2325 E. Camelback Road #100
Phoenix, AZ 85016
Arizona's #1 FHA Lender (2014)
NMLS #221602 | FIMC NMLS #2289
As we have seen the lending industry and investor guidelines contract over the past 5 years, there has been a flight from Conventional Financing to Government backed financing such as FHA, VA and USDA. Banks have been tightening their purse strings and over time made it increasingly difficult to obtain conventional financing because of the number of defaults across the country. Government backed financing typically has looser debt-to-income ratio requirements, lower fico score requirements, and is more lenient when it comes to major derogatory credit such as foreclosures, bankruptcies and short sales. However, as the government has becoming more and more of a player in the mortgage industry, FHA loans being the major reason, it has had to insure these loans against losses in case of buyer default. As defaults of climbed, FHA has had to increase it’s monthly mortgage insurance premium 4 times over the past couple of years, making it more expensive for a borrower.
With that being said, we are just now seeing some positive moves towards opening the door to Conventional financing again. One of NOVA home loans’ preferred mortgage insurance partners will be easing their guidelines in a few weeks to where we can now finance a borrower down to a 620 fico score with only 3% Down for a primary residence, was formerly 680! We can also now finance a 2nd/Vacation Home with 10% Down to a 620 as well, formerly a 720! That means no more spouses credit pulls if you are in a community property state, no more up front mortgage insurance premiums like FHA, and you can have more than 1 Conventional loan at a time whereas FHA only allows one FHA loan to be held at any time (except for very certain circumstances).
I thought to myself, is this a quiet way for the Government to slow the rate of FHA lending so it can back peddle it’s way out of the mortgage business? It wouldn’t shock me as we as a country are trying to shore up our debts and reduce our exposure to further liability. This way if the buyer defaults the mortgage insurance company takes the hit on the chin and not the Federal Housing Administration (FHA). However, it is still a positive move for all of us and opens up more opportunity to finance new home buyers!
For any further questions about anything mentioned above please contact the Tobias Team @ 480-626-2202, or at firstname.lastname@example.org