Scott Dovala Santa Rosa Mortgage and Home Loans

For many borrowers it has been a long and hard road over the past months to try to refinance their homes. Credit has been tight, mortgage companies are making it harder every day to qualify for a loan, and some borrower's mortgages are more than their homes are worth. But now there may be some relief for many borrowers.

As part of the Home Affordable Act, Fannie Mae has introduced the Fannie Mae Refi Plus program. The Refi Plus program is designed to help borrowers who are current on their monthly mortgage payments, but may benefit from refinancing into a mortgage with better terms and a lower payment.

Who can benefit from the Refi Plus Program? Borrowers trying to refinance out of an adjustable rate mortgage, or a borrower looking to lower their monthly payment. Another important benefit is for borrowers whose LTV may have risen to 105%. For instance, let's say your mortgage is $315,000, but your home is worth $300,000. You would be eligible to qualify for this loan because you LTV would be 105%.

What are some of the major highlights of this loan program?

• Max 105% LTV and no max for CLTV
• Properties eligible are Owner Occupied, 2nd Homes and Non-owner Occupied (Investor)
• No mortgage insurance if existing loan does not have mortgage insurance,regardless of new LTV
  
• 2nd home must be 1-unit
• For investment property, no limit on the number of mortgages to the same

There are many restrictions to this program so call to see if your particular situation will qualify. However. just a few of the restrictions are if there is subordinate financing, it must be re subordinated. No new subordinate financing is allowed. Loan limits are set to the maximum conforming loan limits for 1-4 unit properties. Most importantly, your existing loan must be a Fannie Mae loan.

Don't know if your loan is a Fannie Mae loan? Call or email me today, I can look that up for you, or you can call your servicer to find out.

“Seize the day, and put the least possible trust in tomorrow.”

Horace quotes (Ancient Roman Poet. 65 BC)

The above words were never more true in today's mortgage climate. As I mentioned in my previous blog, "Refinance and Purchase Why Not Wait?", I explained why it was not wise to wait to lock in a rate at this time. But there are many of you who are still on the fence, debating with yourself whether this is the time to lock your interest rate.

If you are in the market to refinance, I am sure over the past weeks you have been getting quotes from various lenders. Go back and look at those rate quotes and do your own research. You will see that if you compare those quotes with the current markets they are considerably different. Rates are nearly 3/4 to almost 1 point higher in some instances.

For those who are looking for a rate in 4% to 5% range, your day will come once again. I do believe it will be sooner than later. But do not be fooled that those rates will be available for months on end. This economic crisis is not going away any time soon. Major parts of the new stimulus package currently being debated in Congress and the Senate will not take effect for 2 to 3 years once it is passed. There are still major problems with our banking system that will cause rates to fluctuate rapidly. When rates drop, you have to be ready to lock your rate, and the best way to do that is to get pre-approved.

What does it take to be pre-approved? First you must fill out an application such as the one that is secure on my website. Second I pull your credit report and pre-qualify you against the weekly changes in underwriting guidelines. Lately it seems these guidelines change with the wind. Lenders are raising credit qualifying scores at every turn. Third, you supply me with the necessary documentation to send your file into underwriting. Once underwriting pre-approves your file, we float your rate until the right rate is offered and then with your approval we lock it. It is not until your rate is locked that I order an appraisal. Up until the appraisal is ordered, there is no cost to you. It's that easy.

Call or email me today and find out more about getting ready for the next dip in mortgage rates.

Every month the mortgage industry and also the federal government report whether mortgage applications have increased or decreased. Since the government has started purchasing loans, interest rates have fallen into the mid 4 to 5% range. This has brought about the opportunity many have been waiting for to refinance out from under their option arm mortgage or those that have high interest 30 year fixed loan. It has also given many potential borrowers the chance to buy that dream home they have been eying for months.

So why not wait a little longer to see if rates will drop further? What a borrower who may want to refinance or purchase a home must realize is how it stands right now. The government will only be purchasing loans until June of this year. Unless something changes once June rolls around, borrowers who waited will see rates up once again in the high 5's and low 6's. It has already started in anticipation of the June deadline. Rates have been quietly creeping up unnoticeably.

Why haven't you heard about it? Because the news media only reports when rates hit a milestone number. For instance 4.5% or 5%. They rarely report any numbers in between. For rates to continue at this level, 2 things need to happen. Either the government continues to purchase loans, or banks aggressively start to lend. So far the latter has not happened. Although banks are receiving money from the governments TARP fund, they are using that money to keep their bottom lines from showing just how bad things really are. In a recent survey, it was reported that 45 percent of the chief executives from banks and other lending institutions answered that they would likely use TARP to cushion their capital base, while 15 percent stated they would use TARP to fund acquisitions. What this means is that many banks are using Tarp funds as a cushion for any future losses on loans and credit cards. Will this policy continue? Until banks and lenders stop having more losses than profits, they will continue this course of tightening of lending standards and hoarding the TARP funds.

