Residential Purchase - The Mortgage Porter

New Conforming Loan Limit Won’t Help Refi’s w/2nds…FHA May Save the Day

March 13, 2008 by Rhonda Porter 2 Comments

Fannie Mae’s underwriting guidelines for the temporary conforming loan limits have been released and it looks like the new loan amounts are not going to be as helpful as many had hoped. The new guidelines for loan amounts between $417,001 – $567,500 in King, Snohomish and Pierce Counties are far more strict.

The biggest whammy is that if you were hoping to combine your first and second mortgage (or heloc) into one new conforming-jumbo mortgage, you’re out of luck. Fannie is not allowing any "cash out" refinances. This means that even if you were just paying off the two mortgages and not receiving a nickle back at closing–it’s not going to fly.

You must have a minimum of 660 credit scores for a fixed rate purchase for a LTV of 80% or less for a purchase using a fixed or adjustable rate.

Limited cash out refinances are allowed up to 75% loan to value with a minimum 660 credit score. Limited cash-out means that you are allowed to roll in the closing costs to the refinance and receive no more than $2000 cash back at closing (no second mortgages/helocs can be included in the refinance).

Update: it appears that Freddie Mac will allow cash out refinances up to a 75% loan to value with a 720 minimum credit score.

Adjustable rate mortgages are qualified at the fully amortized PITI at the higher of the note rate or fully indexed rate (worse case rate).

Be prepared for a "full doc" mortgage. There is no "stated income" allowed. You will also need two months of reserves (PITI) and are limited to a 45% DTI (debt to income) ratio.

You can only have four financed properties, including your principal residence.

On Monday, I believe lenders will finally unveil pricing…which again is said to not be as exciting as consumers had hoped. I’m hearing that the rates will fall between current Jumbo and conforming.

Rumor has it that the FHA-jumbo will be more friendly to "jumbo" homeowners…if they can get over paying the upfront MIP (1.5% of your loan amount) and monthly mortgage insurance (0.5% of your loan amount/12 months). For example, on a $500,000 loan amount, the upfront MIP would be $7500 (typically financed into the loan) plus monthly mortgage insurance in the amount of $208.33…even if you have an 80% loan to value. We’ll just have to wait and see a couple more days.

Remember, these loan limits only last through December 31, 2008.

More to follow.

Filed Under: Home Equity Loans & Second Mortgages, Jumbo/Non-Conforming, Refinance, Residential Purchase

New Conforming Loan Limits

March 6, 2008 by Rhonda Porter 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

My Valentines Post on Commitment

February 14, 2008 by Rhonda Porter 3 Comments

Just in time for Valentines Day, I thought I would revisit a word that used to horrify my husband before we married a couple years ago (on April Fools): commitment. I’m thinking about this because I received this comment from a potential client, it’s a common one and I appreciate their honesty:

"I would like to go ahead with preapproval if it does not cost anything and does not bind me in any way to anything….How long can I shop after getting preapproved?"

There are many issues that this brings up. My response to this home buyer in a chocolate covered nut-shell (you got to have chocolate on Valentines) is that I’m happy to provide a prequalification without obligation. However, I will not do a preapproval at this stage in our relationship. Here’s why:

A true preapproval involves more than just my efforts and time, which alone are valuable and limited. With a preapproval, I may also be involving the time of my Processor and Underwriter.
Back to my time: I have to prioritize which clients I’m working with in any given day. My first priority is to bona fide transactions. I must take care of those who have committed to working with me first. Especially in our current market.
Preapprovals also involve more costs. There is a fee to underwriting and credit (minimal for credit).
Lenders are relying on our commitments as originators when we submit loans to them. Having a higher "fall out" from clients who do not close a transaction jeopardizes our relationships with those lenders. One lender I work with tracks "fall out" and charges a slight fee (0.05 bps) when our fall out ratio is too high.

Other Loan Originators may be perfectly happy to issue a preapproval letter to people who are not ready to commit to a Mortgage Professional. The preapproval letter may or may not be legitimate.

As a home buyer, would you rather work with a Loan Originator who is chasing ever rate shopper (which is a lot of work) or a Mortgage Professional who is committed to you, your transaction and sticking around for you after closing by continuing to keep you informed of news that may impact your mortgage?

My Favorite Valentine’s Post: There’s No Love for the Subprime Borrower

Filed Under: Refinance, Residential Purchase

Tomorrow Morning I’ll Either Look Like a Hero or a Zero

February 6, 2008 by Rhonda Porter 3 Comments

Just before 5 tonight I provided a Good Faith Estimate along with a Total Cost Analysis comparing four price points for a 30 year fixed rate purchase closing at the end of March. You see most lenders are not allowing locks to take place “after hours”; you have to wait until the markets re-open in the morning. This home buyer is still shopping rates with various lenders and so when she calls them tomorrow, my estimate is either going to look outstanding because rates have increased (and I won’t be able honor it since it’s not locked tonight) or I’m going to look like a mooch with higher rates because the market has improved. Unless rates are unchanged, the rate on my good faith estimate is worthless.

New Mortgage Porter Feature: Weekly Tips

February 6, 2008 by Rhonda Porter Leave a Comment

Are you considering buying a home or refinancing in the future? You can now sign up to receive weekly email tips on home buying, preparing to refinance and credit scoring. Simply click on the links I’ve provided on the left side of Mortgage Porter under the green Mortgage Weekly box at Favorite Links.

It’s simple, free and I won’t hound you (unless you want me to)!

Filed Under: Credit Scores and Reporting, Refinance, Residential Purchase, Tech/Tools of the Trade