HOW CREDITORS RATE AN APPLICATION
The first thing you should know is that every system is different. That in itself can work to your advantage. You could be rejected by one company’s scoring system and approved by another. One creditor’s system will give you many points for a good ancwer, and totally ignore a question that gives a negative answer. Another creditor can simply reverse the process.
Keeping in mind that creditors use different scoring systems, we will list only the most important questions and briefly review how a response can affect your total score. The following categories are listed from the highest to lowest points awarded each response.
RESIDENCE - The longer you have lived in one place the better. Stability is given high points.
HOME OWNERSHIP - The best possible housing situation is to own your own home, even if itt is mortgaged. The worst is: renting an unfurnished apartment, living with parents, living in a trailer or motel.
FHA ASSUMABLE HOME LOANS
President Bush signed legislation making credit checks for home mortgages mandatory after December 1989. Prior to that date however, all loans are fully assumable without a mandatory credit check. There are four important factors that will allow you to purchase a home without a credit check and with a minimal down payment:
1) As a home buyer, your application can be pre-approved and your loan without a credit check provided: a) The original VA loan was granted March 1988, or b) The original FHA loan was granted prior to December 2) If the original home buyer made a small down payment on the sale price which was used primarily for closing costs and consequently did not buy any equity at that time. 3) If most of the payments made by the original owner were applied to interest during the first 4-5 years and very little went towards the principal. In that event, very little equity would result from making payments. Or, if there was any equity it would probably have been reduced by depreciation or other home market conditions. 4) The last factor would be low- or no-equity conditions that resulted from low inflation and other economic conditions that can decrease the value of property.
UNDERSTANDING WHAT EQUITY MEANS AS A BUYING FACTOR
In order to understand the buying significance of equity you must understand what it means. Equity is the difference between what real estate sells for (market value), and the payoff amount of the loan to a lender on that property. In other words, if you own a home with a market value or $100,000, but you owe the bank $99,000, your eequity is $1,000. In tens of thousands of cases, VA and FHA homes can be purchased with little or no down payment because no equity has been built up.
TENS OF THOUSANDS OF HOMES ARE AVAILABLE - INCLUDING YOURSS!
If you have been dreaming about owning your own home someday, Dream No More! Right now at this very moment there are tens of thousands of homes for you to choose from that can be purchased with no credit check and no down payment. or with a very modest down payment.
Sounds incredible doesn’t it? But remember, the only reason any seller requires a down payment in the first place is usually to recover the equity in their home. A small amount of equity requires a small down payment. No equity means no down payment!