Daily Mortgage Rates LIVE - 09/06/2024 - Low Credit Score Loans

In this episode of Daily Mortgage Rates Live, we’re addressing a common concern—how to secure a mortgage with a low credit score. If you’ve been hesitant to explore homeownership because of your credit, this episode is for you! We’ll break down the types of loans available to those with lower scores, explain what lenders are looking for, and share strategies to improve your chances of approval.

From FHA loans to special programs for credit-challenged buyers, we’ve got you covered. Don’t let your credit score stand in the way of your homeownership dreams—tune in to learn how you can navigate the mortgage process successfully, even with less-than-perfect credit.


For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

Our Mortgage Loan Originators a

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Non QM Loans include Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

To apply for a mortgage please visit our Quick Mortgage Quote Page at https://themortgagecalculator.com/Mortgage/QuickQuote

The Mortgage Calculator is a registered DBA of Mortgage Calculator Company LLC. NMLS ID #2377459. Programs and rates are subject to change without notice. Mortgage Calculator Company LLC is licensed in the following states that require specific licensing disclosures: AZ (#1040352), CA CFL (60DBO-171188), GA Georgia Residential Mortgage Licensee (#2377459), IL MB.6761755 Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 1-888-473-4858. Not licensed or conducting business in New York.

For more info visit https://themortgagecalculator.com...

