Vince Kingston

Everything in Real Estate is based on dead lines, and just like Real Estate, all homebuyer benefits have their own finite time line as well.  Today’s blog is a quick reminder of three important timelines you’ll want to be aware of if you are currently in the housing market. 

FHA Up Front Mortgage Insurance to Increase April 5-FHA is now responsible for over 30% of the loans done in this country.  This is a dramatic increase as FHA offers a number of compelling benefits (particularly for First Time Homebuyers) that Conforming financing cannot (lowest down payment available, allowing co-signers and gifts to help qualifying, much more lenient on credit scores, etc.).  The down side to all these benefits is that on all FHA loans, there is an up front premium charged to cover the FHA insurance pool.  This is in addition to the monthly mortgage insurance.  Currently the premium is 1.75%.  With all case numbers assigned on or after April 5^th, this premium will increase to 2.25%.  This premium can be financed 100% into the loan amount without affecting down payment requirements, so the net effect of this increase is that borrowers will end up with a loan amount that is .5% higher than they currently would.

First Time Homebuyer Credit to expire April 30-you must be in contract no later than April 30^th 2010 to qualify for the $8000 first time homebuyer credit (or the $6500 credit in the case of non-first time homebuyers who have owned for at least five years and are buying a new primary residence).  However the transaction does not need to close until the end of June. 

The Fed’s Mortgage Security Repurchase program set to expire March 31-The not so dirty little secret is that the Fed has spend almost $1.2 TRILLION dollars over the last 14 months to artificially drive down mortgage interest rates.  The current historically low interest rates are the direct result of the Fed’s benevolent action (with our collective national future income as its collateral!).  This program will expire March 31^st and many market experts agree that rates will begin to rise once the program is eliminated.

I am always available for your questions.  You can contact me at 971-221-8525 or vince@vincekingston.com    

Typically regardless of whether a borrower is looking at FHA financing or Conforming financing, they will be required to pay mortgage insurance (MI) if the down payment is less than 20% (with FHA financing, this will be the case with even more than 20% down).  The amount of monthly mortgage insurance payments varies between FHA and Conforming and can also be determined by loan to value.  For example, on FHA the monthly MI is .55% of the loan amount divided by 12 (.5% if the loan to value is 95% or less).  With Conforming financing, the monthly MI for 95% loan to value can be up to 1% of the loan amount/12 months (.68% and .38% for 90% and 85% loan to values respectively).

However there is a mortgage insurance option that can be very compelling for those with higher credit scores that can substantially reduce or in some cases virtually eliminate monthly mortgage insurance payments even when there is less than a 20% down payment.  It’s called Spit Edge premium mortgage insurance and is only offered by a few lenders nationally.  It allows the borrower (or seller via seller paid closing costs) to pay an additional fee up front to reduce or eliminate the mortgage insurance.  This can make good financial sense, particularly if you are in a slowly appreciating market and/or your seller agrees to cover this cost with seller concessions. 

For example, Conforming financing requires a minimum down payment of only 5% as long as you have a 740 credit score or better.  However with only a 5% down payment, your monthly mortgage insurance on a $300K loan amount can be as high as $250/month.  Using Split Edge, you could pay 1.25% of the loan amount upfront ($3750) to reduce your monthly mortgage insurance to only $82/month; saving you over $167/month in MI payments.  If you take your upfront cost of $3750 divided by your monthly savings of $167, you have a pay back period of just over 22 months.  This means that if you envision yourself staying in the home for at least 23 months, this could be a very wise financial decision, particularly if you can negotiate for your seller to pay this $3750 upfront on your behalf! 

With a 15% down payment and 1.25% additional upfront, you can virtually eliminate any mortgage insurance payments, although because a homeowner is able to petition to remove mortgage insurance once the loan to value equals 80% or less, the payback period would need to be considered carefully along with the anticipated time period for reaching the 80% loan to value mark to determine if it makes financing sense. 

I am always available for your questions and I’m happy to help you analyze your options to determine your best financial alternatives.  You can contact me directly at 971-221-8525 or vince@vincekingston.com 

Anyone purchasing or refinancing a home as of January 1^st 2010 will be subjected to a much different good faith estimate experience.  In a classic bureaucratic attempt to regulate an industry they have no personal experience with, the new good faith is a breathtaking mess, being more opaque, inaccurate, and inscrutable to the average borrower than the prior standard good faith estimate.  For example, the new form is a three page maze of boxes, sub-categories, exceptions, and “adjustments” that only a bureaucrat could love.  The old GFE was a one page form.  In addition, the new GFE requires that fees that will not even be paid by the borrower still be listed as borrower settlement costs.  So, you mean to say that even though a fee is not charged to a borrower, it still must be shown as a fee on the new GFE?  Yep, that’s exactly what the new GFE does (a good example is the title insurance charge on a purchase…in the state of Oregon the seller pays for 2/3rds of this policy on behalf of the borrower, yet the new GFE insists that the full cost of this be shown as the borrowers fees, even though they patently are not borrower fees).  You can find a copy of the new GFE at http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf and a list of FAQs at www.hud.gov/respa.

To be fair, the new good faith does finally account for the “yield spread premium” or “after market rebate” that some lenders are paid, and this rebate is applied toward the borrowers closing costs.  However, again for no apparent reason other than to obfuscate and confuse consumers, this after market rebate is only required to be applied by mortgage brokers.  Banks will not be required to display this rebate nor apply it to your closing costs.  I view this as a stunning success for Mortgage Brokers as now it will be that much clearer that Mortgage Brokers generally can choose to offer superior rates and lower fees than most retail banks (not to mention professional counsel and service retail bank loan officers many times are unable to offer).  I have been trying to educate consumers for years that, contrary to myth, a retail bank that must support the overhead of the entire retail operations cannot typically provide the same rate and or fees as a Mortgage Broker who has only their individual overhead to maintain.  Now that will be readily apparent.  This new twist will show up on line A at the bottom of the first page of the good faith estimate under “Your adjusted origination charges”.  This is where the rubber meats the road for borrowers and is calculated on the 2^nd page.  On line 1 on the 2^nd page, you will see the gross origination charge.  Bear in mind this gross charge includes all processing, administrative, overhead, underwriting, and loan officer compensation.  If you are working with a Bank, 100% of these charges will accrue to the borrower.  If you are working with a Mortgage Broker, most likely you will see a significant credit listed in box 2 on the 2^nd page that will offset these borrower charges.  That is why borrowers comparing a Bank vs. Mortgage Broker (on the same day, remember rates can change daily) will most likely find that the Mortgage Broker provides the same rate or better than the bank while offering significantly less “adjusted closing costs”.      

Borrowers most likely will not receive a formal good faith if the following six pieces of information are not provided: Full legal name, monthly income, social security number, subject property address, estimate of value of property, loan amount, and “any other information deemed necessary by the lender”.  The reason being is that the lender is bound to that good faith once it is issued.  It is unreasonable to expect a lender to be bound by a good faith based on assumptions regarding the borrower’s ability to qualify.  Therefore you will most likely receive a informal “estimate” of settlement fees and interest rate if these six pieces of information are not provided.  What this means is that if you shop on line for a mortgage and are provided a good faith without supplying all of the above information (including your social security number) then you are either receiving something that is not based on your relevant situation or the loan officer is desperately hoping that your presumed situation is accurate (and thereby demonstrating their industry inexperience).  In either case, the information cannot be relied upon if the six pieces of information are not provided.  This may prove to be an obstacle to online lending which had already generated a reputation as less than reliable. 

Bottom line, a borrower’s best friend is still a trusted loan officer that will take the time to go behind the forms and numbers and clarify their meaning and patiently answer all of your questions.  I am always available for your questions.  You can contact me anytime at vince@vincekingston.com or 971-221-8525.

 Many of you may already know that homeownership provides the largest single tax deduction most will ever qualify for.  100% of your mortgage interest payments are tax deductible in addition to your property tax and mortgage insurance payments (note the deduction for mortgage insurance is phased out for taxpayers with adjusted gross incomes of over $100,000).  For example on a $300K home purchase with 3.5% down payment using a 5.25% interest rate, you would have an annual tax deduction of over $19,000.  This means you would have an itemized deduction on your tax return of $19,000.  However when you itemize you forgo your standard deduction which is $5450 for 2008.  This still leaves you a net tax deduction of $13,550.  If you are in the 25% marginal tax bracket, that means you can reasonably expect to save approximately $3300/year in income that your are currently losing in taxes.  This translates into tax savings of $280/month meaning it will offset approximately 15% of your new mortgage payment.  Thanks Uncle Sam! 

What many people are not aware of is that as a W2 employee you can take advantage of these tax savings immediately and realize them on a monthly basis instead of waiting for your refund check at the end of the year (which essentially means loaning Uncle Sam your money interest free for a year).  After breaking down your annual tax savings into monthly increments as we did in the above example, you can simply claim more exemptions on your W9 up to the point where you are receiving that amount of additional income every month.  This way you achieve your tax savings immediately month to month (helping to offset that new mortgage payment).  Remember I am not a tax professional and this is not intended to be tax advice; I encourage you to discuss this strategy with your tax professional first.

I am always available for your questions.  You can contact me anytime at 971-221-8525 or vince@vincekingston.com    

President Barack Obama is expected to sign a measure today to continue to provide tax credits to homebuyers as well as expand the credit to those who have owned a home for at least five years.

The measure will allow repeat homebuyers who have been in their current home for five years up to $6,500 in tax credits and extend the $8,000 first-time homebuyer tax credit that was about to expire in November.  First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. 

Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30. Note that the Fed has indicated its mortgage backed securities (MBS) repurchase program responsible for the current low mortgage rates will expire at the end of March 2010.  The Fed will gradually slow the pace of the MBS purchases to avoid any wild swings in rates.  What this means is that potential homebuyers should expect rates to gradually increase during the first quarter of 2010.  With this in mind it may prove more effective to time your purchase for late 2009 or very early 2010 to secure a mortgage rate comparable to today's low rates.   

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes and rental properties are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

I am always available for your questions.  You can contact me at vince@vincekingston.com or 971-221-8525 direct.

Co-signers can be an effective way to qualify for a home mortgage when a borrower otherwise would not qualify on their own.  This can be a great option for First Time Homebuyers.  There could several situations where a co-signer could provide that extra qualifying momentum to help you purchase your home.  For example, FHA and Conforming both require that the self-employed document their income with two full years of tax returns.  If your business has been in existence for less than two years, then no matter how much current income it is producing, it will still not be allowed as qualifying income.  A co-signer could be a perfect option here. 

First some important basics about co-signers:  FHA allows non-occupant co-signers (meaning it allows borrowers to be on the application that will not reside in the home).  ***In order to qualify for the minimum 3.5% down payment on FHA, co-signers must be related to the primary borrower (s) by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of a family-type, longstanding, and substantial relationship.***  Clearly what constitutes a “long standing family type relationship” is somewhat of a grey area so this is where the guidance of your Mortgage Adviser can be important.  If you are attempting to purchase a 2-4 unit property using a co-signer and FHA financing, then the loan to value will be capped at 75% (25% down payment required).  But never fear, as long as the co-signer meats the criteria above, then for single family homes you are only required to make a 3.5% down payment. 

Conforming financing does not effectively allow for non-occupant co-signers.  The Conforming guidelines technically will not disallow this but they insist that the occupying borrower qualify with their income alone which renders a co-signer useless. 

A co-signer can help contribute qualifying income.  A co-signer cannot help you over come a very low credit score (below 620) because lenders use the lowest score on the application as the qualifying score (If you have damaged credit, read my “24 hours to better credit” blog and contact me for guidance).  Remember that lenders will use the lowest credit score on the application so if your co-signer has poor credit (below 620), then they cannot help you qualify.  The co-signer can also contribute down payment assets although if you did not need the co-signers income to help qualify, you could just have them gift these funds to you instead of joining you on the application.  It’s important to know that being a co-signer means they are 100% liable for the repayment of the loan and the documentation requirements are the same for the co-signer as the primary borrower (paystubs, W2s, tax returns, etc.).  The liability will show up on their credit report and could affect the co-signers ability to qualify for loans in the future.  However many lenders will exonerate the co-signer from the mortgage liability if it can be demonstrated that the primary borrower has been paying on time for at least 12 months.  

Employing a co-signer can be an excellent way to qualify for a mortgage, especially for First Time Homebuyers and the newly self-employed.  I am always available for your questions regarding using a co-signer and mortgage financing in general.  You can contact me anytime at vince@vincekingston.com or 971-221-8525.     

