I hope you are well and hanging in there in this ever-changing world of ours right now!
First off - quick answer for y'all - YES, I am still in business and we are still lending money! Naturally, I have to follow that up with ‘yes' it is more ‘challenging' to get the money.
Since the latest financial distress of the ‘bailout' rates have fluctuated even more than usual (usual meaning since 8/2007): They go up and down, and in pretty significant amounts, several times a day.
Investors are asking for more documentation from all of us and coming up with conditions we have ‘never' been asked for.
For example, rates just went up, oh .375%, or so in the last 5 minutes since I started writing this - just from this morning's rate sheet.
Right now, a 30 year fixed rate with 20% equity and a credit score OVER 720, is running anywhere between 5.875 - 6.5%. Yes, that's a bit of a big margin there but that's the way it is.
MY ADVICE:
Be patient!
Don't rush a deal along as issues will come up.
Once you lock in a rate - let it go - that's the rate you are getting.
Yes, it's possible the rate could drop a smidgen (for a minute) BUT the rate could ALSO increase drastically!
No matter what - by locking in your rate - YOU ARE PROTECTED!!
And remember, during this ‘adjustment period' everything will work better if we all work as a team.
Choose your lender based on your ‘relationship' with your lender. Together, you will ALWAYS get the best rate. If you choose someone based solely off the ‘lowest rate' that person may not be here tomorrow ;-).
A loose quote from Bo Schembechler was shared with me yesterday from the author of ‘Bo's lasting lessons':
‘Your day is not complete until you help someone who could not possibly pay you back.'
This is how I have always practiced and what I continue to do, even in this time of strain. The long-term relationships formed are what get us through these tough times.
Please contact me for help on ANY real estate or mortgage related matter. Reminder - I am entering into my 13th year in the industry. I am a licensed Real Estate Broker and mortgage professional with a lot of experience and am in this for the long haul.
ENJOY the day!!
Optimism Today leads to a Better Tomorrow
Candace B. Pinaud Leave No Stone Mortgage Lending a division of Ann Arbor Mortgage Company, LLC.
HUGE news for the mortgage industry. Since D-Day last August programs have been taken away daily & new restrictions are constantly being placed on what we do have.
One big restriction was placed by Fannie Mae stating in automated underwriting findings 'home may be located in a declining market & will be subject to additional 5% LTV reduction'.
This meant no more 100% financing & if loan was a conforming 'normal' loan for 5% down payment that borrower was now forced to put down 10%! Being that I do a lot of work in the Ypsilanti, MI market area this has made it virtually impossible to get many borrowers into a home of their own without doing a government loan.
And while government loans definitely 'have their place' sometimes their restrictions make it impossible to use those as well.
This 'lifting of the declining market' guideline by Fannie Mae states that Fannie Mae will purchase loans from investors (Wells Fargo, Countrywide, Citi, Etc) with only a 5% down payment now or what loan program guidelines allow.
We still face the challenges that the PMI companies have their own declining market guidelines!
That's a whole other topic! Some let you do 5% down if your score is over 720, some over 680, some can do Lender Paid PMI others can't & list of restrictive guidelines goes on.
Used to be we shopped for 'creative mortgages' now we shop for credit score and down payment. At least we are seeing some 'positive' changes in the industry.
I have had a few issues come up lately with clients that have involved either identity theft, in smaller ways - such as folks taking out cell phone accounts in their names to bigger ways such as Capital One doing a 'soft-pull' on a client 54 times in 2 years all for 'pre-approval' letters they sent out!
Personally, i don't want anyone going into my clients credit unless it is absolutely necessary and most especially these days when one point could costs you .5 - 1% more in your rate!
There's an easy way to stop this 'extra' stuff from going on for five years - OPT-OUT - by way of one phone call: Just call: 1-888-5OPTOUT (1-888-567-8688) and follow the prompts.
I had done this myself a couple years ago and just freshened it up again to make sure it was easy to do - it was.
Well, the last 100% mortgage option has pretty much been taken away from us, and most others, in the country - as of March 31st. The Flex 100 has been discontinued.
There are a couple of government programs that still allow 100% however. The Guaranteed Rural Housing Loan is for any area outside of a City Proper and most of Michigan does fit that description.
There is NO loan limit, however, there is an income limit that is based on how many persons live in the household - all children and elderly counted.
There is a 2% funding fee, as in all government loans (1.5% or more), and it is a 30 year fixed rate with no pre-payment penalties. The rate right now is around 6.375% with NO PMI!
They are really fantastic loans and a great alternative for buyers. I find they are also helping get folks back into our rural areas which have suffered quite a bit with the foreclosure market around here.
Of course, VA is also 100% financing with NO PMI, similar rate of 6.5% and the same type of funding fee.
The mortgage world has been ever changing, to say the least, since last August. It is challenging to keep up with it.
However, I suppose that, ultimately, these changes needed to come. It isn't so bad that borrowers have good credit, a job and a down payment. They might take home ownership more seriously ;-).
The mortgage market has not gotten any easier in the recent weeks....programs still being taken away from us and credit score enforcements are becoming even stricter.
The State of Michigan has been declared, by almost all investors, a declining value state, hence, no investor will loan their maximum loan-to-value.