That leaves the government. They too will have their own limits. With the 1.2 trillion dollars thay have already used to bolster the financial system, that will eventually start inflation creeping back into the economy. What does inflation mean to interest rates. It means they will be going higher.

What does this all mean to you as a borrower? Now is the time to seriously consider either refinancing or purchasing that home you have been looking at. If the government does not extend it's policy of purchasing loans, this small window of opportunity will be closing shortly, leaving you with that high interest rate.

Many of you may remember or many of you may have not even known that months ago when the Fed issued the statement that they would be taking over Fannie Mae and Freddie Mac that interest rates dropped 5/8 to 3/4 of a point over night. That had been a drop from 6.50% to 5.25%. Unfortunately, it only lasted 4 days and many borrowers felt they had missed out on the short lived opportunity.

However, last week when the Fed announced they were going to buy up to $100 billion in Fannie/Freddie debt and $500 billion of mortgage backed securities backed by Fannie, Freddie and GNMA, interest rates once again dropped down to levels of 5.125% to 5.50% for 30 year fixed.

For those that missed on out on refinancing, now is the time to take advantage of this drop. If you have a interest rate that is above the current rates that I mentioned, then give me a call and we'll see what we can do for you. Have an adjustable rate, now might be a good time to get from under those increasing rates and move into a fixed loan.

For those looking to purchase, it's a slightly different story. Those of you looking for a home or just in the process of thinking about purchasing a home must weigh all factors. Yes, rates are down, but are home prices going lower. If these rates stabilize here, will that also stabilize the housing market? All though questions to answer. Even the experts can't agree. However if you have found that property that is a home rather than just a house, then now may be the time for you to get pre-approved to see exactly what you can not only approve for, but what you can afford. Call me today and get a no-cost pre-approval.

Everyday one can't pass a TV or newspaper stand without seeing a story on the spiraling economy, home prices, employees losing their jobs. You here it on the radio, standing in line for a coffee and even in restaurants. The latter is what provoked this blog being written.

As I sat enjoying my lunch at a local restaurant here in Santa Rosa, I couldn't help but overhear 3 businessmen at the table behind me expressing their opinions about the economy and what they might do with their stock investments and 401 K's. All three must have been friends for sometime being that they were freely passing information between each other how much they had in their respective 401K's, stock investments and the remaining equity in their homes. Whether each was telling the truth or had inflated what they had accumulated, they each seemed to have done well for themselves. What did strike a nervous cord inside me was when the conversation turned towards the subject of making ones house and credit card payments.

One of the businessman changed the subject to one of his buddies who had a buddy that was one of the few and far between lucky ones who was able to have his loan modified so he could remain in his home.

"Why can't we get it on that!" one exclaimed. "I'd like a lower interest rate. Maybe we should stop paying our mortgages also."

"Yea", said the other man. "Maybe we should stop paying our credit card bills also. What could it hurt, it seems everybody else is getting away with it."

As I paid my bill, I understood their frustration. Although the majority of borrowers who attempt to modify their loans are in dire straights and have exhausted every other possible solution, there are those that work the system to their advantage. However, for any one that pays their mortgage and credit card bills on time and may think about working the system, there are consequences you must be willing to face.

Not only are you committing fraud but the lifetime you have spent building your credit will be wiped away for a number of years. The following are some facts of how long negative information will be attached to your credit report.

Charged Off Accounts: 7 Years

Delinquencies: Up to 7 Years

Child Support Judgments: 7 Years

Bankruptcy: Chapter 13/ 7 Years Chapters 7,11, and 12/10 years

Foreclosure: 7 Years

Collection Accounts: 7 Years, even if paid.

City/County/State/Federal Tax Liens: Unpaid 15 years Paid 7 years

Closed Accounts: Accounts closed to delinquencies remain 7 years. Those closed by the consumer or by the store for lack of use remain 10 years. Be aware that few consumers know that when closing credit card accounts because you don't use them anymore can actually lower your score.

As you can see,although there are some people who might think it worth the risk, working the system can cause some pretty extensive damage to your credit report. Is it worth the risk? I think not, and with lenders tightening up their approval processes even further, why make it any harder on yourself to get a loan down the road. Work the system? I think one will find out the system will work you instead.