? of the Day: Could you tell me when the increase in conforming loan limits will go into effect?

March 19, 2008 by Leave a Comment

I was emailed this question today:

Could you tell me when the increase in conforming loan limits will go into effect?

Believe it or not, the temporary increase in conforming loan limits is in effect.  In fact, it’s retro-active to July 2007.  Why?  This is so that Fannie and Freddie can provide some relief to Wall Street by being able to purchase loans over the true conforming limit of $417,000.   Investors have lost their appetite for jumbo mortgages, regardless of how great the borrower is, these loans did not have Fannie or Freddie’s backing.  Now that they will, we should hopefully see some relief as far as lower rates from lenders for jumbo mortgages.   The higher rates we have been seeing lately with non-conforming (jumbo) mortgages was to try to sweeten the pot on Wall Street. 

Lenders are being slow coming out with their pricing.   The first one I wrote about came out swinging with some very high "hits" to price.  I’m now beginning to see others just starting to appear with better pricing.  As more lenders enter the conforming-jumbo and fha-jumbo markets (i.e. competition), we may see rates improve.

Stay tuned!  I’ll be posting rates tomorrow.

Filed Under: Jumbo/Non-Conforming, Mortgage

A Good Faith Estimate is Not a Commitment

March 18, 2008 by 2 Comments

It’s very important to know that when you receive a Good Faith Estimate from any loan originator, it is not an offer nor is it a commitment to lend.  It concerns me when I’m dealing with a rate shopper (especially in a volatile market where rates may drastically change 3-5 times a day) and they are going to select who handles their mortgage transaction by the good faith estimate.  Here’s a quote from an email I recently received that prompted me to write this post:

"We do appreciate all your kind attention and the fine offer you made to us."

This couple had contacted for the past few months while shopping for homes requesting good faith estimates.  I appreciate that they were upfront with me by letting me know they were receiving quotes from someone else as well.  Depending on the day (actually the time of the day) the quote was prepared, they may have actually selected a lender who is quoting a higher rate than I would have.   Fact is, I only provided them good faith estimates when they requested them; I never provided them any "offers" or "commitments".

A Good Faith Estimate is a detailed interest rate quote for that moment (unless the LO doesn’t track the markets and is simply going off the morning "rate sheets") with the closing costs associated with that rate.  I’m actually considering adding a time/stamp to my GFE’s when I send them just because rates are changing that often (for better or worse) in this climate.

A Good Faith Estimate is not a guarantee of interest rate or closing costs.   In fact, the rate may all ready be different, or the cost to obtain the rate (higher or lower) by the time it’s been created and delivered to the borrower.  Make sure you receive a Lock Commitment from your lender and ask them to guarantee their closing costs.  As a matter of fact, certain situations may cause your rate or closing costs to change from the lock and/or good faith estimate, such as:

  • Appraised value – LTV (higher or lower than estimated)
  • Change in employment
  • Credit scores not what estimated prior to quote.
  • Closing time extended beyond the lock period.

If we have a change to cost (perhaps the appraisal cost less or the LTV is lower than expected changing the loan amount or cost for the rate) I will provide an updated Good Faith Estimate.

My last little bit of advise for you is (if you’re still insisting on shopping lenders by rate) to see if your lender offers a one time interest rate "float down" should the rate improve by more than 0.125%.   This provides you with a ceiling that your rate will never go higher than "x" and allows you to receive the benefit of a lower rate should they improve more than 0.125%.

Just because you have received a GFE from a lender, does not mean that you are qualifed for the mortgage.   It really just means that the lender is quoting this rate with those closing costs on that moment of the day.  Rates are a moving target, and without a lock–it’s just a quote.

Filed Under: Interest Rates, Mortgage

The Mortgage Porter Quarterly

March 9, 2008 by Leave a Comment

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The first issue for 2008 of The Mortgage Porter Quarterly is being mailed starting this weekend. 

