Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon  Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or   email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

The reason Fannie Mae has started its Loan Quality Initiative is to improve its loan pool’s performance.    

Better loan quality should help keep conforming mortgage rates down, while reducing the taxpayer’s burden for foreclosures. Unfortunately, it’s also going to lead to more mortgage denials and a lot of busted purchase closings. Therefore, be extra careful with your credit between the date of application and the date of closing. If you must buy something “big”, consider paying cash.  Anything that goes on a card can be used against you as grounds for revoking your approval. Even if your loan is underwritten and ready to close.   

What the bank will do: Look at the Credit Inquiry section of your credit report to look for “non-disclosed liabilities”. If items are found, the bank will ask for supporting documentation on the inquiry, and will use the information to re-underwrite your mortgage.

What you should do about it: Don’t go looking for new credit until after your loan is funded.  Period.  Now re-read the prior sentence, please, to help it sink it.

 For help with your mortgage approval, or questions about the Loan Quality Initiative, let us explain your options in easy terms.

Posted by Bob Dangelo, a senior Loan Officer with over 20 years mortgage lending experience.  You can reach Bob at Horizon Financial (877) 627-9211 ext 110 or email at bdangelo@horizonfinancial.org.

Rates increasing... but still Low

The Labor Department said 162,000 jobs were added to payrolls in March. Economists had forecast employer would add 190,000 jobs.

The report adds further evidence that the economy is recovering, even though jobs were created at a slower pace than forecast. Investors often sell Treasurys and favor riskier assets like stocks and commodities when the economy is improving.

That’s because investments other than Treasurys traditionally provide the potential for bigger profits. Inflation also typically increases when the economy is strong, so rates must move higher to keep pace.

Interest rates have been creeping higher in recent weeks as more data shows the economy is on the upswing, even if growth is slow. Friday’s jobs data just adds to that string of upbeat reports.

The yield on the 10-year note maturing in February 2020 rose to 3.93 percent from 3.87 percent late Thursday. The yield on the 10-year note is often used as a benchmark for consumer loans. Its price is down 11/32 at 97 18/32.

The yield on the 10-year note is approaching 4 percent for the first time since October 2008, around the time the credit crisis peaked and investors poured money into the safety of bonds.

With economic forces putting pressure on rates to rise, NOW IS THE TIME TO LOCK IN YOUR MORTGAGE RATES!!!

-Call today. Gary Schoenholz – Mortgage Manager – 864-979-1111
-www.GaryTheMortgageExpert.com – 16+ years of experience.

In the past year the government has enacted several new rules to protect consumers and stop appraisal coercion by evil bankers and brokers.

HVCC (the appraisal code of conduct) has already forced many experienced and qualified appraisers out of the business.  It has also helped to propel home values lower by allowing Appraisal Management Companies to seek out the cheapest appraiser (inexperienced, out of area appraisers who have no knowledge of the local market) so they can fatten their profits.

The new Good Faith Estimate has certainly helped to confuse more consumers when they try to compare financing charges for purchasing or refinancing a home.

Of course, the lenders and regulatory agencies (Fannie, Freddie, FHA) have helped too by tightening up on their financial requirements to purchase or refinance.

All this consumer assistance hasn’t been totally successful.  Consumers are still slipping through the cracks.

WILY, CUNNING AND DETERMINED CONSUMERS ARE STILL MANAGING TO PURCHASE OR REFINANCE HOMES AT EXTREMELY LOW MORTGAGE RATES!  THIS IS TOTALLY UNACCEPTABLE!

If the government really wants to help consumers, they could force everyone who wants to purchase or refinance a home to take a two month training course so that the consumer clearly understands how the government has helped them.  Consumers should have to pay for this training and a final test.  The training and test money could be used as a much needed income stream for further government housing assistance.

The government could get Homeland Security involved as well.  By requiring all consumers to provide fingerprints and hair follicle samples we might well prevent a covert terrorist cell from purchasing a safe house. And if Homeland Security coordinated with the local DMVs to collect unpaid traffic/parking tickets from consumers attempting to purchase or refinance, another income stream would be generated so that local politicians could go on more Global Warming junkets to exotic places.

Lenders and regulatory agencies could also assist consumers by demanding more skin in the game.  Instead of a 20% down payment, how about a 50% down payment?

I’m confident that, working together, we can force all of the greedy and diabolical loan officers, appraisers, inspectors, real estate attorneys, homeowners insurance agents, etc, out of the financing business once and for all.  We can shut down the housing industry altogether.  All we need is a little more “HELP”.

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Low Mortgage Rates

Many residents of South Carolina and North Carolina and of the Southeast are refinancing or purchasing right now to take advantage of very low mortgage rates. Often people see low rates advertised, but when they call, the rates are higher, sometimes they are even lower than advertised. Why? Really there are several factors that can affect your new mortgage rate.

Most of the mortgage rates for Fannie Mae or Freddie Mac bank loans are under 5%, but FHA loans (best for purchasing) are generally a little over 5%. Why is FHA rates higher? This is simply due to the type of loan and the pricing that generates directly from the FHA that is higher due to the higher risk for FHA loans for default or foreclosure (this is also why there is higher mortgage insurance costs for FHA).

Mortgage term can affect rate. Shorter terms are generally lower rates. 21 to 30 year loans are priced similar. 16 to 20 year is slightly better than 30 year (maybe 1/8% better). 15 year mortgage or shorter term can be much lower than 30 year. As much as 3/8% to ½% lower, but of course, the shorter the mortgage term, the higher the payment. On the positive side, the lower rate and term means you can save many, many $1,000’s of dollars over the life of the loan in interest (sometimes as much as $50,000., $100,000., or more). In some cases there is even a 1/8% less rate for a 10 year mortgage versus the already low 15 year fixed mortgage.

Closing costs can also affect rates. If you want very low closing costs, that is great, but you will pay more for your mortgage rate. This makes sense if you think about it. The banks have to make money on a mortgage somehow, so if there is little or no closing costs, banks can make up money by having a higher rate. At higher rates, Fannie Mae, Freddie Mac, FHA, and VA all pay banks and lenders more money at a higher rate. Of course the lower closing costs are nice, but the higher rate will mean a higher mortgage payment. Many customer select a very low rate so they can have a greatly reduced mortgage payment. This is good, but this can come with 1% or higher origination or discount fees. For many people, this makes sense, especially if you plan on living in this home a long time. The longer you keep the mortgage, the more beneficial it is to have paid higher closing costs for a lower rate. The best thing is to analyze the numbers with a skilled and experienced loan officer to see which is most beneficial for you.

Lastly, there are some underwriting factors that can affect your mortgage rate. Factors such as your credit score, the amount of equity in your home, loan size, if you are refinancing a mortgage only or getting cash out for bills or other purpose. Generally the higher your credit score, the better your rate. You are best to have a middle credit score of 740 or higher. When scores get below 740 and especially 700, your rate can go up greatly, or even cause your mortgage application to be denied. The amount of equity in your home is very important. If the total of all mortgages (including HELOC’s) are less than 60% of your appraised home value (or 60% LTV, Loan To Value), this gives you the best chance at a lower rate and improves you chances of mortgage underwriting approval. If you get over 80% LTV, rates can be higher and you will be required to pay for mortgage insurance. Sometimes, a customer rate can increase during the loan process because the appraised value comes in lower than expected. This is why it is important to estimate your home value as accurately as possible (consider that in some areas, home values are dropping, especially higher priced homes). Loan size can definitely affect your mortgage rate. Smaller loan amounts under $100,000., means a higher rate. Rates under $60,000. can be significantly higher. Loan amount between $250,000 to $417,000. generally have the lowest rate. Over $417,000 is a jumbo loan, and rates generally are higher like the very small amounts are higher. Lastly, cash out loans have a higher risk than straight refinance loans, so they are priced with a higher rate with higher LTV’s. The higher the LTV, the higher the rates on cash out mortgages, especially the higher you go over 60% LTV.

If you are looking for a mortgage right now or have a mortgage rate over 5%, than call or email me right now. Now is the time to take advantage of historically low mortgage rates.

www.GarytheMortgageExpert.com

-Gary Schoenholz – Loan Officer Manager – 15 years experience, 1000 loans closed.

Call my cell phone today- 864-979-1111. 

Lower Mortgage Rates

Other property issues are more bizarre.  You might be trying to refinance your home but also happen to maintain a working goat farm in the backyard. 

Most lenders will fail to approve you for a mortgage.  Maybe you pay your property taxes to the Department of Motor Vehicles.  Fail.  Maybe you live in a geodesic dome.  Fail.

Maybe you own a log home and the nearest other log home is 50 miles away.  Fail.  Maybe built a bungalow in a neighborhood comprised of million dollar homes.  Fail.  Maybe you built a million dollar home in an area comprised primarily of bungalows.  Fail.  Maybe you turned your double-wide on it’s side so you would have a double-high.  Fail.  Maybe you converted the first floor of your home into a combination tax service and bait store.  Fail.

There are some new government programs available to homeowners who have either a Freddie Mac or Fannie Mae loan.  They can refinance up to 125% loan-to-value.  That is, the amount owed on their mortgage could be 25% more than the value of their home.  These homeowners could refinance at close to conventional rates as long as they have only one mortgage (no 2^nd mortgage or Home Equity Line Of Credit) and meet the normal qualifying criteria of income, assets, etc.  If you fall in this category, it is definitely time to refinance.

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Applications increased 4.3% overall, but the drop in demand for purchases loans is not a good thing for the overall housing market.      The drop in purchase applications was the result of rates jumping in late May which in turn caused many buyers to rethink their plans.   Coupled with higher unemployment potential buyers are wary of jumping into the market for fear they could lose their jobs even though home affordability is near all time highs.  

The spike in refinance applications is predictable because home owners looking to refinance can act quickly to take advantage of lower rates, while buyers tend to be less reactive to rate fluctuations.  

Overall rates are well below what they were last year.    30 year fixed rates, excluding fees, average 5.05% versus 6.22% last year.    Experts say mortgage rates need to be at 5% or below to significantly impact home loan demand.

Mike Owens is a Partner with Horizon Financial, Inc.    He can be reached at 864 907 2678 or via e-mail at mowens@horizonfinancial.org