Payrolls increased by 215,000, which kept the unemployment rate at 5.3%. Wage rates showed some life, up 0.2%. The increase lifts the average hourly wage to just below $25.

We've been saying that as long as new payrolls come in at 200,000 or-better each month, the housing market would remain in good shape, and not surprisingly, home sales and new-home construction have improved with sustained job growth. Home prices have also kept pace, which has been something of a surprise. We thought by this time, the rate of price appreciation would have slowed significantly.

Thanks to continued low mortgage rates and solid monthly job growth, more home buyers will enter the market. As things stand, we see no reason not to expect strong home sales and rising origination activity into at least early 2016.

Mortgage Guideline Tips - FHA Loan Limits (2015)

2015 FHA Loan Limits       


Even though 215 is half way over I thought it would be
important to post this again.  I have many buyer looking on the border of different counties and often forget once they cross over to another county the loan limits may change.  If you are approved going FHA in New Castle County for $310,000 and find a home in Kent County, we will have to
have a lager down payment of convert the loan to a Conventional method..




DELAWARE                             Single Family             2 units                    3 unit   

New Castle County                       $379,500               $485,800                $587,550

Kent County                                  $271,050               $347,000                $419,425

Sussex County                              $316,250               $404,850                 $489,350



PENNSYLVANIA                      Single Family             2 units                    3 unit   

Chester County                             $379,500               $485,800                $587,550

Delaware County                          $379,500               $485,800                $587,550

Lancaster County                          $271,050                $347,000               $419,425

Montgomery County                     $379,500               $485,800                $587,550


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