CHANGE #1 - For the first time in 25 years, we will have a change in credit reporting. A new concept called "Trended Credit Data" will greatly impact borrower's credit scores. Credit reporting agencies will now track the way a consumer pays revolving debt or credit cards. Paying the minimum payment vs. paying more than the minimum payment for the most recent 24 months. A borrower will now have the ability to improve their credit assessment by making higher payments than the creditor requires. For instance, If a consumer has 5 credit cards and has a $10 per month minimum payment but pays a significant amount more than the minimum payment each month or pays it off in full each month consistently, they will have a better risk assessment of their credit or a higher credit score. Consumers who make only the minimum payment each month will also be tracked and are considered to be a "higher risk" for lenders. Lenders believe this "Trended Credit Data" will give them are more clear picture of a borrower's credit use. This form of reporting only applies to revolving credit debt.
CHANGE #2 - Fannie Mae is coming out with a new version of underwriting software. Version 10.0. In the new version, borrowers will be able to use non-traditional credit. Meaning, if a borrower does not have enough credit, 12 months (or more) trade lines can be added to the credit report such as Utility bills, Cellular Phone bills, Insurance payments, Rental payment history, etc. In the past this form of credit assessment could only be used for FHA financing. More and more younger consumers are buying homes today instead of renting. Not every borrower has 5 trade lines on their credit report but they may have cell phone bills and have paid rent somewhere. Also, renting from your parents is now allowed! You will need 12 months cancelled checks (front and back) to prove your payment history.
As always, you can call or text me for more information on how to qualify for a home mortgage loan and as a Realtor, I can also take you house shopping! JoAnn Young 321-243-4917, Email me
