REAL ESTATE TRENDS: A NEW WAY TO EVALUATE

You may recall that I wrote previously about new ideas to evaluate how borrowers are evaluated. If you are a potential borrower but might be among the 53 million U.S. adults who don’t have credit scores, according to Fair Isaac Corp., who created the FICO score; there are options for you to qualify for a home loan without having an initial score. These persons without a FICO score typically don’t borrow in the traditional sense of loans or credit cards but instead like to pay cash.

Last October, FICO created a brand new method to incorporate how cash is managed by people interested in buying a home instead of requiring persons to have an existing FICO score. It has given new opportunity for people to plan for a mortgage and own a home. Typically, those with FICO scores are evaluated in payment records and the ratio of open credit on credit cards. The new method allows cash spenders to get credit for managing in cash.

In the past, people with steady incomes but no credit have often been shut out of buying a home because they can’t qualify for a mortgage.  I believe that more options like giving credit for how persons use cash are going to come the way of the interested home buyer in the future.

Already, we are seeing startups creating new paths for interested home buyers to lease a home with 20 % of the monthly payment going toward equity to buy the home. This can happen in as little as 3 years when the purchaser gains enough equity for a down payment.

One company located in Seattle assists buyers in finding homes, underwrites the buyers for a potential mortgage, but first buys the home with cash helping to get people into homes in tough markets. The home is ultimately purchased when the buyers qualify for the loan.

The bottom line is that no matter how you manage your money, it is becoming easier to evaluate an interested buyer to achieve a home loan.  Please call or email MPattullo@PeakMtg.com

We lend where we live,

Mike