These three-digit numbers, and how high they are, often spell the difference between being able to buy a home, and not qualifying for one. Between getting the best rate, with the lowest loan fees, or paying interest rate and loan fee premiums.
And, in recent months, loan screening has been getting increasingly stringent!
Enter the new Beacon Mortgage Score! According to Chicago Tribune Real Estate Columnist Mary Ellen Podmolik in last Friday's edition, the new scoring methodology will initially be used to determine borrower qualification for a loan modification, as well as their repayment likelihood, the new score might eventually replace the currently-most-popular FICO Score as a way to screen potential homebuyers. Early tests indicate the new score identifies about 25% more high-risk mortgage loans.
Although the FICO Company will never reveal its exact credit scoring formula, the firm does acknowledge the new score will take into account the number of mortgages and home equity loans a potential borrower might have, as well as how well the borrower pays these existing loans. The range of scores will mirror the traditional FICO - 300 at the very low end, 850 at the top.
Within the past year or two, critics of the FICO Score raised concerns it did not accurately predict which consumers run the greatest risk of defaulting on a mortgage loan. The new Beacon Mortgage Score is addressing these concerns, say its creators.
But, in reality, will the new model be a superior predictor of payment behavior? Only time, and data, will tell!
Your thoughts and shares?
Please read our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO