Major Lender Increases Cost to Extend Rate Lock Commitments

August 7, 2012 by 3 Comments

Yesterday we received a memo from one of the big 3 banks notifying us of an increase to extension fees on all conforming mortgages on locks effective August 9, 2012 by 0.125%.  An extension fee is an additional cost associated with extending the rate lock period of your mortgage loan. For example, if your loan is locked for 30 days, and it takes more than 30 days to close the loan, there will more than likely be a fee to extend the rate lock commitment long enough to close the transaction. Just like a rate lock, the longer the time period that is needed, the higher the cost is. It is typically more cost effective to have a longer lock period than to pay for an extension.

Each lender we work with has their own rate lock and extension policies.  Here is what it cost to extend with this lender:

It’s important to note that this is NOT Mortgage Master Service Corporations general extension fees. We work with several lenders and what ever their fees are to extend are passed on to the transaction. One lender that we work with currently offers extensions on a daily basis (instead of blocks of time) so at a cost of 0.025% per day. If we only need 5 days for an extension, the cost would be 0.125%.

Everyone likes to keep cost down and avoid extension fees. This is why it’s critical to provide your mortgage professional with requested documentation promptly, especially once your loan is locked.

Filed Under: Interest Rates Tagged With: ,

Vacations over…I’m back to work!

August 6, 2012 by 1 Comment

I’m back to work after my vacation in Hawaii with my son. We had a great time exploring Oahu’s beautiful beaches. The last time I was in Hawaii was probably about 12 years ago when my husband was a county manager for a title insurance company. And we brought home beautiful weather to Seattle – wasn’t this weekend gorgeous?

Okay… back to work. This week we don’t have a lot on deck as far as scheduled economic indicators. 

Wednesday, August 8: Productivity

Thursday, August 9: Initial Jobless Claims

Watch for the results of the bond auctions starting Tuesday and ending Thursday when the Treasury will be selling $72B in notes and bonds.

Last Friday’s Jobs Report came in stronger than expected which has caused mortgage rates to trend higher.  With that said, mortgage rates are still extremely low.

As of 7:40 am this morning (8/6/2012), I’m quoting 3.500% (apr 3.579) for a 30 year fixed rate based on a sales price of $500,000 with a $400,000 loan amount (20% down) and low-mid credit scores of 740 closing in 30 days for a purchase in greater Seattle.

If you’re interested in a mortgage rate quote or getting preapproved for a purchase or refinance for a home located anywhere in Washington state, please contact me.

Filed Under: Economy Tagged With: , ,

Charge Offs: All is Not Forgiven

August 1, 2012 by Leave a Comment

Part of what I do as a mortgage originator is review credit reports. I’m often surprised how many consumers think that a debt that has been charged off means that it has been removed from their credit history or “forgiven”. Basically, a charge off is when the creditor is writing the debt off their books for tax purposes, it is not terminating the debt owed by the borrower. Often times, the charge off may turn into a collection or be sold or assigned to a collection agency and therefore, mortgage lenders will view a charge off on a credit report as a collection.

I while ago, “Betty Bellevue” called me to see if she could help her mom obtain a mortgage. A couple years prior, her mom had a car that she “gave back” to the bank. She thought she would only have a “repo” reflected on her credit report and that enough time had passed to where she might qualify for a mortgage. What she didn’t realize is that even though the bank had the car back, she had a “charge off” for the balance of the car loan on her credit and that for purposes of a mortgage, we would treat it as a collection (it would need to be paid off and removed from the credit report).

Distressed home owners with second mortgages may be surprised to find charge offs on their credit report following a short sale. Borrowers are often caught completely off guard by this remaining damaging debt being reflected on their credit report. Depending on how the lender reports the short sale to the credit bureaus, it may be just as detrimental as a foreclosure. If you are considering a short sale or foreclosure, I strongly recommend you find an attorney who specializes in dealing with this type of situation.  Linda Ferrarri has great information on her credit blog about foreclosures and short sales which I highly recommend if you find yourself facing this situation.

