Options for Educators In Today’s Housing Market
Brought to you by
NMLS identifier 13909; HUD ID 18001100004. Midwest Mortgage Capital is an
independent mortgage lender and is not acting on behalf of HUD, the Federal
Housing Administration, or the Federal government. Illinois Residential Mortgage
licensee, Missouri Residential Mortgage Loan Broker License 10-1664. Equal
housing lender. This is not an offer to extend credit under Regulation Z. Interest
rates and MI premium estimates are for illustrative purposes only and are subject
to change without notice. We’re mortgage bankers, not realtors, tax preparers, nor
insurance agents, so please consult the appropriate experts for advice on your
particular situation. Additional terms and restrictions may apply. The potential for
default includes not only mortgage nonpayment default, but also for nonpayment
of real property taxes and insurance, failure to maintain the property,
or as a result of not meeting other required obligations.
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Mortgage banker est. 2001,
headquartered in St. Louis, Mo.
Loan types including Conventional, FHA
and VA
Sensible, In-House Underwriting
Things to know about
Private
Depository Bank
Mortgage Broker
Mortgage Banker
Things to know about
A computer-generated, 3-digit
number intended to predict a
person’s likelihood of and
willingness to repay a debt.
We like to think of it as your
Financial GPA!
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Loose Credit: 1998-2007
•
The Meltdown: 2007-??
Lenders are looking more closely at
borrower credit than ever before.
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Above 740 = Excellent
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720 = Very Good
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680 = Good
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620 = Fair
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Below 620 = Poor
It’s All About the Likelihood of Default
Assuming conventional loan for $360,000, 95% loan-to-value,
30 year fixed rate, SFR, primary residence, monthly borrower-paid MI*
Score
Note Rate
APR
Monthly P&I
Payment + MI
Tot. Interest - Total MI (to
Life of Loan 78% LTV)
760
4.875%
5.545%
$2,100.15
$325,853.85
$26,130
719
5.000%
5.821%
$2,148.56
$335,720.82
$29,376
699
5.125%
6.100%
$2,218.15
$345,655.12
$35,346
679
5.375%
6.822%
$2,366.90
$365,722.73
$49,491
659
5.625%
7.717%
$2,543.36
$386,050.70
$67,824
Bad credit costs you!
* Interest rates, APR, MI rates, and program availability subject to change without notice.. This is not an offer to extend credit under Regulation Z. Additional terms and restrictions apply.
Decision FICO Score
>740
Fee as % of Loan
0.25%
720-739 700-719 680-699 660-679 640-659 620-639
0.50%
1.00%
1.25%
2.25%
2.75%
3.25%
Length of History
Payment History
Late Pays
Collections
Charge-Offs
Repossessions
Foreclosures
Tax Liens
Bankruptcies
Judgments
New Credit
Soft Inquiries
Hard Inquiries
Amounts Owed
Credit Cards
Mortgage Loans
Auto Loans
HELOCs
Installment Loans
Balance v. Limit
Types of Credit Used
Mortgage Loan
Auto Loan
2-3 Major Credit Cards
Student Loans
Common misconceptions:
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“ I only paid my credit card bill late a few times.”
“I have a couple of little collection accounts from
college – I’m going to go ahead and pay those off.”
“That was from when I was 18, and I paid it off years
ago. There’s no way it’s still on my credit report.”
“My ex is supposed to be paying that, so I’m not
worried about it.”
Common misconceptions:
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“I don’t need the new fridge right now, but I want to take
advantage of the ‘Zero Percent Financing’ special.”
“It has a $2000 limit, and I only have $1500 on the card – it’s not
maxed out.”
“I’ve got too many credit cards – I’m going to transfer all the
balances to the one with the 2% interest for 6 months promo.”
“I only went over the credit limit once, and it was only by $5. No
big deal.”
“I’ll just pay those cards off with my HELOC.”
“I want to pay this debt off, so I’m going to call the bank and
close the account so I don’t use the card.”
Common misconceptions:
 “I
don’t want you to pull my credit report, Ms.
Loan Officer, because it’ll hurt my credit.”
 “OK,
 “It
I’ll apply for the card to get 15% off.”
said the credit account was already ‘preapproved,’ so I just went ahead and activated
the card.”
Common misconceptions:
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“I’ll just close that account – I never use that card
anymore, anyway.”
“A friend of mine who bought a house said to have
Mom add me as an ‘Authorized User,’ and my score
will go up immediately!”
“I only have had one credit card, ever, so I just need to
get another credit card to increase my credit score.”
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Student Loans don’t have a big impact on
scores unless you don’t pay them.
Be careful if you decide to defer your loans!
1. Order Credit Reports & Scores
2. Verify the Data Being Reported
3. Deal with Inaccurate Information
4. Your Credit Score is Your
Financial GPA!
Things to know about
FIXED RATE OR ARM? FOR HOW LONG?
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Fixed rate means principal & interest payment
will stay the same
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Available in a 5, 10, 15, 20, 25, or 30 year
mortgage
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Adjustable rate mortgages are fixed for a set
number of years and then adjust according to
the market
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Starting rates on ARMs are lower than fixed
CONVENTIONAL
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Often backed by Fannie Mae or Freddie Mac
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Require good-to-excellent credit
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Require as little as 3% down payment
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Fixed-rate or ARM available
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Maximum loan amount is $417,000
FEDERAL HOUSING ADMINISTRATION (FHA)
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FHA doesn’t make loans
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Can borrow up to 96.5% of the sale price
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Seller can pay closing costs for you, up to 6%
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Common-sense underwriting standards
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FHA requires mortgage insurance
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FHA loans are assumable
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FHA loans have a “streamline refinance” option
Veterans’ Administration Loans (VA)
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100% financing; no mortgage insurance
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Waived Funding Fee for disabled vets
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Downpayment Assistance acceptable
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Flexible underwriting
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Seller can pay off buyer debt to qualify
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No geographic restrictions
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If you have any further questions about credit
or lending please feel free to contact me at
anytime.
Bob Grone
Midwest Mortgage Capital
bgrone@midwestmortgagecapital.com
Of. 314-744-7804
Cl. 314-809-1539