This snail-mail newsletter features:

  • Your Credit: Tips to Score Big
  • Last Minute Tax Changes for 2007
  • What’s New with Rhonda (a true read if you’re having troubles falling asleep)
  • My (and my hubby’s) favorite recipe for Huevos Rancheros (pictured above).  YES…I made that. 
  • My Mortgage Adoption Campaign
  • Credit Check Up (this issue, I recommend visiting www.annualcreditreport.com and pulling your free copy from Experian.  (You’re allowed 1 free copy from each bureau annually).
  • And much, much more.

Would you like to be on my snail-mail list and receive The Mortgage Porter Quarterly? 

Confession:  it’s really not a quarterly.  I only mail this out three times a year (currently).  I didn’t want to call my newsletter "The Mortgage Porter Thirdly".

Filed Under: Credit Scores and Reporting, Financial Planning, Just for Fun, Mortgage, Recipes

Shiney New and Temporary Conforming Limits…Not So Fast!

March 7, 2008 by Leave a Comment

I feverishly posted the new FHA and conforming loan limits for Washington State.  It was pretty darn exciting since many of us in the industry were hearing whisper figures of $493k or so and voila, our new FHA and conforming limit for a single family dwelling is $567,500 for King, Snohomish and Pierce Counties.  This could be a nice bump through the end of this year.

The word is out!  Many Seattle, Bellevue, Everett and Tacoma area homeowners are VERY interested and want to take advantage of "conforming rates" now.   Not so fast….sorry.  (Hey…I’m really hoping that on Monday, I’m eating my words…the proof is in the pudding).   So far all that’s happened is that the loan limits have been announced.   This whole process needs to trickle from Fannie Mae and Freddie Mac and through all the wholesale lenders before those of us on "the streets" can offer you any benefits.   

Be prepared.  I fully expect an "add to rate" on loans from $417,000 – $567,500 (or what ever your area conforming limit is).   This will be to compensate Freddie/Fannie for the additional volumes and risk they are taking on.   The big question is: how much will it be?  My best guess is anywhere from 0.25% to 1.00% to what you currently see for conforming.   

"WHAT?" You say… "You’re telling me that you just quoted 6.00% for conforming today…and 7.00% for JUMBO…yet the new conforming rate for loans over $417,000 may still be 7.00% if I were locking today?"

Yes…that’s what I’m saying.  Again, PURE speculation on my part.

The "new conforming limit" goes back to July of 2007.  It’s retroactive for jumbo mortgages still not bought on Wall Street clogging credit lines.   I think that’s where we may see the most action:  rescuing the Thornburg Mortgages of the world (or at least Wall Street).  This from Bloomberg:

Thornburg specialized in so-called jumbo mortgages of more than $417,000, which typically were used to buy more expensive homes. Until recently, such loans were too big to qualify for purchase by government-sponsored entities such as Fannie Mae. Trading for such “non-conforming loans has come to a standstill, cutting off a source of funds for mortgage companies and pushing down the value of their holdings. More than 100 halted operations or sought buyers last year.

The company’s demise would reduce liquidity even more, said Keith Gumbinger, vice president of HSH Associates, a mortgage- market research firm based in Pompton Plains, New Jersey.

“No one has had anything bad to say about Thornburg; they have served the good-quality, high end of the market,” Gumbinger said. “It’s been a good, well-run business that is taking a beating because of market conditions.”

Thornburg is not a part of the subprime melt down they are being sucked into.  My best guess is that due to the volume and risk of loans that Fannie and Freddie will take on through the end of this year, consumers will see a benefit in pricing when the credit lines have been relieved.   

This may not be the band-aid we’re hoping for.  I don’t want to be a "bummer"…I do want to be practical. 

My best advise to those in the "new (temporary) conforming market" is to not wait for the new limits to be in effect.  Check with your Mortgage Professional to see if they can switch your program to "new conforming" IF it’s a better rate/scenario for you if you’ve all ready began the process under the current guidelines.  This is something that I can offer and I would assume most Mortgage Professionals are able to as well.

