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Mortgage News

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Mortgage and Lending

Things are changing once again in the market.  People that are waiting to purchase or refinance in the hopes of rate improvement may be in for a rude awakening.  Usually by the time the Feds decide on what figures  the reduction in rates will be, the market has already been reducing rates for weeks.  Finally when a rate announcement is out, the market has to correct itself.

 Also in even bigger news, FNMA and Freddie Mac are implementing score overlays. That means a customer that could purchase last month is ineligible this month due to his credit score. Also buyers that need 100% financing could be facing a huge challenge because MI companies are beginning to require at least 5% down with lower scores.  So even if FNMA or Freddie say they will accept the loan, if it can't be MI insured its still a dead deal.

Borrowers financing over 95% with credit scores below 660 will now be charged a  higher MIP. My community and home possible loans even with THDA backing will now require borrowers to have a minimum score of 575 in order to obtain PMI. 

The only seemingly safe haven for buyers at this time is going back to good ole FHA financing.

FHA still allows 6% seller paid closing cost.  (Conventional has reduce seller paids to 3%, execept for Conventional/THDA loans)

So far FHA has not changed its guidelines on scoring.  We can still help "0" score customers with manual underwrite  using non traditional credit, ie: utilites, cell phone, auto insurance, etc.

I think you can see that the trend in the market is a tightening of guidelines and things will only continue in this fashion.  The bottom line is that if you have buyers that want to sit on the fence they better work on their credit scores or do something now because things aren't going to ease up anytime soon.

On the bright side things are still good.  Rates are great right now and we still have FHA to fall back on.

In fact FHA is considering increasing their loan limits to be able to help more borrower to purchase the home of their dreams.