If we had just one penny for every mortgage change since 2007, we would not be broke for sure, as they occur almost weekly, if not daily. It is a flux of what works, what might benefit, and what we know for sure does not work. The changes are ever flowing so that mortgage lending can survive again without hitting rock bottom as in previous years.
About a year ago last month at this time, we learned that mortgage rates hit a three-month low. As you know, all things have changed since January 2016.
Rates per online reviews Updated 02/03/2017
30YR Fixed were ranging 4.23%
FHA/VA were at 3.75%,
15 YR Fixed ranging from 3.43%
5/1 ARM – 3.03%.
Please Note the Following:
As always, your rate will depend upon the lending institution you are working with. Your financial and credit status, the property, the loan amount, (High Balance or Fannie Mae/Freddie Mac Conforming loan amounts), the LTV (loan
to value), and down payment factors are equally important. If you have 20% down payment, excellent credit scores, equally low DTI (debt to income), and the property appraisal comes in at or below the sale price, you have it made. Unless, there is something comes to knowledge other than the above. Always making sure, you know that situations arise even when things seem perfect.
Let me say this, not everyone has 20% down payment (conventional lending). That is okay, if you have verifiable assets for a 5% down payment from your own funds, you are still in luck.
If you have a loan pending and waiting for the rates to go lower, the advice of most originators should be, be careful with waiting too long. Most know that the rise of mortgage rates has been the conversation for a while now and who knows when.
Homes sales pending are much lower than expected, also due to the economic changes. Lenders are more careful in their mortgage origination with the losses that caused many to go under. They are looking for clients who have planned their home-ownership with great scrutiny and preparation.
Credit – Not New, However- What to Expect From Your Lender
What to expect regarding credit, credit reports, and how to set your-self up for an approval. FNMA in particular has decided to look at your payment history on your credit cards, mortgages, and student loans. This process will be included in your credit analysis. Two of the credit agencies, Trans Union and Equifax, are in the lead on this, even though there is always a tri-merged credit report required within mortgage lending. There will be a history of your payments to see if you are making an effort to pay off your cards, (paying more than the minimum payment), or if you are always paying the minimum payment. Not just the fact that the payments have been paid, without delinquencies.
Student loan payments must be included in the debt to income ratio now.
- it is 1% of the outstanding balance, or
- the actual payment that will fully amortize the loan(s) as documented in the credit report, by the student loan lender, or in documentation supplied by the borrower;
- a calculated payment that will fully amortize the loan(s) based on the documented loan repayment terms; or
- if the repayment terms are unknown, a calculated payment that will fully amortize the loan(s) based on the current prevailing student loan interest rate and the allowable repayment period shown in the table below.
Business Debt In Borrower’s Name:
If you are self-employed and have a debt your business pays, you must that the business pays the debt for it NOT to be counted in your debt to income.
- the account for the debt must not be or have a history of delinquency
- the business must provide evidence that it paid the account with a business bank statement or 12 month canceled checks
- the lender’s cash flow analysis of the business took the payment of that debt/obligation into consideration.
If the above are not provided the business debt must be counted in the borrower’s debt to income analysis/debt to income ratio.
These are another step in advancing the quality of loans and the credit risk involved. The agencies are constantly working so that they never have to face a potential loss equal to the losses as in the previous years. Will they have losses? Some losses are expected any time you are a lender, but not in the amounts that made our Country go into a recession.
On a final thought, please note that I am always going to give you a conservative point of view. Here is why. Besides having been in mortgage lending for a long, the buying of a new home (whether new to you or new construction) can be very complex and you will be in debt for a long time. Unless, of course, you are conservative yourself and plan to pay it off early. Be careful, and go to the right lender. The one who is looking out for you, and is going to give you the best service.
There are ways to make sure that you are getting what you need. Take it slow, read, study, know your credit, know your financial position, and get the service you deserve.