All Forum Posts by: Michael Smith

Doug McLeod you will NOT be able to get any more FNMA loans once you have ten FINANCED PROPERTIES (regardless of how many loans).

Hi @Bob R. we meet every other Monday at the Knowledge Exchange on Babcock in Palm bay at 6:30 PM. I believe the next meeting is Monday the 18th, @Priscilla Z. can correct me if that's not the case :)

Axel Ragnarsson to qualify for traditional financing you need a 2 year history of being self-employed (possibly as little as 12 months with great compensating factors, but a lack of credit history will not help). You'll need at least a 620 credit score for a Conventional loan, and 15% down since HomePath is going away October 7th. Ideally you should have at least 3 open trade lines that have been open for 12 months, so I recommend opening 3 credit cards today to start building credit. Good luck!

If a standard Conventional loan is not an option, perhaps an escrow holdback would work. Find out what specifically is preventing the property foe passing appraisal and get bids from contractors to check for feasibility of a HomeStyle Renovation or possibly a 203k if you will occupy one of the units.

Hi Justin Bundrick yes this is a FNMA guideline. If the property is an investment, total "interested party contributions" cannot exceed 2% of the purchase price. Your loan officer should have told you this upfront after receiving the contract. From FNMA's perspective, since mortgages secured by investment properties are statistically more risky than those secured by a primary residence, the guidelines are set to ensure that the investor has more skin in the game. That's why the minimum down payment is higher, maximum IPC's are lower, and funds to close can not come from a gift.

Both HomePath and HomePath Renovation are going away on October 7th. From the announcements FNMA has released so far, investors will be required to put 15% down even on FNMA REO's.

@Joel Owens 

@Josh Autery 

Since I'm in the mortgage industry I really only care about the FICO model. Joel you are correct that the exact algorithm is not released to the public, so my information comes from the credit repair firms who assist me in my long-term pipeline of leads who don't currently qualify for financing, and they have all said that the lower your balance on revolving accounts the better that portion of your score will be. One company that I work with, National Credit Care, has advised me of the following approximate sliding scale:

Between 0-30% utilization you will lose between 0-10% of potential points...

Between 30-50% utilization you will lose between 10-25% of potential points...

Between 50-100% of utilization you will lose between 25-100% of potential points.

Also, each revolving account is weighted exactly the same regardless of size. So if you have 1 credit card, the utilization of that card will determine 30% of your score... whereas if you have 3 credit cards, the percent utilization of each card only determines 10% of your overall score.

Please note that I am a Loan Officer and NOT a credit repair specialist, so all of this information has come to me through third party companies that I work with.

@Joel Owens that's actually not the way it works. If all your revolving balances are at 0% utilization you will have the maximum possible points in this category. As your balance goes up your score will go down, until you reach 100% utilization and you have lost 100% of the possible points from Available Credit. So even at 10% utilization you are losing some points, just not nearly as many as you would with a higher balance.

@Alexis Zion as far as your score is concerned, paying off the lower balance revolving account will get you more bang for your buck. Each account weighs equally on this portion of your credit score. So if you have 2 maxed out credit cards, one for $1,000 and one for $10,000 you will gain the exact amount of points by paying either one of them off.

Alexis Zion , 30% of your credit score is calculated based on percent utilization on your revolving accounts, so the higher your balance on each credit card as a percent of the limit, the more points you will lose in this area. If you're able to pay the balance back down, you should regain the points you lost.

Hi @Anil Samuel , it looks like you tagged the wrong Smith!