Good News! It appears that the mortgage markets are finally starting to behave somewhat in a normal manner with the introduction of new, aggressive and competitive product offerings. One of our mortgage banker contacts just updated us with a great new program for mortgages with bad credit. Take a look and see if you meet the criteria.
You may be qualified for a mortgage and not even know it.
These guidelines are for Purchase Money Mortgages with bad credit and since they are in lender lingo, I will explain what they mean:
OK, so here’s what all that Chinese means in English:
o Purchases (Min 530 score)- Pretty self explanatory but these are guidelines for a purchase money mortgages for people with bad credit and the minimum credit score required is a middle score of 530
o 12 months canceled checks or Management VOR- What they are requiring and looking for here is 12 months canceled checks proving on time payments for your existing rental or a Management VOR (Verification of Rental) which is simply a form filled out by the property management company managing the rental property you are in
o Must have 3 open and active tradelines for last 12 mths– What this means is that you must have 3 open and active trade lines that have been open, active and in good standing on your credit report for the last 12 months
o Payment shock limited to 1.5 times– What this means is that your new mortgage payment, plus taxes, insurance and HOA dues cannot exceed 150% of your existing rental payment, even if you can afford it and it is within the debt to income ratio guidelines. Lenders define any increase in your current payment as “payment shock” and they don’t want you too far outside of your comfort zone.
o 35/45 Max DTI–This refers to your DTI or debt to income ratio. 35/45 means that your new housing ratio (PITI, HOA, etc.) cannot exceed 35% of your gross monthly income. The 45% number means that all of your other debts reporting on your credit report combined with your new housing payment cannot exceed a total of 45% of your gross monthly income.
o No late’s or collection in last 12 months — this is self explanatory and certainly understandable
o NO late’s after BK– meaning no late payments after a bankruptcy filing. Lenders hate this as it generally means that someone didn’t learn their lesson regarding over extending themselves and defaulting on payments after being given a clean slate.
You must log in to post a comment.