Texas Home Loan Blog: November 2009

Non Purchasing Spouse with Texas FHA Loans

The non purchasing spouse is a married person NOT on the mortgage loan. But there is special treatment of the non purchasing spouse with respect to FHA Mortgage Loans in Community Property States like The Great State of Texas.

A non purchasing spouse situation arrises when for whatever reason one spouse is left off of a mortgage loan. Typical reasons are that one spouse has bad credit and the other spouse can buy the home solely on their income and credit.

In Texas, as all community property states, the non purchasing spouse will have their credit pulled. Debt payments not showing on the Purchasing Spouse's credit will be added to the loan application and as a result affect the debt ratios on the loan. This is to assure that there aren't any 'Household Debt' that would affect the ability to repay the loan. <= Which simply means, that the non purchasing spouse cannot hide the $700/month lease payment on their Lexus from FHA.

Borrowers in this situation should work with a lender who understands the guidelines and can offer a Conforming option to their borrowers.

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

FHA Streamline Refinance Changes

We have seen tightening of all loan guidelines.... And the same is true for the FHA Streamline Refinance Loan.

Key Revisions:

* Seasoning: At time of application the borrower must have made at least 6 payments.

* Payment History: For mortgages with less then 12 months payment history, all payments must be paid on time. For mortgages with more than 12 months history, no more than one 30-day late is allowed.... and the previous three months must have been made on time as well.

* Net Tangible Benefit: The lender must determine that there is a benefit to the borrower making the loan. A reduction in PITI(payment) or refincing from an ARM to a fixed rate or reducing the term of the loan. See your preferred lender for the fine print.

* Certifications & Verifications: Employment must now be verified. And any cash to close funds must be verified.

* Credit Score: Most lenders require 620 FICO score.

* Maximum Combined Loan-to-Value: If subordinate financing(2nd lien) is to remain in place then the maximum CLTV = 125%

With or without an appraisal, this is still a very good loan for those who purchased back when rates were a little over 6% and would like to lock in at these historically low rates today!!

The biggest benefits to the loan is that lenders do not care about new debt taken out since the mortgage was originally taken. And borrowers who have seen a decline in income are not affected.

Talk to your preferred lender today and see if an FHA Streamline Refinance is right for you!!

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Mortgage Loan Guideline Changes

Capital Market adjustments to guidelines:

Conforming Fannie Mae & Freddie Mac Debt Ratios:

Effective on loans funding after December 12, 2009 the maximum debt ratios are as follows. References to DU 8.0 are due to the pending update to Desktop Underwriter(automated underwriting).

* DTI > 45% must be approved thru DU Version 8.0
* Fannie Mae indicated that debt ratios exceeding 45% require compensating factors. Fannie does not publish a list of compensating factors and it is unknown whether DU 8.0 will approve above 45%

FHA, VA, USDA & Bond Program Loans:

Effective with loans funding on or after December 12, 2009 the maximum debt ratios are as follows.

* Maximum DTI 50% regardless of AUS(automated underwriting) Findings.
* DTI 45% - 50% at the sole discretion of the underwriter who will require measurable compensating factors, including, but not limited to 12 months verified housing history with no late payments. Limited payment shock. Cash reserves. Possible increased down payment.

Minimum FICO on ALL LOANS will be 620..... Gov't or Conforming.
Get ready for 640+ credit score requirements as I believe the tightening will continue.

Borrowers need to prepare themselves to provide more documentation than ever before. Realtors... prepare your clients!!

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Good Credit

I recently denied client for a loan.... She thought she had good credit. And on the face of it she did.... Zero derogatory accounts, perfect payment history. And that would have been enough if she had a few more accounts with some age on them.

But why did she get denied? Every credit card was maxed out!!! That's right... right up to the limit. If she had a $1000 limit on a card, it was sitting there with a $980 balance. THIS is Bad Credit!!!

Huh, you say? Well, a great % of your credit score is how you use your revolving credit lines. And the maxed out cards had the FICO Scores depressed by at least 60 or 80 points. With her short credit history this was too much to overcome.

Think you've got good credit? Are your credit cards maxed out? Then you have BAD CREDIT!!!

Edie Webber with Clean Slate Credit Repair explains balances in proportion to credit limits.

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Found a little video that describes the Homebuyer Tax Credit very well.