Filed Under: FHA, Legislation, Mortgage, Residential Purchase

New Conforming Loan Limits

March 6, 2008 by Leave a Comment

OFHEO just released the temporary conforming loan limits (through 2008).  It does not appear as though that every county that received an increase in FHA limits received one with conforming.   Here is what I show for Washington State:

King, Pierce and Snohomish Counties

1 Family – $567,500

2 Family – $726,500

3 Family – $878,150

4 Family – $1,091,350

Kitsap County

1 Family – $475,000

2 Family – $608,100

3 Family – $735,050

4 Family – $913,450

Clark and Skamania Counties

1 Family – $418,750

2 Family – $536,050

3 Family – $648,000

4 Family – $805,300

San Juan County

1 Family – $593,750

2 Family – $760,100

3 Family – $918,800

4 Family – $1,141,850

Jefferson County

1 Family – $437,500

2 Family – $560,050

3 Family – $677,000

4 Family – $841,350

This data is still very new and I’m just making it available to you as soon as I receive it.  More information will follow.

Filed Under: Mortgage, Refinance, Residential Purchase

New FHA Loan Limits are here!

March 6, 2008 by 3 Comments

Great news!  HUD has announced the new FHA loan limits for our area:

King, Snohomish and Pierce Counties

Single Family: $567,500 (up $204,710 from $362,790)

Two Family: $726,500

Three Family: $878,150

Four Family: $1,091,350

San Juan County

Single Family:  $593,750 (up $230,960 from $362,790)

Two Family:  $760,100

Three Family:  $918,800

Four Family:  $1,141,850

Kitsap County

Single Family: $475,000 (up $114,000 from $361,000)

Two Family: $608,100

Three Family: $735,050

Four Family: $913,450

Jefferson County

Single Family: $437,500 (up $105,000 from $332,500)

Two Family: $560,050

Three Family: $677,000

Four Family:  $841,350

Clark County

Single Family:  $418,750 (up $113,800 from $304,950)

Two Family: $536,050

Three Family: $648,000

Four Family:  $805,300

Clallam County

Single Family:  $383,750  (up $158,600 from $225,150)

Two Family: $491,250

Three Family:  $593,800

Four Family:  $738,000

Island County

Single Family:  $381,250 (up to $91,500 from $289,750)

Two Family:  $488,050

Three Family:  $589,950

Four Family:  $733,150

Whatcom County

Single Family:  $375,000 (up to $90,000 from $285,000)

Two Family:  $480,050

Three Family:  $580,300

Four Family:  $721,150

Skagit County

Single Family:  $373,750 (up to $89,767 from $283,983)

Two Family:  $478,450

Three Family:  $578,350

Four Family:  $718,750

Thurston County

Single Family: $361,250 (up to $86,700 from $274,550)

Two Family:  $462,450

Three Family: $559,000

Four Family:  $694,799

Kittitas County

Single Family: $328,750  (up $79,000 from $249,750)

Two Family:  $420,850

Three Family:  $508,700

Four Family:  $632,200

Chelan and Douglas Counties

Single Family:  $323,750 (up $78,200 from $245,550)

Two Family:  $414,450

Three Family:  $500,950

Four Family:  $622,600

Mason County

Single Family:  $310,000 (up $74,400 from $235,600)

Two Family: $396,850

Three Family:  $479,700

Four Family:  $596,150

Benton and Franklin Counties

Single Family:  $275,000 (up $66,085 from $208,905)

Two Family:  $352,050

Three Family:  $425,550

Four Family:  $528,850

Adams, Asotin, Columbia, Cowlitz, Ferry, Garfield, Grant, Grays Harbor, Klickitat, Lewis, Lincoln, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Wahkiakum, Walla Walla, Whitman and Yakima  Counties

Single Family:  $271,050 (up $70,890 from $200,160)

Two Family:  $347,000

Three Family:  $419,400

Four Family:  $521,250

According to the Wall Street Journal, these figures will also be our temporary conforming loan limits.

