The maximum allowable total expense ratio will be lowered to 45% with flexibilities offered up to 50% with strong compensating factors.

Fannie Mae is modifying the minimum representative credit score requirement for all loans delivered to Fannie Mae to 620.

There are several other industry changes that will be implemented as of December 12 but these two items are the major highlights  for potential borrowers. As always if you have any questions regarding these new changes please feel free to consult myself or your trusted mortgage professional.

Posted by Randy Ratchford Mortgage Planner/Partner. Randy can be reached toll free 877-627-9211 ext107 or email RRatchford@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

Going forward once your broker has registered the loan with the lender and supplied them with the Good Faith Estimate and Truth in Lending disclosure statement the lender will take the numbers that they have received and will mail them to the client. It is at this point when the 3 day waiting period begins. The broker/lender will not be able to order the appraisal until the 3 business days have passed, Sundays and Holidays do not count count in the 3 day period.

It is extremely important to get with your broker and review all of the fees to make sure they are properly marked as an APR item. If you are choosing your own attorney it would be a very good idea to get all of the fees up front from the attorney since these fees are APR related items.

If during the loan process the APR increases 1/8th of a point there will be another MANDATORY 3 day hold for re-disclosure and this could effect the loan closing or your rate lock. Although the Truth and Lending form is nothing new the process is definitely new.

Bottom line, work with your broker on the front end in order to prevent any hold ups on the file during the time sensitive process of the rate lock period.

Posted by Randy Ratchford. Randy is a Partner/Sr. Loan Officer with Horizon Financial. Randy can be reached toll free 877-627-9211ext107 or email RRatchford@HorizonFinancial.org

With mortgage rates are hovering near all-time lows, lots of Americans are taking advantage of refinance and home buying opportunities. 

The downside of today’s unexpectedly-low rates, though, is mortgage lenders are ill-equipped for the rush of new business. 

As a result, the process of underwriting and approving new mortgage applications is taking some conforming lenders as long as 2 months to complete. 

This is double the time needed as recently as six months ago.

Because there may be 60 days between the application date and the closing date, it’s important for applicants to remember that mortgage approvals can be revoked at any time prior to funding. 

As mortgage applicants, there are many events that are out of our control — job security and health matters, for example.  But there are also events that are within our control. 

Knowing that mortgage approvals can be fragile, here are 8 things you should absolutely not do while your home loan is in process.  It may be the difference between being approved by the bank, and being turned down.

1. Don’t buy a new car or trade-up to a bigger lease.
2. Don’t quit your job to change industries
3. Don’t switch from a salaried job to a heavily-commissioned job
4. Don’t transfer large sums of money between bank accounts
5. Don’t forget to pay your bills — even the ones in dispute
6. Don’t open new credit cards — even if you’re getting 20% off
7. Don’t accept a cash gift without filing the proper “gift” paperwork
8. Don’t make random, undocumented deposits into your bank account

Now, avoiding these items may not be practical for everyone.  For example, if your car lease is expiring and you need a larger vehicle, it doesn’t mean you can’t buy the car — just check with your loan officer first to be sure the new payments won’t “break” your approval. 

The same goes for accepting cash gifts from parents.  There’s a right way and a wrong way to accept gifts and doing it the wrong way may prevent you from using the gift as a source of downpayment.

Mortgage lending is full of “gotchas” and with underwriting times stretching to 60 days, it’s a lot more likely that a mortgage applicant will trip into one.  Following these 8 rules, though, is a good start.

Posted by Scott Fowler.  Scott is a Partner / Sr. Loan Officer for Horizon Financial.  Scott can be reached toll free @ 877-627-9211 x 104 or email SFowler@HorizonFinancial.org .  Visit Scott’s website @ www.ScottFowlerTeam.com .