RE/MAX Chief Executive Officer, Margaret Kelly, talks about the government's extension/expansion of the first-time homebuyer tax credit. Certain existing homeowners can now qualify for the credit and homebuyers have until April 30, 2010 to put a contract on a house. Find out more on www.remax.com and www.facebook.com/remax.

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Texas Mortgage Rates, Dallas TX Lender

What a year. We have seen rates as high as in the mid 6%'s and as low as the low 4% range on 15yr loans.

We are staring at the lows right now.... A great time to refinance to a low fixed rate that you will never have to refinance out of.... It is that low!!

Remember.... Refinancing has costs..... Either out of pocket or rolled into the loan. It doesn't always make sense to refinance your loan. If you think there is a good chance of moving for your job, you might be better off in your current loan.

Contact me today to determine whether your Mortgage Loan is performing for you the best that it possibly can!!

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Please share this article on your facebook wall!!

New homebuyer tax credit

A new tax credit for homebuyers has been enacted and there are some changes. Income limits have been increased and it is no longer restricted to First Time Homebuyers.

I have included a chart below from the National Association of Realtors. This is the best illustration I have seen so far and will help answer many questions. I have heard positive feedback from those that have called the IRS from the phone numbers found on their website, irs.gov. Hold times are short and you can easily get to a human being!!

The effective date of this new credit is November 6, 2009 as that is the day this was signed into law!!

I hope this is helpful for those with questions.

As you can see, the income limits were increased to include more participants in the program as well as the inclusion of buyers who have previously owned a home.

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Please share this article on your facebook wall!!

And re-blog if you are an activerain member!!

When Credit Card Companies Lower Your Credit Limit

Has this happened to you? It may have happened and you didn't know it because it was tucked into the fine print of your recent bill. But if you aren't using the full limit..... Does this action by the credit card company help you or hurt you!?!?!?!?

It will hurt!! Plain and simple.

There is a term used by the experts in credit scoring.... And that word is Utilization. We are referring to how much of your revolving credit lines that you are currently using. And this is about 30% of your FICO Score.
So how can this hurt? Let's start with an example:

Joe owes $750 on his Visa card. The limit is $2500. Joe is currently using 30%(750/2500) of his credit limit. Experts agree that you should strive to keep that utilization % below 30% and the lower the better. Why? Because once you start approaching the higher percentages.... The FICO Scoring Method sees you as a great risk. Think about it.... Someone with 30% utilization vs someone with all of their credit cards maxed out.... Who is the better risk? Well, FICO knows.... and the person with the high utilization will have a much lower FICO Score as a result.

Ok.... So Joe is being responsible. His hot water heater breaks and he put that purchase on the card to the tune of 30% utilization. But then the credit card company lowers Joe's limit to $1000 to reduce their exposure to risk. Overnight, Joe went from a responsible 30% to utilizing 75%(750/1000) of his credit limit. Ooooops!!! Now what? Well, it is quite possible that Joe's respectable 720 credit score falls into the high 600s. Let's say 660 or so. What is the impact? Go try and buy a car with a 660 FICO and  720 FICO and see what interest rate difference you get. Try to buy a home on a conventional mortgage with a sub 680 FICO Score and see the if you are eligible for PMI.

But, Tom, I pay off the balance in FULL each month? So this doesn't affect me!!
Not so fast.... If you put $800 travel expenses on that $1000 limit credit card and that gets reported to the credit bureaus on the 4th of the month..... Yet you pay your bill on the 5th.... What number will FICO use? That's right, they will assume 80% utilization and dock you many points for it right then and there.

So, how can you protect yourself?
Keep more than one credit card.
Spread out large expenditures over a few cards.
Open a store card for that one time purchase(hot water heater example)
Know when your credit cards report your balance and pay history to Experian, Equifax & Transunion so you can pay off/down those cards before you apply for that big purchase like a car or new home.

Note: FICO says that it adds up all of your limits and all of your balances to calculate FICO. However, I have seen people suffer greatly by maxing out one card when they had 3 other cards with zero balance. Don't ask me why... This has been experienced by me more than once.

This credit scoring tip has saved many of my clients thousands of dollars... And it could save YOU many thousands too!!!

Did you know: That if a credit card company raises your interest rate that you have a right to cancel the card and pay it off under the old terms**?

** Remember: If you close that account, it lowers your total revolving credit available balance and could raise your 'utilization' which we discussed.

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

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Some neat home 'staging' tips on the attached video!!