Hoping to ease restraints on conventional mortgages for certain borrowers, the $600 million Michigan First Credit Union said this week it is debuting the Turning Point Home Loan Program.
The product is designed to help those who may have run into roadblocks to owning a home but still have the financial capacity to qualify for traditional mortgages, said Chris Maynard, vice president of lending for the CU located in the Detroit suburb of Lathrop Village. Under the program, participants “can make a lower down payment – typically about 10% – than conventional mortgage requirements” with private mortgage insurance “usually waived,” said Maynard.
Loan terms – 10-, 15-, 20-year loans or a seven-year-year balloon loan – “are flexible to fit the needs of borrowers,” said Michigan First.
In addition, noted the CU, “the typical home buyer for this type of loan would be someone who has the financial capacity to repay the loan but might have lost a job in the past several years and had their credit score drop because of it.”
That credit score might be 590 with a 12% down payment, for instance. Under the Michigan First scenario, those “down payment funds aren’t seasoned – moved from one account to another without sitting for a specified period of time,” the credit union said.
Loans made under the Turning Point plan do not fault the borrower, considering “traditional practices would deny the loan or penalize the homeowner with a much higher interest rate,” the CU said.