Patty Rowan, Mortgage Interest Rates, Mortgage loans, Low Interest Rates,

More Mortgage Industry Changes

Time to be aware that you will start seeing yet another, group of changes in the mortgage industry.

Starting this fall with Fannie & Freddie, lowering of the conforming loan amounts. Orange County & LA County, word has it, will have a maximum of $625,500 no longer the $729,750 loan amount. Underwriting income ratios for Freddie (to date, Fannie may follow) are going to tighten. This will make it more difficult to qualify the debt borrowers carry. Good reason to be aware of mortgage industry changes.

The good news is that the MI (mortgage insurance) Companies will take on higher loan to values. Not so good news is that the cost factors for MI are high, which a borrower will have to pay on a monthly basis either by way of an additional cost added to the loan amount or they can choose to take a higher interest rate (called LPMI, Lender Paid Mortgage Insurance). In some cases choosing the higher rate will be a lower total monthly mortgage payment, believe it or not. Another reason to be aware of mortgage industry changes.

One thing to remember is that if you can STILL qualify with adding the MI to the monthly payment it will eventually drop off, once your home value increases and the loan to value will be 80% or less. How soon that will happen nobody knows, but from the looks of it we would be safe in a 5 year or 7 year or 10 year fixed loans. These come with very attractive rates starting at about 2.75% for a 5 year fixed with a 1 year arm through the 30th year.

All and all we can thank the Dodd - Frank Act for keeping us all scrambling and tightening our budgets on a daily basis. At least it keeps us thinking and performing math calculations as we never have before. Remember there is good reason to be aware of the mortgage industry changes for this will effect not only qualifying borrowers but it could be the last time you can make a sale to that buyer in a certain price range due to the mortgage loan limits changes coming this fall.

Economic indicators should be paid attention to. They are what we call "FUNDAMENTALS", in other words the structure of our economy. They will show a trend of interest rates going up and down. They will tell you allot about why the consumer is not buying or not spending. Why prices in your local super market are going up or down.

DEFINITION: An economic indicator (or business indicator) is a statistic about the economy. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles.

TYPES: Economic indicators include various indices, earnings reports, and economic summaries. Examples: Unemployment Rate, Non-Farm Payroll, Housing Starts, Construction Permits, New Home Sales, Existing Home Sales, Consumer Price Index (a measure for inflation), Producer Price Index, Industrial Production, ISM (institute for supply management), Gross Domestic Product, Retail Sales, Durable Goods Orders, Beige Book, Johnson's Redbook, to name just a few.

All economic indicators are published without fail every month, month in and month out. Once you follow the economic indicators from one month to the next, (which is very easy to do they are everywhere, Internet, newspaper, radio on a daily basis) you will begin to understand some of the whys of homes sales, interest rates, retail prices, employment, people's attitudes (little humor), etc.

Additionally worldwide events effect the economy and are called TECHNICALS. Technicals have no staying power, they are only TEMPORARY not near the staying power of economic indicators (called FUNDAMENTALS.)

This Week's Economic Calendar:

Wednesday;

7:00 am MBA mortgage apps

8:15 am ADP jobs estimate for May (+170K non-farm private jobs)

10:00 am ISM May manufacturing index (57.6 frm 60.4)

Apr construction spending (-0.5%)

3:00 pm May auto and truck sales (N/A)

Thursday;

8:30 am weekly jobless claims (-11K to 413K; con't claims 3.688 mil frm 3.690 mil)

Q1 productivity revision (+1.6% unch frm previous release)

Q1 unit labor costs (+0.9%)

10:00 am Apr factory orders (-1.0%)

Friday;

8:30 am May employment data (non-farm jobs +185K, non-farm private jobs +220K, unemployment +9.0%)

Yes there are mortgage loans that will allow a borrower to purchase a home when they show very little income on their tax returns.  (Not your typical "traditional" mortgage)

This loan would require assets. These assets don't have to be liquid. They can be stocks, bonds, mutual funds or savings of any kind.    

This loan will also permit as little as 10% down.   This loan is incredibly unbelievable.  But believe it, it exists. This loan will allow the borrower to utilize assets for the down payment without cashing in on the asset.

These loans are priced very well and not out of line with the going traditional conventional mortgage product. Believe it or not, you have options to select the fixed term of the loan.

Believe this.... Applications increased 1.1% from one week earlier. The Market Composite Index, a measure of mortgage loan application volume, increased 1.1 percent on a seasonally adjusted basis from one week earlier. The Refinance Index increased 0.9% to its highest level since December 10, 2010. The seasonally adjusted Purchase Index increased 1.5% from one week earlier.

Also available:

     * Vesting in Entities - all types of trusts, LLC's, partnerships & corporations
     * Foreign Nationals - no fico required; second homes okay; foreign income and assets acceptable
     * Unlimited Acreage & Expanded Property Types including hobby farms orchards and vineyards
     * Non-Warrantable Condos

So you see, "believe it or not", the lending world still has options for the homeowner that you probably didn't know about, because you are thinking in the traditional sense.

Yes, we all get caught up in looking at the end result low mortgage interest rates and don't realize there are a few ways to achieve the end results. I do this on occasion, forgetting that a borrower may want a lower mortgage interest rate than the typical 30 year fixed mortgage interest rate and would consider a shorter term fixed loan. Shorter term fixed loans come with Especially in this "New" mortgage marketplace, where we as professionals see the rates as being low, when the borrower thinks the 30 year rate we quote them is high.

Consumers are not aware of all the mortgage loan options that are being offered. In an effort to not confuse them, we sometimes cut ourselves short and forget that there is more than one way to achieve the end results.

Same thing happens when the contract is being negotiated or when the borrower suddenly realizes their dream home is slipping away because the lender declined them. Most people close up shop and go another direction, when we could get creative and offer something like the " seller rate buy down" or the seller carrying the second or the seller paying for a mortgage insurance policy premium. These kind of actions or "thinking beyond outside the box" save a sale from going south.

Lots to think about!

Newport Beach California Home loans