What this means - NO more 100% financing unless you do a government loan: VA loan or USDA - Rural Housing loan. You can also do FHA, however, they still require the 3% total investment by the borrower; that can all be a gift - but not by a down payment assistance company as those are no longer legal.
Coach your buyers as much as possible that they NEED to have a credit score over 680 to avoid putting down 10% down payment - in the state of MI, however, I'm sure other states are not far from that requirement.
OR - support your buyers looking in the rural areas. The USDA loans are FANTASTIC! Rates are around 6.5% for a 30 year fixed with NO pre-payment penalty and with NO monthly PMI - you pay a one-time fee of 2% that is added to your loan amount and well worth it.
So, the Fed has 'cut the rates' - twice no less - what exactly does that mean to those of us who have/want mortgages?
The Fed cuts the rates that allow banks to borrow from each other and also to borrow from the Federal Reserve. Unless you have a Home Equity Line of Credit - the 'Fed Rates' don't actually have much to do with the interest rate we, as borrowers, deal with.
If banks can borrow money at a decent rate then they can extend credit to the rest of us for a decent rate. Otherwise the interest rates we would have to pay for our mortgages would be higher since the bank themselves couldn't borrow the money in the first place for a good rate.
Kind of a trickle down - or up - effect.
The Federal Reserve's latest rate cut does not guarantee that rates will keep dropping.
In fact, mortgage rates often climb following a cut in the federal funds rate, and actually rose about 50 basis points after the Federal Reserve announced its emergency 75-basis-point cut Jan. 22.
'The Federal Reserve just lowered interest rates by three-quarters of a point and yet we saw one of the biggest one-day increases in mortgage rates that we've seen in 10 years,' says Bob Walters, chief economist of Quicken Loans.
'It shows you that there isn't a correlation to the federal funds rate when it comes to mortgage rates,' he says. 'It also shows you how quickly things can change.'
It's impossible to guess where mortgage rates are headed after a federal funds rate cut. Trying to guess when -- or even if -- already attractive rates will fall further is a fool's game. Instead, lock in your rate now.
Please contact me to see if you are in a position to refinance or if you know ANYONE who is renting and does not have a house to sell - NOW is the time to buy.
This time IS going to pass and you wouldn't want to be left on the sidelines saying 'I wish I had taken advantage of the once-in-a-lifetime-opportunity to buy a house when I could get an amazing deal with a super low rate'.
The Federal Reserve held a special meeting last night which resulted in a .75% rate cut to the Fed Funds Rate to 3.5%.
This is the first intermeeting action since September, 2001 and the deepest one day Fed Cut since 1984!
A brief statement issued by the Fed this morning said:
'The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate.' http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm
In addition to the Fed Funds Rate cut they also cut the discount rate - the rate member banks can borrow directly from the Federal Reserve - to 4%.
There is still discussion of cutting the rate up to another .5% when the Fed meets for their regular session next week.
Naturally, the stock market is in a tizzy and interest rates will remain volatile as well.
It is recommended to float your rate locks for now - but keep on top of things as rates could be adjusted quite often in times like these.
Rates already dropped .125% from yesterday's rates: 30 year fixed is currently at 5.5% with NO Points, origination fees, etc!!
Most of us in the industry have been counseled that when multiple lenders, car dealers, etc. pull a clients credit report within a certain time frame that the ‘inquiry' only counts as ONE.
Recent information from the credit bureaus has enlightened us that this, in fact, is NOT the case.
There are separate systems within the credit pulling system; one is called ‘NEXTGEN'. IF your lender is using the NEXTGEN system then, yes, each inquiry pulled within the same industry within a certain time period would only count as ONE inquiry.
However, ONLY 11% of all professionals who pull credit reports in this country are on that system!!
This means 89% of the rest of us use the same system which counts EVERY INQUIRY AGAINST the borrower!
Many inquiries within a small time frame WILL pull any borrowers score down. WHY? Because it is possible that each inquiry is extending credit to that borrower and the credit score has to adjust for that fact.
This is an excellent reason to counsel your buyers appropriately and refer them to those who know how the credit scoring system functions and will not put them in harms way.
You will go through a series of forms filling out data and as you get to each Bureaus site: Experian, Equifax & TransUnion
You will be asked different information before they will show your credit report.
They do this to insure ONLY YOU can access your report!
Hints & Tips
You will be asked if you want to 'see your score' for a nominal fee of about $7 'per bureau'.
I recommend you buy at least one score, however, keep in mind there are several different 'credit scoring models' and the score you see will not necessarily be the score the mortgage lender sees. In fact, the score you see is usually quite a bit higher than the score I will see.
One additional caution on the scores.
If you do choose to get your score, you MUST print that out right then and there.
You will NOT get another chance to view that score & you will not get to go back to that site later and see the score again.
One of my favorite aspects of this site is that you can dispute any item you don't agree with.
It's the FASTEST way to have the credit bureaus help the consumer and have a resolved response within 30 days.
DISPUTE, DISPUTE, DISPUTE!
If your score is lower then 680; give me a jingle or an e-mail and we will talk about it.
This is a one-time per year service, take advantage of it!!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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