Let the Welcome Home Program Welcome You Home!

While this time of year may have you pumped for chocolate hearts and shamrocks, it’s got me pumped for an entirely different reason (despite my love of chocolate) — one of my favorite programs, the Welcome Home Program of the Federal Home Loan Bank of Cincinnati, is officially back as of March 1st! And thanks to F&M Mortgage’s relationship with the FHLB, I get to help homebuyers take advantage of this truly one-of-a-kind program for yet another year!

The Welcome Home Program, a down payment assistance program that assists homebuyers in getting the funds they need prior to the closing of their new home, offers grants to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low and moderate income homebuyers. In layman’s terms, it provides free money to homebuyers who meet certain requirements. And who doesn’t love free money?

Sounds great, right? Well, there is one caveat:  This exceptional program is only available for a limited time, i.e., until the funds run out. But there’s no need to worry; in my experience, Welcome Home funds have, within the past couple years, been available through early to mid-April. But we’ve got to act fast!

Here are the details:

1. Up to $5,000.00 is available as down payment and closing cost assistance. Please note that the grant is forgivable if the buyer lives in home for 5 years. If sold before, pay back is prorated over 60 months. 
2. The funds are provided as a grant and therefore, no repayment is required.
3. The borrower must have a home under contract (primary residence only) to place a reservation for the funds.
4. The borrower must put at least $500.00 of their own money into the deal (60% of the $500.00 may be gifted).
5. This program is available in conjunction with certain low interest rate programs such as FHA, as well as THDA, USDA and that of conventional loans – but it is not available in conjunction with repair programs such as 203K.
6. While the borrower does not have to be a first time homebuyer, all first time homebuyers must complete a homebuyer education course as part of the requirements to receive said funding.
7. Income limits most definitely apply (it’s basically 80% median).
8. The income limit in Davidson County, TN, is $65,760 for 1-2 person household and $76,720 for 3+ person households.
9. This program may take a little longer to process due to the file having to be underwritten by the FHLB in Cincinnati, resulting in an up to 45 day processing time (but it’s certainly worth it).
10. While it may be used for new construction, the home in question must be completed by December 1, 2018.

Remember, Welcome Home funds will be available for reservation on a first-come, first-served basis beginning at 7:00 AM CT on March 1, 2018, and will remain available until all funds have been reserved.

If your client will be going into a home contract anytime within the next month or so, then it only make sense to have them take a look at the Welcome Home Program. And I can help. Let the Welcome Home Program help welcome your clients into the home they’ve always dreamed of!

Cracking the Credit Code: How to Supercharge Your Score

If you’ve ever been in the market for financing, chances are your full financial profile was examined by a lender. And if you’ve ever been prequalified for a loan, the inspection of your employment income, credit, assets, and debt-to-income ratio most likely laid the groundwork in determining your candidacy. But despite all four items, did you know your credit has the most pull in determining your eligibility (or ineligibility) for financing?

While your credit score is just a number, chances are it’s already had a measurable effect on your wallet. And when it comes to borrowing money, your credit score is one of the most important factors in determining which rates you will pay on everything from a business loan to a mortgage. Doesn’t seem too scary, right? Well, look at it this way: If you have a poor credit score, you could end up paying hundreds (or even thousands) more in interest over time on anything from credit cards to an auto loan. So how can you tell if your credit score is “good”, and what should you do if it’s in need of some serious improvements?

If you’ve never actively worked to improve your credit, a credit score may seem mysterious or enigmatic. You may understand that scores run from 300-850, but that’s where the credit knowledge of most consumers ends. And when you don’t quite understand the way something works, it’s easy to assume you have little control over it, or in this case, where you fall on the credit score spectrum. In reality, however, your credit score is based on very real and measurable criteria… and you have the complete power to change it. In fact, most consumers are in a position to improve their credit with very little effort. 

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The breakdown.

FICO is the biggest name in town when it comes to credit scores. Most major card issuers and lenders in the U.S. use FICO’s traditional model to decide whether to extend credit to consumers and at what interest rate. Using the information in a borrower's credit report, FICO breaks that information into categories. Those five components each get different weights.   

