Not having enough credit history for a credit score doesn’t necessarily mean you must go through a drawn-out manual underwriting process to get a home loan. If you have a history of making housing payments on time and references, you could benefit from a new automated process from Freddie Mac, a quasi-public agency that purchases mortgages.
Starting in June, borrowers without credit scores can see if they’re eligible for purchase mortgages or no-cash-out refinance transactions on one-unit owner-occupied homes. Lenders will be able to use Freddie Mac’s automated assessments to quickly approve your loan with greater confidence that Freddie Mac will purchase it. Loans will still be evaluated against Freddie Mac’s credit requirements, but the automated process should allow lenders to more efficiently serve borrowers.
09/30/2016 | Author: Editorial Staff
If you’re financing a property purchase, you’ve probably come across the term points or discount points. Although there are other meanings, most often these terms refer to prepaid interest, with one point equal to 1% of your mortgage loan.
Lenders offer borrowers the opportunity to purchase points on their mortgage, which means you’re paying up front to lower the interest rate of your loan. Here are some questions to ask when deciding whether you should buy points:
How long will you live in the house?
You usually benefit more from points the longer you stay in the property. That’s because the savings you realize on each monthly payment will accumulate and eventually offset—hopefully exceed—your points payment.
Can I afford points?
You need to provide a downpayment and cover the closing costs to secure a mortgage. Do you also want to pay for points?
How much will the rate come down?
Each point costs 1% of the loan amount, but the interest-rate reduction you receive varies from lender to lender.