"The upper mortgage limits also will apply to loans purchased or guaranteed by government-sponsored mortgage companies Fannie Mae and Freddie Mac, FHA officials said."

More information will follow as I receive it.  Remember, these higher loan limits are only through the end of 2008.

 

Filed Under: FHA, Mortgage, Refinance, Residential Purchase

New Mortgage Porter Poll: Do You Care Who Your Mortgage Company Is?

March 1, 2008 by 7 Comments

As a Correspondent Lender, we work with just about ever bank and some lenders you may not have heard from.   Every so often, I’ll have a client request a specific bank.  The conversation may go something along the lines of:

Client:  Can you please lock my loan at Wells Fargo (or Washington Mutual, Countrywide, etc.)?

Me:  We work with many banks.  However, I usually select by who is offering the best rate or best product for your scenario.

Usually the client is fine with getting the best rate or product.  Sometimes, they may request to not be locked with a certain lender due to a bad previous experience.   I’ll advise the client that I won’t lock them at that specific bank; however, I cannot guarantee they won’t wind up at that bank since mortgages are often transfered.   The request to be with a specific bank has really dwindled lately.  I’m assuming clients are happy to have qualified for a mortgage with today’s tightened guidelines and to have secured a low rate.

I have been wondering…does a potential borrower care if they found out their mortgage was locked in (brokered) with a specific lender?

Would it matter to you if I lock your mortgage with Countrywide, WaMU, IndyMac, Wells Fargo, Chase, Flagstar, Wachovia or DiTech?  (Note: these banks are mentioned in no specific order and does not represent a complete list of lenders we work with).   How about a bank you’ve never heard of before?   Or if the bank was a "subprime lender" yet they offered a lower rate than a prime lender?

Voila, we have our first poll at Mortgage Porter on the right side of this page.  Please vote! 

Update:  I will keep this poll available until March 8, 2008.

Pole Results:

  1. Yes. There are banks I don’t want to support. (8)
  2. No. I don’t care. I just want the lowest rate. (8)
  3. It doesn’t matter (4)
Filed Under: Mortgage, Polls

Do I Actually Have Clients?

February 28, 2008 by Leave a Comment

Welcome

I just received this question from a Mortgage Porter reader:

"I’m looking for licensed, local quotes to refinance my house. My ARM is ending and I’ve been entertaining quotes from contractors to redo my kitchen this Spring. Do you actually have clients or just an advice website?"

I’m really glad she asked this question.  Mortgage Porter is web-blog where I dish out my 2 cents on the mortgage industry and what ever advice I may have.   You may notice that I do not have any advertisements on this blog as many other blogs do.  It’s tempting…but I’ve steered clear of google ads and offers from various vendors.

My sole source of income is the origination of mortgages for those I assist with their financial plans.  My clients are the fine folks who with residential property anywhere in Washington State.  If your property is outside of Washington, I cannot provide your mortgage (I’m only licensed for Washington) however, I will try to find a Mortgage Professional who can assist you.

A majority of my clients are either returning clients whom I’ve helped before, referred to me from past clients or professionals (real estate agents, CPAs, CFPs, etc.) and I also have clients who read Mortgage Porter and decide they would like me to help them with their mortgage needs too!   I do not "cold call" or buy leads.

I am a Licensed Loan Originator (510-LO-32047) with DFI and hold a CMPS (Certified Mortgage Planning Specialist) designation.

Sorry, too late for a quick answer:  Yes, I do have a mortgage practice and I welcome new clients.  You don’t even need to refi or to be buying a home to be my client.  I am "adopting clients" who have been abandoned by their loan originator as well. 

Thanks for asking!

Filed Under: Mortgage
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