I Read this and felt the need to pass it on.
No, the Sky ISN'T Falling on the Mortgage Industry
If you have read the newspaper or turned on the television in the last month, you have probably seen a story or two about the mortgage business. The headlines have highlighted lenders going bankrupt, the elimination of certain types of loans, and the diminishing appetite of the secondary market to repurchase loans. Even the Presidential candidates have weighed in on the solutions to this current "crises."
Despite this rather sobering news, I remain optimistic about a return to a more traditional mortgage environment, and feel this is an inevitable correction to the mortgage marketplace, and not a "crises" as the news reports lead you to believe.
Q: How has the mortgage market changed in the last month?
A: American Home Mortgage, a nationwide wholesale lender (they were not a sub prime lender) experienced liquidity problems and declared bankruptcy. As a result, many lenders reacted by restricting loan programs that include loans with little or no down payment, as well as limiting loans allowing alternative income documentation (stated-no doc, etc). HOWEVER, many mortgage solutions still exist if you have reasonable credit scores.
Q: So, can consumers still get 100% financing on home purchases?
A: Yes. With reasonable credit and verifiable income you can still obtain 100% financing. Additionally, if you are self employed with good credit, stated income loans still exist if you have at least a 5% down payment.
Q: What about Jumbo Loans? Haven't those rates risen rapidly in the last month?
A: Yes. Jumbo Loans are defined as mortgages that exceed $417,000. In response to the latest developments in the credit market, many lenders quickly raised their rates to near 8% on a 30 year fixed mortgage, over a full point higher than a couple of weeks ago. However, a few lenders have since brought that rate down closer to 7% and we at Arbor Mortgage have a wholesale lender that is offering a 30 year fixed mortgage under 7% for loan sizes above $417,000.
Q: Can home owners still get favorable terms on refinances?
A: Yes. Again, so long as the borrower has solid credit and there is equity in the property, there are ample opportunities to refinance. Because real estate prices have leveled and in many cases, declined, an appraisal must validate the amount of equity still existing in homes before refinancing.
So, what does all this mean to you? Well, if you have buyers that are hesitating to move on their dream home, or are uncertain about the availability of financing, please have them call me. I will be happy to work with them to find the best loan available within their appropriate price range.
Thank you Rob Moore from Arbor Mortgage for this letter.
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