From the Southside Landlord Compact:
Subject: SouthSide Landlord Compact Meeting
DATE: December 20th, 2007
TIME: 11:30 AM - 1:00 PM
PLACE: Old Country Buffet Restaurant
4902 S. 74th Street
Peter Kazaks, a member of the SouthSide Landlord Compact and board member of theApartment Association of Southeast Wisconsin, is a highly respected officer at KLM Mortgage Group who will share his knowledge on consumer credit and answer as many of our questions as time permits.
Showing posts with label Credit Score. Show all posts
Showing posts with label Credit Score. Show all posts
Monday, December 17, 2007
Wednesday, November 07, 2007
Fannie Mae Makes Some Changes!
In response to the rising delinquency rates and the losses they cause to lenders, Fannie Mae announced yesterday that there will be new pricing adjustments for borrowers with a 679 or lower credit score, and for loans where the total loan to value is over 90%.
What does this mean to borrowers? The current underwriting system allow borrowers who are overall very strong (good income, plenty of assets, good equity in the house) but who have less than perfect credit to obtain the best rates available. Under the new structure, credit scores will have a direct impact on rate, and only borrowers with a 680 or better middle credit score will qualify for the best rates.
For the last year I've been talking about how credit is becoming more and more important. Now Fannie Mae has put it in black and white and it will start impacting borrowers in January for mortgages closing starting March 1, 2008.
On top of the increased importance of credit scores, there are pricing changes in the works for transactions where there is subordinate financing, for example a second mortgage or home equity line of credit. For the last few years there have been great mortgage products available which allow borrowers to get the best possible rate on an 80% first mortgage regardless of whether or not there is a second mortgage behind it, even up to 95% total loan to value. While the guidelines are a bit too complex to summarize here, the gist of it is that for most borrowers, if the down payment is less than 10%, there may be a slight increase in rate for the first mortgage.
In spite of all the doom and gloom in the headlines lately it is still a good time to buy a home. It will still be after the new guidelines go into place, but credit and down payment are becoming more and more important.
As always, feel free to call or e-mail with questions--or even leave a comment here on my blog!
What does this mean to borrowers? The current underwriting system allow borrowers who are overall very strong (good income, plenty of assets, good equity in the house) but who have less than perfect credit to obtain the best rates available. Under the new structure, credit scores will have a direct impact on rate, and only borrowers with a 680 or better middle credit score will qualify for the best rates.
For the last year I've been talking about how credit is becoming more and more important. Now Fannie Mae has put it in black and white and it will start impacting borrowers in January for mortgages closing starting March 1, 2008.
On top of the increased importance of credit scores, there are pricing changes in the works for transactions where there is subordinate financing, for example a second mortgage or home equity line of credit. For the last few years there have been great mortgage products available which allow borrowers to get the best possible rate on an 80% first mortgage regardless of whether or not there is a second mortgage behind it, even up to 95% total loan to value. While the guidelines are a bit too complex to summarize here, the gist of it is that for most borrowers, if the down payment is less than 10%, there may be a slight increase in rate for the first mortgage.
In spite of all the doom and gloom in the headlines lately it is still a good time to buy a home. It will still be after the new guidelines go into place, but credit and down payment are becoming more and more important.
As always, feel free to call or e-mail with questions--or even leave a comment here on my blog!
Monday, March 05, 2007
Credit Scoring in Layman's Terms
The first thing I do when I meet with a new client is go through their credit report line by line. Here is the basics you need to know to make sure you have good credit!
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
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