Will reactivating an old account help my credit score? “If the borrower reactivated an old account, would the borrower see a boost in credit score?”

Source: Will reactivating an old account help my credit score?

Remember Sub-prime Mortgages?

Nowadays, we are basically able to categorize buyers in one of two ways, those with slightly challenged credit that still qualifies them for competitive interest rates in the 4% range or those who cannot be financed at all. But it wasn’t always that way. At one point borrowers were either “A paper”, meaning they had “good credit” and qualified for the lowest interest rates and fees available or a sub-prime “bad credit” borrower which were placed in what are now called predatory loans or they were Alt-A, which meant “challenged credit” at slightly better but far from prime rates and fees.  Although many in the industry will disagree, as some loan officers made a killing charging front and back-end points to the tune of 1 – 4,5,6% of the loan amount back in the day, others found it unconscionable and are glad those days are over, present company included!

Your Bucket List

But, are they? In 1997, there started being talk about adopting Risk Based Pricing in the mortgage market, an existing model where “lenders assess borrowing costs loan by loan, aided by computerized loan-evaluation systems capable of forecasting the default risk dictated by each mortgage”. Each loan having an investor such as Freddie Mac, Fannie Mae and others to guarantee the loan, these investors would then “adjust the guarantee fees” “to more accurately reflect the risks represented by the individual mortgages within a loan pool that an originator wants to sell”.

Replacing prime and sub-prime titles with “buckets”, lenders are no longer able to charge as much in rates and origination fees, even for “challenged credit” borrowers, which is why we barely see rates deviate much from the 4% range these days and also why “bad credit” borrowers have been forced out of the market, the American dream out of reach for now.

The American Dream

Or is it? A new breed of lender is here to pickup where the subprime lenders, many if not most of them now out of business, left off. With competitive, low interest rate FHA/VA and USDA mortgages down to a 550 FICO score, the dream of home ownership is very much alive and well. Lucky to work with a few, the Axiom Realty Team professionals are standing by to be of service because, with service first, rewards come later.

A trade name of Norberto Villanueva, the Axiom Realty Team at Equity Colorado is a REALTOR member in good standing of the Pikes Peak, Colorado and National Association of REALTORS, holds an Employing Broker level license and is a former REALTIST member of the National Association of Real Estate Brokers. Certified as a Short Sale and Foreclosure Resource (SFR) and a Real Estate Owned (REO) specialist, we focus on win-win-win solutions or none at all, offering expert analysis, acquisition, disposition and specialty finance consultation for retail buyers and sellers as well as private and institutional investors alike.

Contact the Axiom Realty Team at Equity Colorado for all your real estate investment needs by using the contact form found in the lower right of this page. We are the ART of Real Estate and look forward to serving you.