Delaware First Time Home Buyers are going to have a tougher time qualifying for loans after October 20th, 2007. Fannie Mae is making changes to what it will accept for approval on all 100% financing options that are backed by Fannie Mae.

What are the changes?  Fannie Mae is no longer going to accept EA-II or EA-III approvals thru its desktop underwriting system. So if you are applying for a Delaware Home Loan thru any lender be it bank or broker, they all have to follow the same system, you will have to qualify at EA-1 or Approve-Eligible.

How does DU work?  DU (Desktop underwriter) checks your loan application against the guidelines laid out by Fannie Mae for that particular program. If you meet all of the guidelines without any credit risk, you receive an approve eligible. If there is excessive risk associated with the file, then you receive a level approval, which can be level 1-4. Level 4 is called a refer with caution and you are not eligible for the loan at all.  Level 2 & 3 have significant risk to the file so usually involve an approval but an adjustment to the rate is applied. Level 2 & 3 happen if the borrower has no reserves and some credit challenges. These two levels will not be approved any more for 100% financing after October 20^th. They are approvable right now! Level 1 will continue to be approvable for now.

Why the changes?  Fannie Mae is responding to the changes in the market conditions from the mortgage market meltdown. Fannie Mae is limiting their risk of lending to borrowers who have a high risk of not making payments.

These changes will also affect the Delaware State Bond Program because it has to run thru Fannie Mae DU. So what are other options for a borrower that falls into this category?  The answer is FHA, FHA is not credit score driven and doesn’t have level approvals. If you need a Delaware FHA loan, then please feel free to call me at 302-368-7132 Ext.12 or fill out the contact me form on the left side of this web page.

What are the best options for challenged borrowers?  Sitting down with a Mortgage Planner and getting a plan of action together is a must. Attending educational seminars on credit repair and home buying is a must now so that you understand the process of getting a Delaware Home Loan.  There is a First Time Home Buyer Seminar September 29^th in Newark, DE, and an Understanding Credit and Credit Repair seminar October 13^th in Newark, De.  See out seminar page for more information.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713