Mortgage giant Fannie Mae will soon be evaluating and rewarding mortgage seekers for new evaluations of good credit behavior. They will look into if you are a “transactor” or a “revolver”, benefiting the “revolvers.” The Boston Herald gave definitions on these new titles:
“A transactor is someone who pays off credit bills in full every month or makes more than the minimum required payment. A revolver is the opposite: Someone who routinely makes the minimum payment on credit cards and other debts, rolling balances over to the next month. Credit industry statistical research suggests that, all other factors being equal, revolvers tend to present higher risks of future default to lenders, especially when they are accumulating substantial unpaid balances. Transactors tend to be lower risk,” they wrote.
Before now, those looking for mortgages could have been affected by late payments, but they could not see how much people paid monthly and if they left a lot to roll over to the next month. Fannie Mae “will soon begin evaluating how all loan applicants have managed their credit over the previous two years – how much they owed in revolving debt each month, the minimum payment allowed on each debt, and how much they actually paid,” wrote the Boston Herald.
These new reports should benefit loan applicants who regularly pay off debt. For some whose credit scores don’t give the whole story, more details about their credit behavior could help them get a mortgage for a home. It should make lending fairer.
Terry Clemans, executive director of the National Consumer Reporting Association, says it this decision by Fannie Mae is “the biggest change to the mortgage credit report in nearly a quarter of a century.”
For people seeking financing for a house, this should be great news if you’ve had good credit behavior. This new report could really change the future of home financing, making it fairer for many people. If could help get you closer to your dream home in Miami from RE/MAX Paradise today!