A charge off also dramatically impacts credit scores. Once a charge off, or collection is paid, credit scores will initially drop as the credit scoring modules view it as a “new activity” on the borrowers credit. Eventually scores should recover and improve. If you are considering a mortgage and have charge offs or collections, it’s important to discuss how and when you’re going to pay them off (some can be paid at closing which will prevent your scores from tanking during the mortgage process).  

You can obtain a free copy of your credit report at www.annualcreditreport.com.

Washington State’s DFI (Department of Financial Institutions) guide for home owners who are considering a short sale and Foreclosure Help.

Filed Under: Credit Scores and Reporting Tagged With: , , , , ,

What May Impact Mortgage Rates this Week: July 30 – August 3, 2012

July 30, 2012 by Leave a Comment

I’m actually on vacation this week with my son. We haven’t gone on a trip “just the two of us” since he was about 7 or 8 years old…now he’s in college! I will be back to work on Monday, August 5, 2012. This week is jam packed with economic data that may impact mortgage rates, winding up on Friday with the Jobs Report. There are no economic indicators scheduled to be released today.

Tuesday, July 31: ADP National Employment Report, Personal Consumption Expenditures (PCE and Core PCE), Employment Cost Index, Personal Spending, Personal Income, Chicago PMI, ISM Index and Consumer Confidence 

Wednesday, August 1: FOMC Meeting

Thursday, August 2: Initial Jobless Claims

Friday, August 3: The Jobs Report and ISM Services Index

Whew! After all of that, I feel like I need a vacation. Seriously, if you need anything while I’m away, please contact my office at 253-859-5300 or Marilyn Porter, my sister-in-law and President of Mortgage Master Service Corporation at 206-669-2746. 

Filed Under: Economy

Taking a Break!

July 28, 2012 by Leave a Comment

I’m on vacation and will be back to work on Monday, August 5, 2012.  I haven’t been on a vacation with my son since we went to Disneyland. He was around seven … he turns twenty this year! 

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Should you need anything while I’m away, please contact my office at 253-859-5300, or my sister-in-law and President of Mortgage Master Service Corporation, Marilyn Porter, at 206-669-2746.

Filed Under: Travel Tagged With:

FHA Streamlined Refinance: Credit vs Non-Credit Qualifying

July 25, 2012 by 10 Comments

With an FHA streamlined refi, most folks have the misconception due to the program name “streamlined” that the refinances are close very quickly and are a slam dunk with little to no paperwork. While they do close quicker than a typical refinance since more often than not, you’re not waiting on an appraisal, if you’re going for a lower cost or better rate, you’re probably opting for a “credit qualifying” FHA streamlined refi. What’s the difference?

FHA streamlined credit qualifying basically means that the borrower is providing income and asset documents, just like a regular refinance. By providing documentation that shows they actually qualify for the new mortgage, lenders provide preferred pricing. Since it is a “manual” underwrite (a real human is underwriting the loan and not a computer program) the debt to income ratio is limited to 45%.

FHA streamlined non-credit qualifying is when income documentation is not provided and not stated on the loan application. The borrower’s income is not a consideration. Because of the higher risk, the rate or pricing is often slightly higher.

EDITORS NOTE: Rates quoted below are expired (years old!!)…for a current mortgage rate quote for your home in Washington state, click here.

Right now (July 25, 2012 at 11:00 am) I’m working on a quote for an FHA streamlined refinance for a home located in Seattle. The rates quoted below are based on mid credit scores of 680 –  720 with no appraisal and the base loan amount is $289,000.

FHA credit qualifying 30 year fixed: 3.375% (apr 4.548) priced with just over 1 point in rebate credit which will cover closing cost and some of the prepaids/reserves. Principal and interest payment is $1300.01.

FHA non-credit qualifying 30 year fixed: 3.750% (apr 4.934) priced just under 1 point (about 0.25% difference in fee) which covers closing cost and some of the prepaids/reserves. Principal and interest payment is $1361.82.

NOTE: for a current rate quote on a home located anywhere in Washington state, based on today’s pricing and your scenario, click here.

What type of supporting documentation is required?  This is in additional to a complete loan application and credit report.

Non-credit qualifying:

  • Copy of your existing mortgage Note
  • Copy of your mortgage statement (we need to document a “Net Tangible Benefit”)
  • Bank statement (all pages) if funds are due at closing. Large deposits may be required to be documented.
  • Drivers license
  • Social security card
  • Payoff obtained from escrow company documenting that the current month’s mortgage payment has been made

Credit qualifying: all the above, plus…

  • last two years W2s
  • last two years tax returns (if self employed)
  • most recent paystubs documenting 30 days of income
  • most recent bank statements (all pages) documenting at least funds for closing. Large deposits may be required to be documented.

Additional documentation may be required depending on your personal scenario.

Whether you opt for non-credit qualifying or credit qualifying is your choice and depends on your financial scenario. When rates and pricing are the same for both scenarios, most would opt for “non-credit” qualifying. Since recent changes with how HUD prices FHA mortgage insurance for some loans, there has been major changes with which banks are offering FHA streamlines and how they’re pricing them.

If I can help you refinance your FHA loan on your home located anywhere in Washington state, please contact me.

Filed Under: FHA, Refinance Tagged With: , , , , , ,

How Long Will PMI Stay on my HARP 2.0 Mortgage?

July 25, 2012 by Leave a Comment

This is a question that I’m often asked by Washington  home owners who are considering refinancing their current conventional mortgage using the HARP 2.0 program. The answers I’ve received from private mortgage insurance companies vary from “it’s up to the mortgage servicer” to “when the new loans principal reaches 78% loan to value”.  

If your current loan to value is triple-digit because of being underwater, the thought of paying private mortgage insurance for years may not sound appealing. Here are some points I encourage my clients to consider:

  • determine when your existing private mortgage insurance is set to terminate. If it’s before December 2013 (assuming the HARP program is not terminated early, which Fannie and Freddie have reserved the right to do) you could consider delaying your HARP refi so that you won’t have PMI on the new loan.
  • compare your existing principal and interest payment (excluding the private mortgage insurance) to the proposed HARP payment including principal, interest plus mortgage insurance.  Many of my clients are saving hundreds of dollars each month – even with keeping their mortgage insurance.
  •  consider how long you plan on keeping your home and what your alternatives may be. If you are underwater and are planning on staying in your home or eventually converting it to a rental property, reducing your payment now may be beneficial. If you are planning on doing a short sale, then refinancing at this time would probably not pencil out.

With HARP 2.0 refinances, when you have private mortgage insurance, most pmi companies are transferring the pmi certificates over to the new lender without any issues. The pmi rates stay the same so if you’re currently paying private mortgage insurance monthly, you can estimate that the new pmi payment will be roughly the same with your new mortgage payment.   

If you have lender paid mortgage insurance, often times it was paid for upfront and there will be no private mortgage insurance for the home owner to pay. Sometimes the lender paid mortgage insurance (LPMI) was being paid monthly by the lender and in those cases, the pmi company may convert the policy to “paid monthly” so the borrower can assume it.

If you’re interested in a mortgage rate quote for a HARP 2.0 refinance for your home located anywhere in Washington state, contact me.

Filed Under: HARP - Home Affordable Refi, Mortgage Insurance Tagged With: , , , , ,

What May Impact Mortgage Rates the week of July 23, 2012

July 23, 2012 by Leave a Comment

mortgageporter-economyThere are no scheduled economic indicators due to be released today. However, mortgage rates are trending lower this morning due to steepened worries from the Euro-zone, namely Spain and Greece. How could Greece and Spain’s pain cause lower mortgage interest rates? Investors are seeking the safety of bonds, like mortgage backed securities. As I write this post (6:35 PST), the DOW is down about 121 and the Euro has fallen to a two year low.

[Read more…]

Filed Under: Economy, Interest Rates
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