Applying for E-Loan Mortgage w

I am doing some preliminary research about mortgages and came across this at E-Loan:

E-LOAN offers two ways to help you move into a new home without the usual 10-20% down payment. If you are a first time home buyer with a strong credit history, you can qualify for special 15-year and 30-year fixed loans with just 3% down at very competitive rates.

Just what, exactly, is "a strong credit history"? I have only two accounts, one an installment the other a credit card, and they are each only 2 years old. Never late. The reason my history is so limited and short is because I had alot of paid collections that were deleted. Should I even bother applying with E-Loan?

 

RE: 3% down mtg loans!

There are two 3% down mtg loans.

1) One is an FHA, which I specialize in. All you need is:
A) 3 open lines of credit (which I can get around if there are less than 3 lines of credit and no neg credit for more than 3 yrs)
B) No major credit issues (collections, charge off) in the last 2 yrs. I'm not even required to have collections paid off if approved.
C) Stable income (2 yr in same line of work) to debt ratio.

2) The other is an A paper loan. These loans typically require 5% minimum down. To qualify for the 3% deal, you need credit scores in the 680+ range and your income must be below the median average, 58K in my area. It's by far the best loan available for low down payment. There are no increases in % rate or points, unlike the 100% or 103% financing programs. It works for younger people with very good credit & for single income families.

It's the loan I did for my cousin when she bought a house 1st of the year.


Dave

 

RE: Mortgage FACT or FICTION

David I would like further information on this point
"B) No major credit issues (collections, charge off) in the last 2 yrs. I'm not
even required to have collections paid off if approved."

This is in direct contrast to virtually every post I've seen on every credit site wherein the mortgage broker is DEMANDING that a collection/charge off be paid regardless of how old it is.

Would you deem this strictly a policy for FHA loans or is possibly the case that most mortgage brokers don't have a clue and are just passing along the same old hearsay as valid requirements.

In a nutshell, the question I'm asking and I'm hoping you as a mortgage broker with some knowledge in this field can answer which is do mortgage companies have a regulation on their books which require collections and write offs have to be paid off.

 

RE: Mortgage FACT or FICTION

It is true for FHA, not conventional A paper loans. Many mortgage brokers my not be aware of this because they submit loans to lenders/investors. Fannie/Freddie do not require approved loans to have charge-off /collections paid off.

As a Mortgage Banker my company does not add any conditions to Fannie/Freddie approvals, but some lenders do. Brokers probably don't know the requirements of the various lenders and may not be aware of the more cutting edge technology and u/wing. In addition, moving the borrower to a sub-prime loan may be more profitable and it may generate a refinance in a year or two after the borrowers credit improves with good payment history.

So in short, brokers only have requirements set by the lender where they submit the loan.

If this is in "contrast to virtually every post I've seen on every credit site wherein the mortgage broker is DEMANDING that a collection/charge off be paid regardless of how old it isâ? contact me, I'd be happy to do loans they are unable or unwilling to do.


David W