Below are some of the best guerilla tactics for improving your credit score quickly.  Remember Conforming financing requires a 740 fico or better to secure the best interest rate, FHA is less demanding, only requiring a 620 credit score to receive the same low FHA rate.  Note that while all of these strategies can be implemented immediately, it can take 30-60 days to reflect on your credit report, depending on how often your creditors report to the credit bureaus (hint: you can call your creditors and ask them when they report so you know when updates will reflect on your scores). 

1. Order your credit reports and credit score online.  You need to know your scores before you can improve them and many credit reports have factual errors that can be corrected.  Since you have three credit scores, and for mortgage purposes you are qualified off of your mid credit score, you will want to know all three of your scores from Transunion, Experian, and Equifax.  The most economical (free) way I have found to get all three of your credit scores is to go to www.transunion.com and sign up for the “3 bureau credit monitoring” 30 day trial.  Just make sure to cancel prior to the 30 days expiring and you will receive all three scores for free!
2. Call your credit card companies and request an increase in your credit line.  Increasing your credit limit will improve your utilization rate, other wise known as debt-to-available-credit-ratio.  This can improve your score by over 50 points.  ***Caution DO NOT allow them to pull your credit in order to increase your line, tell them upfront “I would like to request an automatic increase in my credit line, please DO NOT pull my credit to do this”.  Pulling your credit will work against you as an inquiry on your report will temporarily lower your score.  Only allow them to do so if they insist that it is a “Soft” inquiry, which will not hurt your score.****
3. Work to redistribute your debt amongst all your credit cards so that all cards have the lowest possible outstanding debt-to-available-credit ratio.  A ratio of 30% or below is ideal although reducing them to at least 50% can improve your scores as well.
4. If you have the funds available, pay down your existing credit card balances until the ideal ratio is met (balances 30% or less of your available credit limit are ideal).
5. Borrow money to decrease your reported revolving debts from a lender that does not report to the credit bureaus such as friends, family, and the IRS.   Note paying down installment loans typically will not materially improve your score unless they are fully paid off; use your funds to pay down revolving debt (credit card) first.
6. If you have recently paid down or paid off debts and they are not reflected accurately on your credit report, fax supporting documents directly to the credit bureaus.  Providing them with the proof of payoff is more expedient than initiating a dispute to have the record cleared.  (DO NOT pay off old collections and negative accounts that have not been reported within the last two years.  It is better to let them remain dormant)
7. Dispute online with each credit bureau the trade lines, collections, or information you want cleared from your report or believe to be inaccurate.  Even if your dispute is unsuccessful the first time, the negative items from your report can be suspended temporarily while the dispute is investigated, thereby increasing your score.  Disputing online is exponentially more effective then snail mail.  You can dispute items/trade lines on your credit report online once you are signed up for the 3 bureau credit monitoring through Transaunion.com or whenever you purchase your score from any of the three credit bureaus.  

Knowing and improving your score several months prior to applying for a mortgage can save you thousands in interest rate costs, not to mention that a better score in general will  help you secure lower credit card, consumer loan, and auto loan interest rates.  I am always available for your questions regarding your credit report and scores and how to improve them.  You can contact me anytime at vince@vincekingston.com or 971-221-8525 direct.   

Most Home Loan options require a down payment these days.  The two notable exceptions to this rule are Veterans Administration loans (VA) and USDA Rural loans.  Both of these mortgage types allow 100% financing.  However, even with 100% financing, all lenders will fully document your existing assets (particularly checking and savings accounts) and any funds required for closing costs.  And this is where it can get complicated for even the most straight forward of all borrowers.  Lenders like consistency, so if they see deposits into your checking account that don’t appear to be payroll deposits, they will condition to “source” these deposits.  If the deposits cannot be documented to be from an acceptable source, per FHA and Conforming guidelines, they cannot be considered as qualifying funds.  This means that in all but very rare cases, no cash deposits will be accepted.  Lenders do not like untraceable “mattress money”.  The only way to use “mattress money” is to either A. prove you have a consistent history of not having a checking or savings account or B. deposit the cash into your account 60 days prior to the earliest bank statement your lender will require.  Lenders will only request the last two months of bank statements; so if you deposit your untraceable funds into your account prior to the last two months of statements, the lender will see no transactional record of these deposits and everything will be wonderful.

