Archive for June, 2008

Moving targets

June 19, 2008

Much like hitting a moving target, it is hard keeping up with the seemingly daily guideline changes from lenders, Fannie Mae, Freddie Mac and mortgage insurance companies.

While the pace of guideline changes have slowed from 2007, it still happens!

A post by a colleague of mine here at Hillside Lending titled, “Thinking Inside the Box” details the new, improved, and more interesting loan process. The bottom line message from that post — before the debacle of 2007, underwriters were more subjective in their decisions. Now they look for every “t” to be crossed and “i” dotted when it comes to guidelines.

Back to our moving targets… we’ve seen several changes over the last year and a half including:

Combo loans all but disappearing

The end of 100% financing

Rate adjustments for credit scores in the 700s

Minimum down payment requirements increased for investment properties

Changes on the horizon: Some lenders and mortgage insurance companies have declared that several metro-Atlanta counties are now a declining market and minimum down payment amounts have been increased from 3% to 5%. But remember, these are moving targets. Not everyone has declared metro-Atlanta a declining market. In fact, some lenders have sounded more like a politician flip-flopping on a platform… “3% down”… “no, 5% down”… “wait, 3% down.”

In this time of moving targets, it is imperative for you to work with a professional: a mortgage broker who is up-to-date on guideline and loan program changes, someone who is well-versed in market trends that determine mortgage rates, and, lastly, someone with multiple funding sources – meaning funding available from different lenders who have different guideline requirements.

There is more paperwork involved in buying or refinancing a house, but working with a professional who can answer questions on guidelines, document requirements, and knows what to ask for in advance makes the loan process as easy and straightforward as possible.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

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Update — Trapped like a rat

June 12, 2008

For the background to this post, check out the original post of “trapped like a rat” on Friday, May 30, 2008.

Bonds rallied on the Monday and Tuesday following the original post to finish and hold above the 200 day moving average. That kept mortgage rates at 6.000% — the high end of the trading range I mentioned on the May 30th post. Since then the results have been disasterous for bond prices and mortgage rates.

The “blue” line is the 200 day moving average.

Bonds are now well below the 200 day moving average. With more inflation worries coming from the Federal Reserve, the outlook for bonds over the short term isn’t very bright.

It seems the new trading range for mortgage rates will start at 6.250%. How high will this range go? Well, that is yet to be determined.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

A Fight for the Ages

June 4, 2008

This is the concluding post for the Conventional and FHA series.  For previous posts, use the following links.

Ladies and gentlemen, boys and girls, let’s get ready to rumble… In the red corner, I give you Conventional loan. In the blue corner, FHA loan.

As we get ready to start this highly anticipated match, let’s take a minute to go over the rules. This contest will list the characteristics of the loan programs, and there will be absolutely no punching below the belt.

Conventional (prime) Loans

— interest rate is generally lower than the interest rate of an FHA loan

— require a down payment of at least 3%

— loans with less than a 20% down payment will require private mortgage insurance

— loan options to avoid private mortgage insurance are available

— mortgage insurance is based on the appraisal value of the home

— relies on the traditional credit score model for qualification

FHA Loans

— loan is partially guaranteed by the Government

— typically carries a higher interest rate than prime loans

— mortgage insurance is required for loans with less than a 20% down payment (called mortgage insurance premium for FHA loans)

— there is an upfront mortgage insurance fee of 1.5% of the loan amount collected at closing

— mortgage insurance based on the purchase price of the home

— there are no options available to avoid paying mortgage insurance premiums

— down payment assistance programs are available

And we are ready for round 1. This is going to be great!

TIME PASSES BY…

The fight is over. They both made it through 12 rounds. What a fight! We are waiting on the judges for the winner… NO DECISION! NO DECISION! I can’t believe it. Someone has to win, shouldn’t they?

Back to reality… Several factors go into qualifying someone for a loan (credit score, credit history, income, assets available for a down payment, purchase amount, etc.). A loan officer choosing one option over the other for you without explaining the pros and cons of each is doing you a disservice.

I will end this series the way it began… I recommend speaking with a mortgage consultant that can provide professional advice that informs and educates you on the pros and cons of each loan program to ensure you get the best fit possible for your mortgage.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.