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November 2008 Archives

November 3, 2008

Do Rates Drop After a Presidential Election?

(This article came to me from an anonymous loan officer) elect2008.gif

No political views are intended in this email. This is for information purposes only and is intended to help you discuss this topic with your clients!

Not only do I like this article, but it reminds us that present rates are so good compared to any other time in recent history.

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Do Rates Drop After a Presidential Election?

Everyone is buzzing about the prospect of lower mortgage rates after the Presidential election. Is there any truth to the rumor that mortgage rates drop after Presidential elections? What about changes in trends?

It's important to note a few things about the history of mortgages in the U.S. before I explain why....

Continue reading "Do Rates Drop After a Presidential Election?" »

And for those SFH Investor Clients...PMI, FICO Rules, etc.

While this news has been out for a little while, I thought I'd make sure that everyone is on the same page. Underwriting guidelines continue to be squeezed as the market looks for ways to combat the heavy losses due to foreclosures. In the last couple of months these changes have (or will) gone into effect:

1. Mortgage Insurance companies will no longer provide mortgage insurance on investor transactions. Therefore, investor loans now require a minimum down payment of 20%.

• Keep in mind, even with 20% down, there are some pretty big pricing hits; while the hits are still there with 25% down, they are quite a bit lower.

2. The ability to qualify when keeping a current property as a rental and buying a new home to live in, is much more difficult. Here are the new guidelines impacting this process:

• Conversion to an Investment Property: Fannie Mae will permit the 75% rental income calculation to be used IF there is documented equity of at least 30 percent in the existing property. The rental income must be documented with a copy of the fully executed lease agreement AND a copy of the receipt of a security deposit from the tenant and deposited into the borrower's account. If the 30 percent equity cannot be documented then both the current and the proposed payments must be used for qualifying AND 6 months PITI for BOTH properties will be required for reserves.

• The FHA process is not quite as challenging, but close. it requires only a 25% equity position. And will not require the additional reserves.

3. Pricing hits for credit scores on conventional loans. The hits kick in at 60% LTV and become more dramatic as the LTV climbs and the FICO score lowers.

• Example, an 80% LTV loan has a 1.75% pricing hit with a 670 FICO. In the past, that FICO was considered pretty good. For conventional pricing, not anymore!

• FHA hits appear to be limited to FICO scores under 620.

4. Mortgage Insurance is tightening down, especially on condos with LTV's of 90% or greater!! Make sure your lenders get their Mortgage Insurance approval as soon as possible, not just their loan approval!

5. Don't forget, the FHA new down payment of 3.5% goes into effect on January 1st. Best recommendation is to get a home under contract by the end of November
so it closes and FUNDS by Dec. 31, 2008.

Please do not hesitate to contact me with any questions. My industry is changing, It's important that we understand the changes and how they impact our clients!

November 10, 2008

How Much $$ Do I REALLY Need to Buy a House?

I recently created this info [2008] for a new first time home buyer when he asked what he would need to buy a home in Hawaii (he currently makes about $3600 a month income....and had about $5000 saved up):


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1. Ask the Realtor for the minimal house and condo prices available for your area

2. You will want to have a minimum of 3.5% of the purchase price of the house available for the down payment in addition to another 2-3% in closing costs. The seller can pay the closing costs portion (up to 6%) if they are able and are negotiated to do so by your Realtor.

The mortgage company I originate loans might also be able to have your new mortgage bank pay the closing costs if you are in a fast moving market and might not win the house offer if you ask for closing costs in addition to an offer discount.

3. The down payment/closing costs comes from your normal checking and/or savings accounts (you want to be sure there are no....

Continue reading "How Much $$ Do I REALLY Need to Buy a House?" »

November 25, 2008

Dropping Rates....Washington's Nov. 24th Move

This just came in from my secondary market rep this morning:

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Stock market up; bond market prices higher, and mortgage market on fire this morning
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The Fed has made a massive move to unlock the credit markets that so far have resisted all attempts to light the fire. In a surprising move this morning the Fed announced an $800B spending binge that may finally get mortgage rates down. The move is Bernanke's attack on deflation and getting credit markets functioning again.

The Fed will purchase as much as $600B in debt issued or backed by government-chartered housing-finance companies.

It will also set up a.....

Continue reading "Dropping Rates....Washington's Nov. 24th Move" »

About November 2008

This page contains all entries posted to Eileen M. Carda in November 2008. They are listed from oldest to newest.

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