Mortgage FAQs

I get asked many questions every day, in fact, I consider education to be a large part of being an honest loan officer.

Here are the more common ones:

5/14/2013 How long do I need to wait after a short sale to qualify for a home loan?

Answer:  It depends if you were behind on your payment when the home short sold.  If you were current on the payments and short sold, then there is a 12 month waiting period to obtain a mortgage.  If you were behind on the payments, then its treated the same as a foreclosure.  That means 24 months for new VA financing, 36 months for FHA and Rd financing, and 84 months for Conventional financing.

5/8/2013 What is considered “good credit” these days?

Answer: For a borrower to have “good credit” they generally need to have no bankruptcies, foreclosures, collections, or judgments showing on their report.  This means you haven’t had any negative items in the last 7 years report.  You also need open and active credit lines that indicate responsible use of credit.  This will usually result in a Fico score of 700 or greater on a 350-850 scale.  That doesn’t mean you can’t get financing if you don’t meet all of those criteria, but it does mean you’ll not get as good a rate or the same terms as someone with good credit.  There are some items that will prevent your from getting a mortgage: Recent bankruptcy or Foreclosure, Fico scores less than 620, and unpaid judgments, tax liens, or back child support.

5/2/2013 What is the difference between a Mortgage Broker and Mortgage Banker?

Answer: A Mortgage Broker finds loans for their clients through multiple “wholesale” sources, compiles a loan package, submits it to the wholesale lender’s underwriting team, and works through the items needed for the wholesale lender to fund the loan.  The Mortgage Broker does not approve, underwrite or fund the loan.  They are essentially a well connected middle man of mortgages.  A Mortgage Banker funds loans themselves with their own money, approves and underwrites them with their own staff.  They are the direct source of the money.

We were mortgage brokers for many years when there were numerous loan programs for every situation.  Nowadays, that is not the case.  The special programs have gone away and what is left is largely Agency loans such as Fannie Mae, Freddie Mac, FHA, VA and USDA.  With the ability to find a loan for every situation gone, the ability to reliably approve and fund a loan became vital.  We became a Mortgage Banker in August of 2011 and we instantly got more control over the process and lower costs for the client.  I can’t imagine how tough it is to be a Mortgage Broker in 2013.

4/24/2013  What is the difference between Fannie Mae and Freddie Mac?

Answer:  Fannie Mae and Freddie Mac are both government sponsored entities that purchase bundles of loans from banks.  This replenishes the banks funds so they can lend again.  The mortgage backed securities that Fannie Mae and Freddie Mac sell are bought by investors and mutual funds to provide a safe return on investors funds. 

They have similar loan requirements and guidelines, sometimes they are referred to as “conforming loans.”  This means that a loan in Idaho is gong to conform to the same loan guidelines as a loan in North Carolina.

There are other types of loans that are not Fannie Mae or Freddie Mac, such as VA, FHA, USDA-RD that I’ll go into in later posts.

For more information, check out:

http://fanniemae.com/portal/index.html   or

http://www.freddiemac.com/

 

If you have a question and you don’t see it answered here, call me at 208-861-7579.  I’m always willing to discuss your situation.

 

Leave a Reply

%d bloggers like this: