As a REALTOR® operating in Pagosa Springs, my business is tied very closely to the mortgage industry. The shifting tides of rates and corrections have left me dependent on my "daily fix" via the Internet to try and maintain some understanding of current mortgage conditions.
Thankfully, I don't have to go this alone. Recent news of fairly significant rate changes whet my appetite enough to seek out someone who really knows what's going on. Kathie Lattin of First Southwest Bank was gracious enough to give me a few minutes of her time this week. Kathie is the vice President of First Southwest Bank and has been with them for 17 years. The following is from an interview with her:
Chris: "Kathie could you give us an overview of what has happened in the last few years in the mortgage industry?"
Kathie: "We hit the big turbulence when the sub-prime market dropped - because too many people over-borrowed for their ability, which has really hurt the housing market. There are a lot of houses out there for sale. The inventory is available but the qualified buyers are becoming more picky.
"The programs have all changed. Obtaining the 100% financing is getting a lot tougher. Mortgage insurance and extra costs are still appropriate to what you are doing. You can do 80/20 purchases or 90/10, whatever you want to do, but a lot of them aren't offering second mortgages anymore - so you can't do a first/second combination. Most of them only go up to 90% on the first. So to get the 100% you usually have to go to an in-house portfolio or have mortgage insurance."
Chris: "I understand that last week the long term mortgage rate dropped. Can you give me a basic scenario of what that means for the borrower on a $350,000 home."
Kathie: "This rate drop was put into place to help stabilize the core market. Last week with an interest rate of 6.25% a borrower would have made a principal and interest payment of $2,155, where today with a 1% origination fee your looking at about 5.5% which drops that payment down to $1,987. So we are seeing significant monthly payment changes from the interest rate drop."
Chris: "The big news this morning is that the Federal Reserve cut the short term interest rates by 75 basis points. Will that have any effect on long term mortgage rates?"
Kathie: "Not on long term mortgages, but on short term borrowing. The cut was made in hopes that consumers will get out there and borrow more short term money- your credit card, in house accounts, home equity line of credit and that sort of thing. If they pull it down then people can therefore buy more and get the economy back going.
Chris: "It seems that I am starting to see more attention on some of the homes between about $200,00 and $250,000 in the recent weeks. Can you offer any reason for this concerning mortgages?"
Kathie: "We are seeing a shift in the people that are able to qualify for these loans. Rates are coming down. We are at a low even for what it was two years ago...so this is making those loans available. What we have to do as REALTORS® and Lenders is consciously put the right person in the right home. Not over extend them, we can almost qualify them for anything. The 100% is still out there but we need to know they can truly afford this so that were not flipping or doing foreclosures a year or two from now. We have to justify to our customers, we are here for the long haul."
Chris: "For the borrower with an average credit score what rate can you give them right now?"
Kathie: " Probably 5.875% with no origination fee and 5.5% with an origination on a 30 year fixed rate mortgage."
Thanks to Kathie Lattin for her expert insight into the mortgage industry. I highly recommend her for her professional efficiency and strait answers when it comes to home loans. She can be contacted at kathie.lattin@fswb.com or call 970-731-1300. Learn more about First Southwest Bank at their website.
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