Mortgages are getting easier to qualify for in 2017

On top of the recent improvement to accuracy that credit reporting agencies are making this year, FANNIE MAE and FREDDIE MAC have increase their back end pre-tax debt ratio from 45% to 50% this month. That means buyers will be able to afford more house and possibly avoid having to go FHA which can save them money.

While FHA is a great option for borrowers with lower credit scores (as low as 520), it comes with some expensive tradeoffs such as an upfront premium that gets added into your loan as well as a monthly insurance premium that cannot be canceled even when your loan goes below 80% of the value of your home!

With conventional loans from FANNIE and FREDDIE, you can still get low down payment options without the upfront fee and the mortgage insurance can be cancelled once you get below 79% LTV.

FHA Loan Advantages

• Low down payment (3.5 percent minimum)
• Can go as low as 520 credit score
• FHA loans are assumable (with qualifying)
• FHA loans are eligible for ”streamline” refinances which require no appraisal or income
• Shorter timeframe following major credit problems (3 years vs. 7 years for foreclosure and 2 years vs. 4 years for bankruptcy)
• FHA loans typically have a lower base interest rate than a comparable conventional loan
• Non-occupant co-borrower (relative) may be used for qualifying by blending ratios

Conventional Loan Advantages

• Low down payment options available as low as 3%
• Mortgage insurance required for loans exceeding 80% loan-to-value but can be removed at 78 percent loan-to-value
• Conventional mortgage insurance is credit sensitive (For FHA, one premium fits all)
• Conventional loans can cover much higher loan amounts (FHA has limits based on county location)
• Even though conventional loans may have higher interest rates, their monthly payments may still be lower
• Over the life of the loan the cost of the mortgage insurance can offset any savings from the slightly lower interest rates of an FHA loan

There are advantages to both loans but it’s important to remember that (especially while rates are still low), conventional will almost always be the better option when it comes to saving you money in the long term. Now if FHA is your only option due to credit or job history issues, then by all means go that route. At the end of the day, it’s still a great option for home ownership and much better than wasting money on rent.

Details like this are why it’s important to work with a Realtor experienced in mortgage finance. Here at the 24hr Team at Coral Shores Realty we make sure our buyer get the financing that is right for them. Feel free to contact us any time.

Apartment rents continue to increase as demand remains strong

Did you know that the average rent for an apartment in Broward and Miami-Dade counties have been rising dramatically in the recent years?

Miami-Dade's average rent of $1,751, was up three percent from a year ago and 9 percent from May 2015.

Broward's average rent was $1,676, which is five percent higher than a year ago and a whopping fourteen percent from 2015!

In general, each year, rent increases at about one-to-three percent; high demand and lack of supply are bending the market in the landlord's favor.

Developers this year are expected to deliver more than 15,000 units, boosting the supply and giving renters some possible relief on costs, according to a report from the RealPage research firm in Richardson Texas.

However, another report shows that South Florida remains one of the worst areas of the country when it comes to building apartments due to local regulations and the lack of available land.

If you are tired of paying rent, recent changes to credit reports as well as loosening guidelines by lender, may make it easier to qualify for a mortgage.

Also, while rates have gone up slightly, they are still at 50 year lows, making it a smart time to buy.

Contact a local Realtor, like myself, to see if home ownership makes sense for you.

Starting now, new rule changes will cause some credit scores to go up!

New criteria will strip a majority of civil debts and tax lien information from credit reports. For those affected, scores could rise by up to 20 points and these changes already took effect July 1 so you may see improvement in as little as 30 days.

The new standards follow a report by the Consumer Financial Protection Bureau that found problems with credit reporting companies and recommended changes to help consumers.

If you’ve had issues with negative public record information, this may be a good time to talk with a mortgage professional and see if they can prequalify you. Take advantage of these low interest rate while they still last!