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Recently I came across an article titled, “How Your Credit Score is Calculated” by personal finance writer Miriam Cross of Kiplinger Magazine. Miriam’s article, which you can access here, outlines each credit-affecting factor in your financial life, and details how to positively steer each factor in the direction of an improving credit score. It also proves to be the most concise credit guide I’ve ever had the pleasure of finding and I felt compared to share it with you.

Let me ask you something— when was the last time you checked your credit score? And if your answer is, “I haven’t”, did you know that several credit card issuers and personal finance websites such as Credit Karma allow their users to frequently check their credit score at no cost? Seriously. It’s free. It’s also seriously imperative to understand how to go about improving your credit score, especially if it’s not up to par (and there’s always room for credit score improvement, anyway).

As a mortgage advisor and loan originator who aims to educate, advise, and inspire, it is my goal is to do all that I can to help potential borrowers find their footing along the path to home-ownership. And with that, I’d like to share some important tips, many requiring little effort, that allow potential borrowers, or anyone in need of financing, increase their credit score. You may also reference the linked article above for a more detailed explanation of each:

1. Make your payments on time and for the right amount – every month.
2. Avoid over-extending your credit, and stay away from unsolicited credit cards as they won't benefit in any way to your credit score.
3. Don't ignore your overdue bills, and if you face any problem regarding repaying your debt, contact your creditor for repayment arrangements.
4. Be sure of what type of credit you have, as credit from some financing companies can affect your score in a negative way.
5. Try keeping your outstanding debt as low as possible – particularly on revolving debt (credit cards). Extending your credit close to your limit constantly is considered to be bad and will reflect negatively in your score.
6. Restrict your number of credit applications as a credit report having many hits (credit inquiries) is viewed poorly.  In other words, the more times you let people pull your credit, the worse your score is likely to be.  But not all hits are considered to be negative, like monitoring of accounts, prescreens, etc., are viewed positively.

Your credit score plays an important role in your life that can put you on the right path towards financial success, or even simply veer you off course.  When you improve upon your credit score, you are also improving upon your confidence… and with confidence comes the power to seek out and follow through with the goals you strive to meet. Besides, if you are one of the 8 in 10 Americans who consider owning a home as part of the American dream, are you really going to let something as easily changeable as a credit score hold you back?

97% Conventional Loan Options

As we head into 2018 and continue to be in what we would probably all agree to be a seller’s market, understanding the various lending options plays a key role in getting contracts accepted for your buyers. 

For whatever various reasons that might exist, it seems that sellers are much more inclined to accept offers when the buyer’s financing is with a conventional loan versus an FHA loan.  And while I believe that FHA serves a critical role in home finance (many clients, particularly those with lower credit scores are better served with an FHA loan), there is a very distinct benefit for buyers using conventional loans to make their home purchase – and it’s not just in getting the seller to accept the contract.

There are basically two types of 97% conventional loans: the standard 97% scenario and the Home Ready (HR) option.  To qualify for the standard 97% program, at least one of the buyers must be a first time homebuyer – but there is no income limit.  The buyer doesn’t have to be a first time buyer to qualify for the HR program (although they can’t own any other property at time of purchase), but there is an income limit based on property address.  

The main things to remember is that HR offers a discounted interest rate and mortgage insurance (MI) is cheaper than the standard 97% program.  In many cases, particularly when the buyer has a good credit score, the HR program is better than FHA (less down payment and cheaper MI).  So not only does this type of financing work better for the buyer, because it is a conventional loan, the contract offer is more readily acceptable from the beginning.

Here are the statistics.

Borrower benefits

• Down payments as low as 3%
• Competitive pricing meets or beats our standard loan pricing
• Flexible sources of funds with no minimum contribution requirement from borrower’s own funds (1-unit properties)
• Rental and boarder income may be considered for qualifying
• Others who don't live in the home can join buyer on the mortgage
• Cancellable private mortgage insurance per Servicing Guide policy
• Reduced MI coverage requirements for LTVs above 90% (up to 97%)
• Homeownership education and housing counseling options empower borrowers to become successful homeowners

I’m happy to discuss any specific questions you may have regarding this, so feel free to call. Be sure to check out the following  links for further information. 

HomeReady Fast Facts  |  Income Eligibility Look-up Tool  |  FAQs