Wednesday, January 19, 2011 -
Article by:
Key Financial Mortgage of Kentucky - Joel Lobb, FHA, VA, USDA, KHC, First Time Home Buyer Expert Louisville, Kentucky -
Louisville Kentucky Mortgage
Pressured by federal regulators to write quality loans, lenders have little choice but to follow underwriting marching orders issued in rapid succession this year by federal mortgage insurers.
Here's a rundown.
Fannie Mae
Freddie Mac
Freddie Mac is considering guidelines similar to big sister Fannie's.
If the borrower was granted additional credit, the debt adds to the debt-to-income ratio.
Federal Housing Administration (FHA)
Borrowers underwritten out of the running for Fannie Mae and Freddie Mac guidelines on conforming loans may have to consider low-down payment Federal Housing Administration loans. However, those loans are already tougher to land than ever and they come with mortgage insurance that recently rose in price.
FHA loans have become the go-to mortgage for less financially fit borrowers who likely would have shopped the now defunct subprime market.
FICO scores, ranging from 300 to 850, are a numerical rendition of a borrowers' creditworthiness.
Individual lenders can set their own credit score requirements and several lenders recently pushed the minimums to 640 on FHA loans.
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