Depending on the type of financing used, lenders will want to see that you have several months of mortgage payment “reserves” in addition to any down payment and closing costs.  The exception here is FHA when you are buying a single family residence; they require no reserves.  However Conforming and FHA 2, 3, and 4 unit will require at least two months of documented mortgage payments in reserves and sometimes up to 6 months in the case of FHA 4 unit or Conforming investment property purchases.  Again, bearing in mind the first paragraph, these reserve assets will need to be from an acceptable source and cash will rarely be considered acceptable.  That being said, reserve assets can be more than just funds sitting in your checking or savings account; they can come from your 401K, IRA, Roth IRA, cash value of a life insurance policy, stocks, bonds, mutual funds, and almost any type of retirement account.  

GIFT FUNDS!  This is how borrowers who otherwise don’t have the required down payment or reserves can still buy a home, using gift funds.  It’s important to understand that FHA and Conforming have different guidelines with respect to gift funds.  FHA allows gift funds under all circumstances as long as they are from a family source or “person of special interest” (Godmother, Godfather, etc.).  However, Conforming is a little more complicated.  In a confident nod to bureaucracy and esoteric guidelines, Conforming will disallow any gift that is less than 20% of the purchase price unless the borrower can document that they have at least 5% of their own funds into the transaction.  Isn’t that neat?  So basically if you are going for a Conforming loan and your donor has less than 20% to gift you, you will need to put at least 5% of your own funds down as down payment, or use FHA financing which has no such restrictions. 

In terms of sources of Gift funds, PLEASE don’t have your donor borrow the gift funds and then gift them to you.  Unless the donor borrows the funds from a home equity line of credit or another type of loan that is secured by marketable assets (401K, IRA, Annuity, etc). then borrowed gift funds will be disallowed even if the borrower themselves did not borrow them and is not required to pay the gift back.  Some may ask “how would a lender ever know if my Dad borrowed money and then gifted it to me?”  Ahh in years past this would be a valid question although nowadays, lenders will condition to fully document the source of all gift funds by requiring the donor to show proof that those funds are available to gift.  If their bank statement shows a recent deposit of say $5000, and your gift happens to be $5000, they will know what is up and complication will ensue. 

IMPORTANT REDEEMING MESSAGE:  All of these aforementioned guidelines need not be an obstacle.  There is always a way with proper timing and counsel.  I have had several transactions that have been complicated by these guidelines but I have never had a transaction fail due to these requirements (although sometimes some fancy footwork is required).  The take away message is talk to a loan professional you trust and share your asset situation with them months before your planned purchase.  This way the competent Mortgage Advisor can counsel you on any potential road blocks and how to avoid them to ensure a smooth process. 

I am always available for your questions regarding gift funds, reserve requirements, or esoteric guidelines of any sort.  You can contact me anytime at vince@vincekingston.com or 971-221-8525.         

One of the primary determinants of mortgage qualifying is the borrower’s ability to repay.  This is actually a paradigm shift from just a few years ago.  In times past, more weight was put on the collateral (the property itself and how much equity was available) as well as borrower assets.  This paradigm is what gave rise to the now infamous N.I.N.J.A loans (no income verified, no job verified, only assets) and Stated Income loans.  It was believed that as long as there was substantial equity in the property (down payment) and that the borrower had good credit scores and significant liquid assets, that this constituted as good a risk as a borrower who could actually demonstrate employment and income.  This belief has been painfully refuted for lenders over the last several years as Stated Income loans have one of the highest default and foreclosure rates.  This is why even with a significant down payment and $400,000 liquid in the bank, most lenders will still not extend mortgage financing to a borrower who cannot show employment and qualifying income.  The best option in the above situation would be for the wealthy (but no job/income) borrower to get a co-signer on their mortgage application who does have qualifying income and employment.

In terms of Employment, the traditional guideline calls for at least two year employment history same line of work.  In practice, there are dozens of exceptions to this rule and it is rarely if ever an obstacle to qualifying.  For example, I have worked with many, many borrowers who had extended job gaps (Peace Core, unemployed, backpacking around Europe, following Phish, etc.) who have had no problem qualifying as long as they have current employment and a good explanation letter for the job gaps.  In regards to the same line of work requirement, again in practice this is typically never an issue as in the majority of cases even seemingly very different jobs can be construed as more or less same line of work.  In addition, lenders will count schooling as work history.  This is why the recent college graduate with only one month on the job is still considered to have 4+ years work experience (if in fact they were in a 4 year degree program).  However where the two year rule does become more binding is when your current employment is Self-Employed and/or 1099.  Lenders hold the self-employed and contract employee to much stricter standards and in almost all cases will insist on a full two year history of self-employment (proven with most recent two years tax returns).

