Fred Chamberlin - Eugene/Springfield's #1 Experienced FHA Mortgage Consultant

When will we hit the bottom? What is a good interest rate? What is the best interest rate? These questions will plague buyers for the coming months as they try to decide if this is the right time to buy a home.

Today, Barry Habib, the Mortgage Market Guy, had this to say:

"Existing Home Sales surprisingly came in a bit better than expected, at 4.7M when estimates were only for 4.40M. Perhaps the current low interest rate environment we are operating in - combined with firesale prices on many homes - is helping more homebuyers see the wisdom in finally getting off the fence. The arrival of this positive news is driving Bonds a bit lower in early trading."

Where will you be when prices and rates are on the upswing?

Three major concerns in mortgage loan underwriting have again come to the forefront with underwriters. Those three items, Credit, Collateral and Capacity are the three legs of intelligent underwriting in todays Real Estate Mortgage industry. What are some of the things that effect these three legs and what changes are new (again) in the consideration of underwriters. You can read the entire post here in my post on Eugene Loan Guy.

I would have thought that some of these points were just common sense, but as is evident with the foreclosure rate and amount of defaulting mortgage loans, obviously, common sense didn't have a lot to do with underwriting in many cases in the past few years.

There has been a lot of discussion about how the adjustment period of ARMs are going to have a major detrimental effect on the housing market as people with adjustable rates that they got over the past 2-3 years will be seeing their payments skyrocketing as these ARMs adjust. Well, it is just possible that this is not going to happen. The major index for ARMs, the LIBOR has dropped dramatically lately and those adjustments may not be coming the way someone would think.

Please read the whole story here. Now, I think that it is best for most people to get into a fixed rate, but not necessarily for everyone, especially if you have lost equity. My best suggestion, give me a call. Pull out the note and adjustable rate rider that went with it. Let me go over your options with you. Think before you make a major jump!

The second post that I made on my website about refinancing covers the changing in the real estate mortgage market that may make it impossible for you to refinance even if it does make sense for you to do it. Changes like the loss of equity through lower sales prices, or charges for cash out refinances, or charges for lower credit scores, are only part of what is new in mortgage financing. I hope this gives you some useful information about the changing real estate environment.

Author: fchamberlin, Senior Mortgage Consultant, Eugene/Springfield OR, 541-342-7576

Yesterday I posted about "just because you can refinance your mortgage, should you." Today, I want to touch on another question and that is, "Can you." I got a call yesterday from a person that wanted to know what the rate was for a refinance. That was it, no lead in, no information from her, just, what is the interest rate? When I told her that I needed information to be able to give her information her response was that the other people she talked to didn't ask any questions.

WHAT??????????????

Let's consider this for just a moment. If today's rate is (again, just for the purpose of an example) 5%, is that what she is going to get? Well, if her credit score is 740 or above, the loan to value is 80 percent or less and her income is enough to qualify for the loan and she isn't taking any cash out, yes. But, if her credit score is 680, the rate may be 5.25% and there might be an additional cost to get that.

But what happens if it is an investment property and they own 7 financed properties, the rate might be almost 7% and be limited to 70% loan to value. How about if it is a triplex or they want cash out. All of these things have an effect on the rate. So, how can you quote a rate without knowing any information?

Can you get a loan? Consider the following. You bought your home two years ago for $200,000 and put $40,000 down on it with a 6.5% interest rate. Your principal and interest is $1,011.31 per month and now you owe $156,304 against it. Today, it is worth $190,000 and 80% of that is $152,000 so to refinance it without mortgage insurance, you would be bringing about $10,000 +/- in to closing. To get the $10,000 back, will take you more than five years and do you have that cash available? With mortgage insurance, your payment will be $73 less, so payback in about 7 ½ years.

I am not trying to talk anyone out of refinancing in this mortgage rate climate. As a matter of fact, it is a great idea for a lot of people, but just be aware of what you are doing. Make certain that you are dealing with a mortgage professional that has your interests foremost in their mind, not just another loan in their pipeline. Does the loan make sense for you? Look before you leap. Call a mortgage professional that you trust. Remember, if it looks too good to be true, it probably is.

My purpose of giving this information is to make a more informed client. I believe the more you know, the better decisions you can make. Teaching and training are as much a part of my business and lending. Make right decisions now and you will fell better about them later.