"The only constant is change." Who said that? In my search, I found several people have said similiar quotes. The theme is that change will always happen.
Whomever we give credit to, is absolutely correct, especially in the world of lending. The last 18 months have seen constant change. Most of it good. There are some continually tightening rules that seem to be too far in the spectrum though. I will highlight a few of those here.
Fannie Mae and Freddie Mac are imposing pricing adjustments for certain loan to values, types of loans, credit scores and if a borrower is refinancing to pull cash out. Each of these categories have a different risk associated with it based on statistics of current loans and how they are currently performing.
Borrowers with a 740 score are now almost guaranteed at least a minor adjustment unless their loan to value is 60% or less and they are just refinancing. Borrowers with less than a 740 score can have a multitude of adjustments.
There are additional pricing adjustments for investment properties now too. You must put 25% down to get the lowest adjustments for an investment property. These pricing adjustments are on top of your credit score adjustments.
Condos now have a pricing adjustment, much like manufactured homes.
I am not saying that all of these adjustments are negative, however, in the rate environment that we are in that could actually help people lower their interest rates and be able to stay in their homes, some of these adjustments are pricing those people out of the ability to refinance and take advantage of the lower rates. It doesn't seem right.
One theory on these pricing adjustments are that rates are going to have such a low starting point and that after adjustments we will be in the 4.5-5% range for most borrowers. I hope that is the case so we can truly help clients save the most they can on their mortgage payments.
This may sound like I am saying that you can't get a loan these days, that is not the case. Lenders are extremely busy and the loan volume is high. I am saying that there is now much more to a phone call that asks "what are the rates today?" Everyone's situation is entirely different so you and your co-worker could both be refinancing your houses and end up with entirely different rates. It is all truly dependent on you situation!
Make sure that your loan officer knows all the adjustments and asks enough questions to be able to quote you the correct interest rate. Be wary of phone solicitors that tell you a "too good to be true" rate when all they know is your name and phone number. (more on this later)
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