Transcript

Restream recording Sep 06, 2024 • 03:02:24 PM: 0:09

All right So welcome everyone. My name is Kyle Hiersche I'm the coo of the mortgage calculator joined here by our president Nick Hiersche and our cso jose gonzalez We are a lender that specializes in non qm loans and what we do Every weekday at 11 a. m. Eastern on the show is go through our actual live mortgage rates And then we do a deep dive into a different loan topic and today's topic is going to be different low credit score options So jose will take us through some great options and probably tricks up his sleeve there for some low credit score loans For that, we'll do what we do every morning, which is pull up our rates. So interesting to see what the rates are going to look like today. Nick, let's go ahead and pull them up and check it out. All right. Let me go ahead and refresh. Lots of movement today before I pull this up a little bit. We'll check our rates for today. All our initial sheets are live for September 6th here, just after 11 a. m. And we will compare the APR across the program. It's definitely some good news as rates are hitting, uh, new one year lows after we were just at one year lows just this week. Hitting new one year lows again, which is amazing. So if you'd like a full breakdown and itemized loan estimate that itemizes all the fees that go into the APR that you're going to see here, please get with one of our team members. We have over 300 loan officers to help you out. For the demo, we will set up a standard scenario, a single family home. 500, 000 purchase, 400, 000 loan amount corresponds to 80 percent loan, 20 percent down payment, and we'll set an estimated 760 credit score and an estimated 40 percent debt to income ratio here for the demo. Let me go ahead and share my screen and we'll check out today's live rates. We love to see those fours. So first up, our 30 year fixed conventional option for primary, typically the most common option people think of when they think of a mortgage. Rates today coming in at 5. 875, amazing. Final APR 6. 159. Now if for any reason our customer doesn't qualify for a conventional option, you typically want to quote an FHA option. FHA coming in today under 5, absolutely amazing. It does allow a higher debt to income ratio overall as well as much more leniency on credit issues, but does require upfront and yearly mortgage insurance. FHA coming in at 4. 99 today. Final APR. With all of the fees included 5. 936 here. So if our customer qualifies for both FHA could be a touch cheaper, but they would have to be willing to do the mortgage insurance and our customers that need to use it, definitely a good option, very comparable to conventional. And are eligible vets and active service members that are eligible for VA loans. These are amazing. Hopefully these go down a little bit more today as well. Right now we're at 5. 125, right? Final APR with a standard funding fee 5. 414. So, notice if our customer qualifies for VA, this final APR is going to be FHA and conventional, so definitely take advantage if our customer is eligible. And the final standard option here, USDA, is only for USDA eligible properties in the rural areas of the country. So, if the property is eligible and our borrower is eligible, these are great options. Rates today, 4. 99. Final APR with standard fees here, 5. 705. So notice if our customer is shopping in these rural areas, they're going to be comparing to FHA, which the USDA is going to be, uh, cheaper and compared to conventional, it will be as well. So if you're looking at those areas, definitely consider FHA. I mean, uh, USDA, sorry. And that rounds out our standard options here that any bank or lender has. But if our customer doesn't qualify, many banks or lenders have to deny them. That's where we start to present our 5, 000 plus other options. Starting here with our non QM alt doc option. So if our customer doesn't qualify with two years of tax returns, which are needed for conventional, needs to switch to using alternative docs. These are bank statements, 1099s, PNLs, all the different topics we covered earlier this week. This option here is a bank statement option, 6. 25 rate. Final APR, 6. 553 to use bank statements or other alt docs. And notice we're within well within a half a point of conventional here actually only about 0. 35 Uh different there, which is amazing and we have our investment property options First up our non qm alt doc again bank statement or similar or an investment property not much change than yesterday Rates as low as 6. 75 finally for our 7. 080 But compare those to our other investment options Which have had some updates since yesterday. First up the conventional option. There are no government programs for investment properties and OVA, USDA or FHA, but we do have conventional for 6. 5 rate today. Final IPR 6. 838, a little lower than AltDoc, which is normal, but we definitely recommend to check out our favorite programs, which have dropped by quite a bit here today, our DSCR. DSCR stands for debt service coverage ratio. No income is needed on these loans. No employment is needed on these loans. We simply use the estimated rents from the appraisal to determine a DSCR ratio. The estimated rents could cover the estimated expenses. That means the DSCR ratio is 1. 0 or higher, which is preferred because the property cash flows monthly. For these demos here, we put a ratio of 1. 5 so all the programs show up. And the first one here with a three year prepayment penalty is standard. Rates coming in today, 6. 375 final APR 6. 682, so beating conventional, absolutely amazing. And we can sweeten the deal even more, adding a five year prepayment penalty rates as low as 6. 125. Absolutely amazing. Final APR 6. 438 blowing conventional out of the water or our five year prepaid DSCR option. And looks like a little movement here for the no prepayment penalty option as well. Rates as low as 6. 75, finally here 7. 080 for the no prepayment penalty option, which is a touch higher than conventional. I'd still say 100 percent of investors would still choose a DSCR when we're within about 0. 2 there with no prepayment penalty at all. And those that are willing to add a prepayment penalty definitely take advantage of these sweet rates. And the final two options, a little bit of movement there as well, are 30 year fixed second mortgages. So very popular request these days as many of our customers have a low rate first mortgage and still need to access equity cash out, but don't want to get a HELOC, which is the traditional option. Now we have our 30 year fixed second mortgage. which is a fixed rate instead of a adjustable HELOC and lower rates as well for a primary home rates today coming to 8. 375 finally APR 8. 