Getting mortgage approval could be easier than you think

So what does it take to get approved for a mortgage to buy a house this summer, whether you’re a first-timer, planning to move up or downsize? Maybe not all that you think.

For most people, the key requirement is that you’ve got the right package of stuff — acceptable credit score, down payment, financial reserves, debt-to-income ratio — to get an acceptable grade from the automated underwriting systems or “black boxes” installed at the dominant investors in the market, Fannie Mae and Freddie Mac.

Though the intricate webs of algorithms and big data spun inside Fannie’s and Freddie’s black boxes are kept under tight security, we do get monthly read-outs on some of the characteristics of loans they’re approving.

For example, in June the average FICO credit score for home purchase loans at Fannie and Freddie was 754. That’s a big reach for millions of would-be buyers. It’s well above the national average FICO score of 700 and considerably higher than what was typical during much of the previous two decades. (FICO scores range from 300 to 850, with higher scores indicating lower risk of default.)

Debt-to-income ratios are another major factor hard-wired into the black boxes — and can be deal-breakers in mortgage applications that otherwise look pretty good. DTI refers to the ratio of your monthly credit-related expenses — including current rent, mortgage payments, credit cards, student loans and the like — compared with your monthly gross income. If you have $6,000 in income and $2,500 in total debt payments, your DTI is 42 percent.

Fannie’s and Freddie’s average DTIs look strict, but there’s actually more wiggle room for mortgage applicants this summer than any time in recent years. The average DTI for Fannie and Freddie during June was 39 percent. FHA, which tends to be more forgiving on debt matters, had average DTIs in June of 43 percent. But Fannie, Freddie and FHA recognize that even solid, creditworthy applicants can be carrying high debt loads in the current economy, and they are open to higher DTIs than the monthly statistics suggest. In an important policy change taking effect this month, Fannie raised its permissible maximum DTI to 50 percent. A study released last week by the Urban Institute predicts that this change alone could open the mortgage door to 95,000 additional homebuyers. That’s potentially a big splash.

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San Diego County Home Prices Hit a New High

june home price

San Diego County’s median home price hit another record in June with an imbalance of supply and demand continuing to push costs up, CoreLogic reported Tuesday.

The median home price reached $543,500, increasing 9.8 percent in a year and marking the third month in a row of record-breaking prices.

June’s numbers are still far from the peak of the housing boom. When adjusted for inflation, the November 2005 peak of $517,500 equates to more than $644,000 in today’s dollars.

All types of homes in the county hit new nominal price peaks in June:

  • The median resale home price, considered the most important part of the housing market because it has the most sales, was up 9.2 percent in a year to a median of $595,000 with 2,800 single-family houses sales. The previous peak of $590,000 was set last month.
  • The resale condo price also set a new record of $412,500 — increasing 7.4 percent in a year — with 1,294 sales, $12,000 more than the peak set in April 2005.
  • Prices for newly built homes increased 19 percent in a year to a median of $787,000 with 217 sales. The previous peak of $775,500 was reached in December 2015.

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Remodeling – Small items that will impact your final costs


Choosing several different tiles for your floors and walls can really add to the cost of your bathroom, especially if you’ve opted for unusually shaped or intricately patterned tiles. The tiler will need to spend more time getting the pattern and positioning right, and instead of charging you by the metre, they will charge you an hourly rate to lay the tiles, which quickly adds up. There is also the potential for wastage as some tiles may need to be cut to fit the space. Multiply this by several bathrooms and the cost can soon blow out.

Tip: If you love a patterned tile, choose a simple shape, which will limit wastage and laying time. Also consider giving this royal treatment to just one bathroom in your home.

Choosing a single tile shape and colour for both walls and floors will give your bathroom a luxurious feel, plus it will reduce wastage and cost. Use the same tile in all the wet areas of your home and you may get a bulk discount, saving you even more.

Tip: Natural stone, ceramic and porcelain are the main tile materials. Ceramic tiles will give you the same look as expensive stone, but are far cheaper to buy and lay.

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