The increase will apply to new purchases and refinances but existing homeowners will NOT be affected.

If you are currently in the market to buy however you can beat this increase if you act quickly.

No, you don’t have to sign a contract tomorrow.  Instead, you simply need to fill out a mortgage application and have your loan officer file for an FHA Case Number.

As long as you have a FHA Case Number assigned by April 18, 2011 you will not be subject to the increase.

Questions? Give me a call at 703.927.4554 and let’s see what we can work out.

Michael

The maximum no money down VA loan is increasing to $818,750 from the current limit of $768,750, assuming the borrower has full eligibility.

It’s worth remembering that veterans can have more than one VA loan at a time.  Veterans can do the second loan with no down payment if they meet eligibility requirements.

Michael

Starting today, Dec. 13, Fannie Mae will look at loan applications through a new set of standards.  Dan says

“Guidelines are changing across 9 separate areas of the mortgage approval process. Collectively, the updates figure to impact nearly everyone in want of a conforming home loan. They run the gamut from income and assets to documentation and reporting.

A few of the more major changes:

• The 97% “Flexible Mortgage” is eliminated, replaced by a standard 97% loan subject to loan-level pricing adjustments
• Borrower “minimum contributions” are eliminated for 1-unit purchases with at least 3% down. Gifts and grants are permissible sources for a down payment.
• ll revolving debt must be included in debt-to-income ratios, regardless of whether there’s “10 Payments Or Less”. If there’s debt, it must be counted.
• A 5% monthly payment against the balance must be assumed when no minimum monthly payment can be verified via the creditor, or the credit bureaus.

Furthermore, the new guidelines contain a note that former homeowners with a foreclosure on record must wait 7 years before re-applying for a conforming mortgage. . . .

For buyers with little or no money of their own, the looser gifting guidelines will be a boon.

For buyers with car payments or student loans, however, the new debt requirements may preclude an approval. Fannie’s new guidelines favor personal income over personal assets; it’s not what you have, it’s what you earn.

Self-employed persons and those with “good accountants” are especially susceptible.”

These new mortgage guidelines make pre-approval even more important for potential homeowners.

If you are in the process now or just starting to look for a home in Northern Virginia, call me at 703.927.4554.

Michael

In an effort to remedy the tsunami of foreclosures since 2007, Fannie Mae is putting more responsibility on the lenders and putting them on the hook if things go bad.

In other words, according to loan officer Dan Green, “the program shifts the onus of mortgage guidelines compliance away from the government-backed group and to the individual banks responsible for making loans.”

Green goes on to explain that consumers will notice very little difference – except for one thing.  And that one thing is BIG.

“In the new LQI environment, Fannie Mae wants lenders to verify that an applicant’s credit profile did not change while the loan was in underwriting.  If the profile did change and the lender happens to “miss” it, Fannie Mae might then refuse to buy the loan, burdening the bank with a loan (and possibly a loss).

Because of this added risk, it behooves banks to take each mortgage  applicant’s credit report in hand, and do a complete re-pull just prior to closing.

To make sure the loan is saleable to Fannie Mae, banks will look for evidence of any of the following events occurring while the
loan was being underwritten:

• Did the applicant apply for new credit cards?
• Did the applicant run up existing cards?
• Did the applicant finance an automobile, or other major purchase?

If the more recent credit report reveals inconsistencies versus the original  credit report, the mortgage is subject to a complete re-underwrite and a possible turndown.”  In other words, a last minute credit review could change your loan terms.

These three question should be “no brainers.”  I have always told my clients to wait – just wait – until they are in their house before doing anything that would change their credit report. 

This new action by Fannie Mae simply emphasizes the need to be financially prudent before signing on the dotted line.

For a full explanation of the new Fannie Mae initiative, visit Dan Green here.  And in the meantime, don’t do anything to jeopardize your loan terms

Michael

Rob goes on to say “According to some analysts, mortgage rates  “wandered about aimlessly” last week.  It is becoming apparent that the current economic recovery will be a very slow and muted affair, at least for the time being.

With manufacturing issues appearing to cool, consumers remaining on the sidelines, and, in last week’s Producer Price Index (PPI) and Consumer Price Index (CPU), inflationary pressures seeming to be nearly nonexistent, the Fed will likely be able to maintain its low rates for some time. The Fed’s policy statement last week said as much, with the Fed leaving rates unchanged again.

This week could be another week of the same for rates, but there are some unknowns coming. While many have pointed out that the Fed continues to have many tools available to influence rates, its campaign of buying mortgage-backed securities will come to an end on March 31st.

While there appears to be some significant stability to rates right now, markets can turn quickly. Hopefully it will not happen, but even a false rumor could lead to a spike in mortgage rates in the coming weeks.”

For Rob’s full report, click here.

Michael

Long-term mortgage rates moved down slightly last week as some of the recent optimism regarding the economy waned.

While industrial output increased a solid 0.6%, the increase was due to utility output related to the frigid weather gripping much of the nation.

Retail sales dropped by 0.3%, which was quite shy of the 0.5% increase that analysts had forecast. Fortunately, both the Consumer Price Index’s headline and core numbers increased only a scant 0.1%.

For more information on the mortgage market and why ARM indices don’t always move as expected, click here.

Rob Clark, Preferred Mortgage Group

The next few months should see rates affected more by the market place than by government policies.  Bottom line, we are probably in the last few weeks of sub-5% rates for 30 year fixed mortgages.

For my complete report, click here.

Rob Clark, Preferred Mortgage

Conventional, FHA and VA loans of $417,000 or less are all under 5 percent  with 0 points; loans above $417k,  up to $729,750 are 5% with 0 points.

The big news though is that as of the end of this week conventional loans of $417k or less will only allow for a debt to income ratio of 45 percent regardless of AUS  (Automated Underwriting Systems) findings.

If the loan carries mortgage insurance it is a maximum 41 percent debt to income ratio.  Some lenders have already moved to this maximum but everyone must be in compliance by the end of the week to align with Fannie Mae/Freddie Mac imposed changes.

For more click here.  As always, thanks to Rob Clark, for the most up to date information.

Michael

“With limited economic data released last week, mortgage rates continued their recent trend of slowly moving downward. While we continue to see limited activity outside of conforming and FHA-backed mortgages, it is worth noting that jumbo mortgages are beginning to reappear more widely in the market, and the difference between conforming and jumbo rates has been shrinking.

This is a week full of economic data for markets to sort through. With recent signs that the labor market could be hitting bottom, any signal that indicates that the recovery is beginning to power up could start pressuring mortgage rates upward.

Both Retail Sales and Industrial Production are due this week. If these two influential reports show greater strength than anticipated, then the likelihood of increasing rates will grow. However, if they both come in lower than expected, we could see this trend of very slowly decreasing rates continue.

Both the PPI and CPI also are also due this week. If they are near expectations, they will create some additional downward pull on rates.”

Next we’ll be bringing you up to date information on the extension of the first time home owners tax credit so stay tuned.

Michael