786 definitely better than a HELOC option to get cash out of their primary home without touching that first mortgage and the same option for investors rates as low as 9. 75 finally APR 9. 965 to get cash out of an investment property using a fixed rate second mortgage Especially because he box are very rare for investments. So those are the standard options. We always go over on the show Let's get into our topic for today, which is going to be our low credit score loan, so hopefully they're not as low as the Demo screenshot that we have there But we do have options for borrowers with lower credit scores that are working on their credit Under all kinds of different programs so jose is going to highlight The lowest options on a few of our different programs here. So Jose, it looks like your camera. Yeah, I lost my video today. So I, today you don't get to see me, but I do have great options for you all. Because we, uh, at the mortgage calculator like to provide solutions for all of our borrower needs. So today we're showcasing the low credit score options that we have. So let's jump right into it. Alright, so our first option here is for our FHA purchase with a 500 credit score. Now, I will note that, uh, all FHA loans, once the credit score drops below five 80. Now this is a FHA guideline. Uh, when the credit score drops below five 80, the maximum LTV is 90%. I will also note that although FHA does not have a minimum FICO score, the lenders and investors have their own overlays. So in this case, we are selecting options from the one that has the lowest FICO score. credit score overlay of 500. Now this is also assuming you're going to get your, either your DU approval or your manual underwriting approval. These are just rate options. So our lowest cost option here is 7. 5 percent interest rate at a cost of 2. 25 points. And our lowest rate option is 7. 25 percent at a cost of 2. 5 points. And again, this is 500 credit score, 90 percent LTV FHA purchase. Uh, now we go on to USDA. Great news for USDA is they, uh, we don't have any overlays here regarding LTV. So again, we're providing 500 credit score interest rate options at 100 percent LTV and you do see a substantial improvement in the options here for lower credit score borrowers on USDA being our lowest rate option. Almost at par or lowest cost option, excuse me, almost at par. And our lowest rate option being 6. 25 costing 1. 875 points. Great news. Also for V a a hundred percent LTV option, also possible with a 500 credit score. We're looking at our lowest cost option of. 8. 25 percent at a cost of 1. 824 points and you can buy that down to 7. 125 percent interest rate at a cost of 2. 69 points. And now I'm going to offer some conventional options but I will Um, basically throw this out there, which is very important, right? We all know conventional loans, uh, you have a standard matrix of 620 being the minimum FICO score, credit score. And then you have, uh, AUS, which says, uh, it's really gonna depend on whatever AUS findings tell you. So, I mean, theoretically, you, you could try to submit it. For a manual, you know, for DU, I mean an underwriting, see what you get. Assuming you do get an approval, keep in mind at LTVs above 80%, you do have to get mortgage insurance. And depending on the credit score, mortgage insurance would either be Extremely expensive or possibly not possible to purchase just because it is so expensive. So what I did here, I limited the minimum credit score to the matrix of 620. And even at 620, it's going to be tough to get a affordable MI. So normally our 620 credit score borrowers are a perfect fit for an FHA loan where the mortgage insurance is based on the loan amount and not the credit score of the borrower. And where the borrower doesn't really get penalized as much for having a lower credit score. Uh, when we go to, uh, look for interest rates, as you can see here, we have 7. 5%. Uh, at a cost of 1. 125 points, which is our lowest cost option and our lowest rate option 6. 49 At a cost of 2. 5 points. So this is for our standard conventional loan with a 620 And with five percent down However, we do have the affordable option that's Fannie Mae Home Ready and Freddie Mac has the Home Possible, which is the sister program. Also, that's Freddie Mac's affordable option. This program option is based on income, right? You cannot be above 80 percent of the area median income for the census tract that the property is located. However, if the census tract is a low to moderate income census tract, or a minority census tract, or a disaster affected area, then it may be possible to exceed the area median income for that census tract. basically would have no maximum income limitation, but you can see how the rate for the affordable option with the same 620 credit score is much better than the conventional loan, right here. We're looking at 6. 5, actually with a lender credit of three quarters of a point, almost 4, 000, which always helps the 3 percent down buyer. And you can buy that down all the way to 5. 625 at a cost of 2. 25 points. So you do see. Much better rates. Our next option here is our bank statement and this I could consider an alt doc because bank statement profit and loss and 1099 actually have the same interest rate. They all fall under the alt doc category. With this particular option, so we're looking at 20 percent down, 80 percent max LTV, 10. 999 is our lowest cost option at par. And we can buy that down all the way to 9. 375, right? And this is for an investment property purchase with 20 percent down with a 600 credit score using Altdocs. And the same option is available for primary, uh, as well at the same LTV. And leaving the best for last. that you all didn't know that we actually do have a DSCR option with a 575 credit score. That's not a typo. And this same 65 percent LTV purchase option is also available as a cash out refi at the same LTV of 65%. So this option here. This one is for the obviously investment purchase, DSER, and we're looking at 11.25% rate. And this does have a cost loan discount of 1.25, and this is a borrower paid financing, so there would be a separate broker fee. Uh, the borrower would have to pay for this product, but. 65 percent LTV with a 575 credit score. Not a bridge loan, not hard money. This is a fully amortizing 30 year loan. So this is great news for investors. So definitely look to the mortgage calculator for all your needs, including your low FICO score borrowers. All right. Thank you, Jose. I don't see any questions there in the chat, so I guess we will go ahead and wrap it up with some amazing options there. Remember that we do this show every weekday at 11 a. m Eastern where we go through our live rates and then do a deep dive into different loan topics. So we will see you all next week on Monday at 11 a. m Eastern for the next episode of Daily Rates Live with the Mortgage Calculator.