{"id":32092,"date":"2025-01-16T23:00:06","date_gmt":"2025-01-16T23:00:06","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/real-estate\/mortgages-renters-and-first-time-homebuyers\/"},"modified":"2025-01-16T23:00:06","modified_gmt":"2025-01-16T23:00:06","slug":"mortgages-renters-and-first-time-homebuyers","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=32092","title":{"rendered":"Mortgages, Renters, and First Time Homebuyers"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>I do what I do \u2013 represent my buyer and seller clients \u2013 well. I\u2019m always learning, and I\u2019ll never say I know all that I need to know. Part of doing what I do is associating and learning from people who know more than I do. <a href=\"https:\/\/www.grayfoxmortgage.com\/matthodges\/\">Matt Hodges with Gray Fox Mortgage<\/a>* is one of those people.<\/p>\n<p>Matt and I were talking the other day about new Fannie\/Freddie guidelines and he said two things that struck me \u2014 1) first time homebuyers are less risky than second+ homebuyers, and rental history was now allowed to be used when qualifying buyers. I asked him to send me what he was talking about; when I got it, I asked him to write something for you, so we can all learn something.<\/p>\n<p>Yes, some of it is inside baseball jargon, and yes, it\u2019s important to understand parts of what happens on the mortgage side.<\/p>\n<p>For most borrowers buying a new or resale home, the loan officer working with you will first evaluate your ability to purchase using accepted maximum debt to income ratios. This is an eye ball check to make sure that you aren\u2019t trying to obtain a loan that Freddie Mac, Fannie Mae or Ginnie Mae won\u2019t allow. But, that visual review of your income and debt load and assets and credit report isn\u2019t sufficient. Automated underwriting is the process where that loan officer uploads your file electronically to be evaluated by a computer program. This step occurs prior to a human underwriter reviewing the file. This is standard and required for all Qualified Mortgage loans (also called Agency loans) \u2013 the vast majority of all mortgage loans.<\/p>\n<p>Most of the time loan officers can figure out what the computer program and thus what an underwriter will accept. Sometimes, the computer program spits out a result that is unexpected \u2013 Approve\/Ineligible or Refer with Caution. What the loan officer is attempting to get is Approve\/Eligible. I recently had one of these situations. Debt to income was within ratios, though high. Reserves were available \u2013 meaning cash left in the bank after closing. It was a 723 credit score with several 30 day lates MORE than a year ago that was tripping the Ineligible result. Well, what does one do?<\/p>\n<p>First attempts are to modify the file to find out what the computer program will take and whether that\u2019s acceptable to the client. Next attempts are to talk to fellow loan officers and underwriters to talk through the scenario. But, there\u2019s another piece to this puzzle. I enjoy reading industry guidelines and learning what is \u201ccoming soon\u201d. Well, Fannie Mae releases new automated underwriting periodically \u2013 what they call Desktop Underwriter (DU) or Desktop Originator (DO). I use DO and I read their latest release notes for version 12.0, months prior to its release on January 11, 2025. Two items in the notes spoke to me and my client\u2019s ability to be approved (bolding is mine):<\/p>\n<p>\u00a0<\/p>\n<h3><em>First-time Homebuyer<\/em><\/h3>\n<p><em>The presence of a first-time homebuyer on the loan application will now be considered a mitigating factor in the DU risk assessment. DU V. 12.0\u00a0<strong>research showed that loans where a borrower identified themselves as first-time homebuyers performed better than similar loans for borrowers that had previously owned a home.<\/strong><\/em><\/p>\n<h3><em>Rent Payment Identification<\/em><\/h3>\n<p><em>DU currently only\u00a0<strong>considers positive rent payment history using a 12-month asset verification report for first-time homebuyers purchasing a principal\u00a0<\/strong>residence and requires the borrower to have a credit score<\/em><\/p>\n<p>My client is a first time home buyer and does have a 12 months rental history of on-time payments. I found the \u201cresearch\u201d that Fannie Mae has done \u2013 essentially reviewing \u201clike\u201d closed loans in their data base, but differentiated between first time home buyer and repeat home buyer (ownership during the last 3 years) to be eye-opening. I found it interesting that first time home buyers are more likely to pay on time and not default. But, more importantly, I was hopeful that my client would be able to improve their lot.<\/p>\n<p>In fact, once I confirmed that Fannie Mae had released the update, I immediately ran my client\u2019s file through the new release with the end result we sought \u2013 Approve\/Eligible.\u00a0 This release follows logic, which isn\u2019t always the case in the mortgage world.<\/p>\n<p><strong><a href=\"https:\/\/www.realcentralva.com\/wp-content\/uploads\/2025\/01\/DU_notes_12_0.pdf\">Here are the notes Matt is referring to \u2013 Desktop Underwriter\/Desktop Originator Release Notes DU Version 12.0<\/a><\/strong><\/p>\n<p>* I don\u2019t know that I have to make this disclosure here, but I feel better having done so. \u201cThis is to give you notice that NEST REALTY GROUP, LLC (\u201cNEST\u201d) has a business relationship with GRAY FOX MORTGAGE, LLC. The owners \/ members of Nest own 100% of Nest Realty Affiliate, LLC which owns a 20% membership interest in Gray Fox Partners, LLC which owns a 49% membership interest in Gray Fox Mortgage, LLC.\u201d<\/p>\n<p>As I tell my clients \u2013 1) this type of affiliate relationship is common practice in the real estate world, and 2) I\u2019ve recommended Matt for nearly 20 years, well before the advent of Gray Fox Mortgage.<\/p>\n<p>(Visited 7 times, 1 visits today)<\/p>\n<p><h3 class=\"jp-relatedposts-headline\"><em>Related<\/em><\/h3>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>I do what I do \u2013 represent my buyer and seller clients \u2013 well. I\u2019m always learning, and I\u2019ll never say I know all that I need to know. Part of doing what I do is associating and learning from people who know more than I do. Matt Hodges with Gray Fox Mortgage* is one [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":32093,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[99],"tags":[21544,21543,16570,1231],"dealstore":[],"offerexpiration":[],"class_list":["post-32092","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-homebuyers","tag-mortgages","tag-renters","tag-time"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Mortgages, Renters, and First Time Homebuyers - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=32092\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mortgages, Renters, and First Time Homebuyers - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"I do what I do \u2013 represent my buyer and seller clients \u2013 well. I\u2019m always learning, and I\u2019ll never say I know all that I need to know. Part of doing what I do is associating and learning from people who know more than I do. 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