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18 Comments on Winds of Change are Blowing Again Regarding Mortgage Insurance
Glad to hear that possibly the markets are opening up to more opportunities. Who wouldn't want to eliminate mortgage insurance? Keep us informed as to the current events Gene.
Will do, Lyn! Hopefully we'll know more soon ...
Gene
I'm so anti 3% down. I truly believe no one should buy a home without saving at least 10% using it for down payment and closing costs. I think it's a slippery slop to not make a person earn a little equity in their home.
Every time we turn around they're changing the rules. I have no problem with the 5% down. It makes sense.
Tammy: I think the answer lies in the individual buying the home. I personally am living proof that you can enter the market with very little down and be a responsible home owner. To say that my wife and I bought our first home with VERY creative financing, is giving us the benefit of the doubt. Yet, it turned-out to be the best financial decision we ever made. We bought a home, where if we had had to save 10% or anything close to it ... we wouldn't have entered the market for years. The good thing now with the more strict lending is ... we know much more about the abilities of the buyer prior to approval for loan. Stats are proving that the more strict guidelines ARE working, and those borrowing recently are not as delinquent with their payments or facing foreclosure. Again, I think it boils down to the individual and their individual financial scenarios ... so I respectfully disagree with you on this one ...
Schuylkill Appraisal: You're right about the rules changing .. and changing quickly and often. Hang on to your hat ... I doubt this will be the end of this tale ...
Gene
I agree that there are exceptions. Frankly I helped one young woman get a USDA 100% this year and I know in my heart she's better off and that she will never miss a payment if she has to pick up aluminum cans off the side of the road to make her payment one month. But those exceptions should be rare. Most people don't care about their home if they have nothing in it. I see that with most of the REO properties in my area.
Great post, Gene. Let's hope there is additional capacity with private mortgage insurance. The FHA's recent increases are a killer for some and it's nice to think they'll have competition. I don't look at MI options as one or the other, but "the more the merrier." Each scenario demands careful consideration.
For a well qualified buyer with great credit scores, this can be a great option to have conventional 97% financing available. Unfortunately many of the buyers in the market do not have stellar credit and FNMA and FHLMC have severe hits to the fees for credit scores below 740. FHA will probably continue to dominate the market financing due to easier qualifying, non-occupant co-buyers, no cash reserve requirements and higher qualifying ratios.
I look forward to reading your future blogs on this topic. Just glad to hear it's not sub-prime lending that's making a come back.
I interviewed an LO a few weeks ago. She was at a credit union dor the last 13 years and told me she wasn't making the kind of money she wanted to make, so was looking to join a mortgage company, where there was more opportunity.
The interview went from bad to worse from there. I asked her how she got her business? She told me, she sat at her desk and waited for customers to show up. I asked her what mortgage products she worked with? She told me only conventional. Then she offered, we really don't want to see any buyers putting less than 20% down.
It turned out to be a shorter than usual interview.
A lender that understands YOUR needs...and not the Lenders...very key....!
Gene, I can see where this may open up the market. If FHA can do it, why not? Keep us posted!
Those are interesting developments, Gene! I'm glad to hear that lenders may be loosening up. I also share a little of the reluctance about 3% down that Tammy talks about in her comment. I realize the capability allows for some buyers to have the opportunity to purchase a home before they might otherwise have a chance to. But this past housing crisis, makes me wonder if we would have experienced it as severely, if more folks had more skin in the game!
Great info. It's so hard for realtors to keep up with absolutely everything and that is why we rely on terrific blog posts like yours. Thank you.
Gene..you remain one of the premium "go to" 's for this service here on ActiveRain. Good post and host here..thank you
Tammy: I certainly concede to what you have actually witnessed and experienced as an agent. But as a mortgage lender, I can not make that call. I have to base my actions, on the mortgage market and the actuality of each individual's financial scenario and history. And if there is an option available, I must explore it with that customer. That said, I can advise or express opinions as to the wisdom of certain choices ... but still, the option must be discussed and the ultimate decision must remain theirs.
Many of the complaints directed at lenders during the mortgage crisis has been that they coerced or steered clients in one direction or another. To NOT discuss all options viably open and currently available to my client, I am still committing that "crime" ... no matter how good my intentions are. JMO ...
Rob: You summed your comment up perfect, as well as my post ... "Each scenario demands careful consideration." Well said ...
Doug: You are absolutely right. There ARE lots of pros and cons to the situation .. and much to consider. Each on their individual merit. Each with their own personalized outcome. We'll see when and if this plays out ...
Pamela: Hopefully the industry has learned some lessons ...
Ahhh yes ... a quandry, isn't it? They want to earn more money, but accomplish that within certain limitations and perameters. I have found much the same when talking to applicants, Joe. Strong opinions with little real experience or background to offer. I'm left wondering how some of this still happens after Dodd-Frank and all the myriad of rules and regulations??? The number of experienced QUALIFIED lenders is smaller than we even imagine ... you saw the proof of that ...
Amen, Sally! And oh could we have a discussion on that ... hopefully soon???
Myrl: Lots of room for discussion, no doubt. And so many things that contributed to the mess! One good thing though ... statistics are proving that the current intense analysis of buyers IS paying off. Way fewer delinquencies and foreclosures. Moving forward we must not forget those statistics and why they are showing real progress ...
Chris and Dick: Thank you much ... very kind of you. I feel a large part of my job as lender is to educate. My clients certainly, but my referral partners as well. They can be so key to the success of a transaction ... and the improvements in the market ...
Richie: As always, you're so kind! I'm glad you find benefit in what I offer ...
Gene
Gene - Hopefully as they do allow these types of loans the underwriters for the lender and the MI company won't be so stringent as to strangle the deals. I've seen some of this with low downs lately.
I think we've all had those experiences, Christine. My hope is that the consideration of bringing this lower downpayment options is indicative of more openmindedness across the board ... underwriting included ...
Gene