While I am not sure I would go so far as to compare being a mortgage broker to a Chinese menu, I would say they each possess some of the same properties. Being a mortgage broker with an affiliation with several different monetary sources does give us some interesting options that we can suggest to our customers.
We can't offer the Won-Ton Soup with the Sweet Sour Shrimp, but we can offer a 90% conventional mortgage with a no escrow option should the customer be escrow adverse. Likewise if the client hates, hates, the idea of mortgage insurance our conventional loans do come in the lender paid mortgage insurance variety.
In fact we have some very unusual possibilities on our little mortgage menu. How many people were forced into short sales over the past few years? Quite a few. The bad thing about a short sale is that most lenders view it as in the same category as a foreclosure. The good news about a short sale is that if the home owner has continued to pay their mortgage in a timely manner a short sale shouldn't have a huge effect on the credit scores. While most lending won't allow someone who has had a short sale to obtain mortgage financing for three years and then only a government loan. However, one of our conventional lenders will allow a short sale borrower with on time mortgage payments the year prior to the short sale to obtain conventional financing after two years with a 20% down payment. One of our USDA lenders allows two years seasoning on a short sale as well. So there are some exceptions. Of course credit must be in order and there can be no deficiency judgments.
In our community we all know that several of the largest employers use temporary agencies to provide employees. In fact that is the normal method of obtaining regular employment with those organizations. The typical lending rule is that a borrower has to be on he job for two years with a temp service. One of our lenders requires one year. How many potential home buyers would benefit from that? Quite a few I would venture to guess.
What about a Chapter 13 bankruptcy discharge? Find a lender if you can that doesn't require two years from a chapter 13 discharge as a requirement for a new mortgage. I am not at all sure why that is...chapter 13 folks have just spent the past three or five years paying off their debts. The two year discharge rule is a chapter 7 rule. FHA allows mortgages once a 13 has been discharged. Maybe it is easier just to count all bankruptcies as the same-in any event, one of our lenders will work with chapter 13 discharges once the discharge is final as long as we can get an automated underwriting approval. Typically this means maintenance of credit -but chapter 13 folks normally come through with much better credit than a client with a chapter 7.
While the FHA loan is still a viable choice for many people, the high mortgage insurance has made it much less appealing the past couple of years. I am pleased to tell you there are conventional options. We have an investor that allows a gift of 5% down from relatives of the borrower down to a 640 credit score. That's something we can get behind. How many people out there would love to take advantage of that rather than MI for life with FHA? Celebrate opening that one!
We also have conventional financing available down to a 620 credit score. Count on a higher interest rate-but there it is-conventional back to pre 2008 levels.
Here's some more good news for potential home buyers! Rates are still low, and, while housing prices are appreciating, they are not appreciating as fast as rents are going up. Since I have two children who are renters, the weeping and wailing in my ears is loud and getting louder. Neither are quite established enough to become home owners yet, but I am sure they will be looking at that possibility as soon as they can. Like my two, more and more first time home buyers are going to figure out that buying is now a better choice than renting. More and more sellers are going to figure out that they are no longer upside down in their homes and get them on the market. All the indicators are there for the real estate industry to come roaring back. And we have the choices that a lot of those new buyers are looking for.
Employment is increasing every month. Pretty soon even the world's most interesting man will have to move out of his mom's basement!
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