I've been seeing the same question over and over so here I go...
What fico do I need to qualify for a mortgage?
Lenders look at more than your Fico! They also look at Debt to Income ratio, Loan to Value, Employment history, and Mortgage/Rental history. Keep in mind that they look at the past two years on just about everything. Different programs have different guidelines so remember that.
Do the lender use my highest fico?
Lenders use your mid fico. So if you have a 650, 550, and 680 well your score would be 650. If you are married they use the mid of who ever makes more but some companys will use the lower mid of the two.
What should my DTI be at?
The goal should be below 45% including your new mortgage. Just add you min payments on your cards, take that car payment and added to you new PITI. Then divide it by what you gross.
Exp... $1,000.00 in debt + $1,500 PITI = $2,500 / $5,500 gross income = 45% DTI
What if its over 45%?
No problem... If you have a lot of factors that are going your way you can go over 45%. Exp.. Lets say your LTV is low or you have a good amount of reserves to cover six months. Well theses would be good factors. More to this but this is to give you an idea. When you start going over the 50% DTI mark you start getting in to subprime. Some prime/alt-a programs let you go up to 65% DTI but will hit the rate and its still better then going subprime.
What's a good LTV?
Well 80% or less will keep you away for PMI. There are still lots of government backed loans that are 100%. FHA likes to keep it below 97% but there are ways around that. Just remember that the more you put down will save you money in the long run. I have been using
www.ameridream.org to get the LTV down for my borrowers. The MBA backs programs like this. Someone on this site said this is mortgage fraud but I googled the FBI... Look up mortgage and the FBI tells you to go to the MBA website. So this is a great program. Lots of other programs like this out there but you got to find them.
What about my employment history?
No job? Well... NO loan! Good luck with going stated. Most banks are running away from stated and using bank statements. Lenders will want to take a look at the past two years. Working for the same company is always the best thing. The next best thing is the same field and school counts. So for you collage fokes... As long as you can prove that you were in school and went in to your field after school. If you were at the same job then the lender will use you income. If its the same field they will avg out your income to qualify you.
What if I'm 40 and still live at home?
Well I'm going to say... Get a life! J/K Lets talk about mortgage/rental history. Again lenders are going to look at the past two years but mainly the past year. Then want to know where you have been living the past two year but check the past year for payment history.
If you're really living at how you can do two thing. You can get a rent free letter from mommy or show canceled check up to 12 months. If you rent they will do a VOR to the landlord or VOM to your current mortgage company.
What kind of programs are out there?
Well lets see... LOTS! The good new is that if you are in an ARM that has adjusted and that has got you behind... FHA is coming out with a program that get you out of that arm as long as you can prove you payments were on time till the adjustment. Not sure when but it is coming.
Depending on where you live MyCommunity programs are great. You can go to
www.efanniemae.com to see if you qualify. This program has income guidelines is most area but you can just check.
As for FHA... The fico does NOT matter to them but the lowest fico for PMI is 575. FHA looks at everything and anything.
EA1,2, and 3 are prime/alt-a programs. EA1 is just like a normal loan with the same almost the same rates. The EA programs let you go up to 65% DTI.
Of course you have all the other Prime and Subprime products as well.
Wait!!! Need more information!! Don't we all... This is just a quick over view adn you should alway talk to a loan officer and SHOP AROUND and yes I'm a loan officer but I'm at work and need to get back to work. I could go on for hours and hours about mortgages. In the end you need to do what is best for you. Okay I for got one more....
Should I apply for a loan before or after my new mortgage?
NO! NO! NO! Lenders only pull your credit once but can pull it again. You never know whats going to happen. Your loan officer may have screw up and may need to reapp your loan or just rerun your credit. So NO! NO! NO! Don't buy that new car or open any new accounts till the loan FUNDS not when you sign but when it FUNDS!!!
Message Edited by OneMortgageGuy on
09-08-2007 11:48 PM
