Home Loans In The Now
As far as home loans go, Ellie Mae is in the know.
The tech company makes available automation software to a big portion of the mortgage finance industry. Ellie Mae gets the complete picture of residential sales and financing as it deals with more than a third of all U.S. home loans. From its vantage point, it gets an immediate picture of the reality.
Recently Ellie put out a news release that included some thought-provoking facts that may interest home owners or future home buyers. They are well-timed pointers about the trends of U.S. home loans. Also provided are details about what is necessary when applying and what amount of money will be needed. If you are applying soon, consider what follows. Here are some of the latest facts about this year’s late summer and early fall activity.
Home Loan Changes
- Refinancing loans are down from 38% to 29%.
- September’s 30 year interest rate decreased just a bit to 4.91%.
- The average FICO score increased to 727.
- ARMs or adjustables rose as a percentage of loans given, at 7.2% of the market. This is up about half a percentage point from August which is no surprise since home prices have increased.
- The time it takes to close stayed the same at 45 days.
It is true a home must sell two times: first to the buyer, and then to the lender. If you are looking to buy or sell soon, being knowledgeable about trends in residential finances will make the process go smoother. We keep apprised of all the latest information and trends. Call today for a no cost, no obligation consultation.
Answering a Common Question: Mortgage Refi FICO Scores
Satisfying Coral Springs Mortgage Refi Candidates’ Curiosity
If you use a credit card or Coral Springs bank checking account’s online system, you may have noticed the appearance of a free service: FICO score tracking.
You find it as a clickable area with a link title like “Your FICO® score” or just “FICO®.”
For many years, each of the major credit reporting agencies were mandated by law to honor any consumer’s request for a copy of their credit scores. But that was a once-a-year deal. For access to regular updates, you had to pay for a subscription. Particularly for consumers working to improve their credit scores, the paid services became a prudent monthly expense. The arrival of anytime free FICO score reporting eliminated much of that need.
Of course, tracking your FICO score is only useful if you know how the lending institutions will view it—and the answer to that is anything but clear-cut. Not only does each lender have their own confidential requirements, but since there are three separate reporting agencies, Coral Springs consumers have three FICO scores (and they’re rarely the same).
Even so, let’s face it: the single piece of information most everybody wants to know is what FICO score is needed to buy a home? or to refinance a home? Even if the answer is imprecise, it’s human nature.
To quell that curiosity, at least one source is willing to report what amounts to an average of approximations: it’s called EllieMae®. Ellie is a company that serves banks, credit unions, and mortgage companies by providing a raft of automated tools—but those are for industry insiders. As a sideline, they also put out a monthly Origination Insight Report with statistics drawn from the home loans processed through their systems. Including some that most future Coral Springs home loan applicants will be interested to learn:
Average FICO score for conventional mortgage refis closed last month: 732
Average score for conventional purchases: 752
Average for FHA purchases: 681
Average FICO score — all loans: 724.
Average time needed to close: 43 days.
The percentage of mortgage refis grew to 39% of all loans. Most likely because interest rates decreased “for the sixth straight month” to 4.2%. EllieMae reckons that constitutes “a new 2017 low”—something Coral Springs refi and home loan applicants will be interested to know!
Those bargain basement interest rates continue to create a terrific opportunity for Coral Springs real estate. Call The Miranda Team for a no-obligation discussion about how you might take advantage of the current real estate environment!
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Mortgage Application Success: The Single Underlying Factor
A Single Underlying Factor When Applying for a Mortgage
Every mortgage lender develops their own unique guidelines for evaluating the factors contained in a home loan application.
These may change from time to time so that their portfolios stay “balanced”—that is, so that the cumulative risk represented by the entire batch of home loans do not exceed the level of risk they wish to assume.
Potential Coral Springs mortgage applicants are bound to be curious about which factors are most influential for that decision.
Their curiosity is why you can find hundreds of “Top 5” and “Top 7” lists of “mortgage application factors”—and why home loan originators pay top dollar to advertise on them.
Given that the factors mortgage companies examine are hardly secret, it’s not surprising that all of the lists are pretty similar. It’s also true that the individual factors all have something to do with a single underlying element. (I’d call it the “hidden factor” if it weren’t right out there in the open). Here’s a typical list seen as it relates to that single underlying factor:
- Down payment (underlying factor: size of loan). If, say, $50,000 will be available for the down payment, a $200,000 home loan would be easier to grant than one for $600,000. Many mortgage firms have relaxed their requirements—but inevitably look harder as a down payment percentage declines.
- Debt level; aka Debt-to-Income ratio (underlying factor: size of loan). Lenders analyze an applicant’s monthly cash flow to determine how much will be available to pay the monthly mortgage payment. The size of the loan—thus amount of the payment—determines if that’s easily doable.
- Loan type (underlying factor: size of loan). Conventional loans carry stricter qualifying factors than do other types. For instance, if the size of the loan is beyond the conforming loan limitation, jumbo loan requirements pitch in.
- Employment history (underlying factor: size of loan). Starter homes requiring smaller loans are often right-sized for younger borrowers with shorter employment records.
- Credit Score. Typical descriptions say things like, “Borrowers who need to finance more will need a higher credit score of 700 or above…” In other words (you guessed it), underlying factor: size of loan.
Success when applying for a mortgage loan does involve all of these factors and more but that’s just another way recognizing the common sense notion that home loans are granted to those who can demonstrate the ability to repay. The last time that notion was abandoned, the global financial crisis ensued.
The corollary for house hunters is equally clear: determine your comfortable budgetary range first–then go out and find your new home. The mortgage lenders will fall into line—and The Miranda Team be delighted to help!
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