In terms of Income, as a W2 employee you are qualified off of your Gross monthly income (see pre-approval blog # One for how debt ratios work).  As long as you are a full time W2 employee, lenders will give you 100% of your Gross hourly or salary income (before taxes) as qualifying income.  Lenders will not use overtime and bonuses as qualifying income unless they have been received for two years.  If they have been received for two years, they will take a two year average and use that as qualifying income.  Part time W2 employees must have a two year history of part time work in order to use their income as qualifying income.  I put this in italics for emphasis because from experience I know this can be hard to accept however, it is a Fannie Mae/Freddie Mac/FHA guideline and in most cases lenders will stick to it strictly.

For Self-Employed and 1099 contract employees, it can be a little tougher to qualify as lenders will not use gross income as qualifying income, rather they will grant only the net income as qualifying income (after all business deductions).  This means that a self-employed individual who grosses $100k per year but after deductions shows net income of $40K will be qualified off of the $40K (broken down monthly), not the $100K.  The good news is that self-employed borrowers can always use a Co-Signer to help them gain additional qualifying income and ultimately qualify for the loan.    

In the old days (three years ago) there was a loan available for just about any credit score (and even those with no credit scores).  450 fico?  No problem.  Four consecutive bankruptcies in the last three years?  No problem.  Alas times they are a changing!  Now a prospective borrower must actually have a decent credit score to be considered for a mortgage.  First some credit score basics:  Credit scores can also be called FICO scores after the company who first developed credit scoring models.  There are three national credit bureaus (Transunion, Experian, and Equifax) so most borrowers will have three credit scores.  In the vast majority of cases, all three scores will be different and sometimes substantially so.  FICO scores can range from 350-850.  The average credit score is somewhere between 680 and 720 depending on the source.  You must have a credit history to actually have a credit score.  Contrary to popular myth, never using credit or never securing credit cards or loans will make it very hard indeed to qualify for a mortgage (without a co-signer).  Most lenders would like to see a minimum of three pieces of credit history that have been open and active for at least two years, however there are always exceptions to this rule.  (Hint: right now you can go to www.transunion.com and get all three of your credit scores for free, you just need to cancel the service prior to the 30 free trial period ending.  Having all three scores is the only way to know your qualifying FICO score (see below), www.annualcreditreport.com will give you your free credit reports but NOT your scores).            

For mortgage purposes, you are qualified off of your MID credit score.  This is not an average of the three; you will have a high score, a low score and the score in the middle is your qualifying mortgage score.  Bear in mind that all lenders will use the lowest middle score of all borrowers on the loan application as the qualifying credit score.  So if you have an 800 score but your partner has a 650, you will be qualified on the 650 score if you are both on the application.  (hint: take your partner off the application if their income is not needed to qualify, in some cases this can save you thousands in interest costs you would otherwise pay with the lower credit score). 

The minimum qualifying FICO score for all mortgage types is 620.  If your scores are currently below 620, I encourage you to contact me to develop a credit improvement action plan.  Most people can improve their scores markedly in 30-90 days and sometimes even much quicker than that.  FHA mortgages are generally not credit score based; the FHA borrowers with a 620 score will receive the same low interest rate as an FHA borrowers with an 800 score.  Conforming mortgages are very interest rate sensitive.  You must have a 740 credit score to receive the sexy interest rates you see quoted.  For lower credit scores the interest rate hits can be truly punishing.  (Example: on Conforming financing, an 800 fico will get you 5% today while a 660 fico will be closer to 6%!).  For this reason alone many borrowers without perfect credit will be better served with FHA financing although there are other variables that go into choosing which loan option is more appropriate for your situation.  

So to review, you (hopefully) have three credit scores, for mortgage purposes you are qualified off of the mid score of the three, you need your mid score to be at least 620 to qualify for any mortgage type, and if you wish to use Conforming financing your score must be 740 or above to receive the best interest rate.  I am always available for your questions on credit scores and how to improve them quickly.  You can contact me anytime at vince@vincekingston.com or 971-221-8525.  

Stay tuned for next weeks continuation on the four pinnacles of pre-approval:  Employment/Income