Happy Sunday everyone,
I had a finance class on Friday with a Banker/Broker and thought I would relay a bit of information that I was not aware of.
First of all did you know that a Fico score over 720 does not get you any better rates on a mortgage ?
The teacher of this class has been around for over 25 years in Real Estate and finance so I have to assume he knows what hes talking about, He told us that as far as a mortgage goes the very best rates are given at the benchmark 720 and although impressive anything over that will not get you any better rates, I found that interesting to me as an agent because I have always believed the higher the better. I have clients with 850s that I have told would get a better rate with those scores so now my wording will change to (If you are over 720 you will get the best rates ) I am sure some of you already know this information but I did not, So now everyone who reads this will.
Next we had a speaker that specializes in FHA loans who really kinda floored the class with his information, He informed us that the FHA does not look at FICO scores at all, And he prefers people with no credit at all for his loans over people with lower scores. He did 15 FHA loans last month alone and was quite up beet with his delivery while talking to us. He said that it is the Banks and lenders that put FICO scores in there process for loans that are insured by FHA, While I find this kinda strange it does not surprise me. He has done loans with 320 scores in the past 90 days. Also with the FHA loans buyers can be gifted money to close by anyone who wants to give it to them.
In our tight slower market the main speaker suggested we look more at offering to pay Buyers closing costs over a reduction in pricing, Especially when looking into FHA financing which I found was probably a wise thought since reducing the price is the last thing the seller wants to do even though it is probably the right thing to do. He put it like this to us If you drop the price of the home say 5 to 10 % in an effort to bring someone it will cost the sellers whatever amount that is, However if your seller offers to pay the buyers closing costs it would probably be around 3 to 5 %.
Again some of you already know this stuff but I thought it was worth talking about today in hopes that it might shed a little light on the real market and ways of getting people back to the tables. Oh and there are grants available to help folks with the down payments as well. Farm loans for single parents and lower income folks are still strong but people are not applying for them according to our local rep. we need to let these folks know they still have hope when it comes to owning a Home.