Tuesday, following the holiday, rates popped up about a half point to rate. Last week, the very same people I was quoting mid-to-high-4’s to who opted not to lock yet, now are receiving updates with rates in the low 5’s…much to their surprise. Why didn’t they lock? Because some want just 0.125% better in rate and some want the rate priced with zero points (which is a much taller order than 0.125% improvement in rate these days with rebate pricing almost non-existent).
Martin Luther King Day
January 19, 2009 by 3 Comments
In 1986, King County, where I reside, was renamed after Martin Luther King Jr. 
Originally our county was named after William Rufus Devane King, a slaveowner and once Vice President under Franklin Pierce, back in 1852. The renaming of King County was official in 2005 and the new county logo, featuring Martin Luther King Jr replacing a "crown" followed in 2006.
Personally, I'm pleased to have our county to be named after Martin Luther King Jr.
In observance of Martin Luther King Day, Mortgage Master will be closed. We will reopen for business as usuals on Tuesday, January 20, 2009.
2009 County Recorders Schedule
January 15, 2009 by Leave a Comment
Here is the holiday schedule for King, Pierce and Snohomish counties recorder's office. If the recorder's office is closed, your transaction will not be recording on that date.
A tip of the hat to The Talon Group, your title and escrow partners. You can click on the links above to have a pdf of the specific closures by county.
Condo’s Getting Spanked by Fannie
January 12, 2009 by 2 Comments
Fannie Mae’s latest hits to rate will be implemented by lenders any day. Condominiums are really getting spanked with a 0.75% add to fee if there is less than 25% home equity in the property. This will apply to both purchases and refinances for any mortgage except those amortized 15 years or less.
If you are considering refinancing your condo, contact your local mortgage professional right away (I can help you if you’re located in Washington state)…if you’re in the process of buying a condo and are “floating” your interest rate, I highly recommend considering locking.
PS: Cash-out refinances are also getting whammo’d by Fannie. Don’t wait!
Sunday Drive: Winter Adventures in and around Leavenworth
January 11, 2009 by 2 Comments
This Sunday Drive is written by Geordie Romer who shows us there is a lot more to Leavenworth beyond the Bavarian Village. Geordie is a real estate agent with Windermere Real Estate in Leavenworth who blogs regularly on MyLeavenworth.com and Leavenworth Real Estate Blog. You can also follow him on Twitter at www.twitter.com/geordieromer.
In Leavenworth, we have two types of folks. Winter people and summer people. [Read more…]
Fannie Mae: The Hits to Rate Keep Coming
January 9, 2009 by Leave a Comment
Fannie Mae has announced new "hits to rate" that will take place on mortgages they purchase effective April 1, 2009. This means that lenders will start to implement these increases ANY TIME since loans originated today may be bought by Fannie around the effective date for the new increased pricing. No lender wants to be an April Fool and in position of having to make up for the difference in price when the loan is sold.
Below is an example of some of the hits to pricing rates. You can see why Mortgage Professionals should not rattle off rate quotes without having detailed information of the borrower. If a couple (or single borrower) has a low-mid credit score of 720-739 and they are putting 20% down (LTV 75.01-80%) they can pay 0.25% more in fee than a borrower with a 740+ mid score or the 0.25% will be factored into the interest rate (currently running about 0.125% to rate).
Agency Products
 |
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
| FICO |
<=60%
|
60.01-70%
|
70.01-75%
|
75.01-80%
|
80.01-85%
|
85.01-95
|
>95%
|
| >=740 |
+0.25
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
| 720-739 |
+0.25
|
0.00
|
0.00
|
-0.25
|
0.00
|
0.00
|
0.00
|
| 700-719 |
+0.25
|
-0.50
|
-0.50
|
-0.75
|
-0.50
|
-0.50
|
-0.50
|
| 680-699 |
0.00
|
-0.50
|
-1.00
|
-1.50
|
-1.00
|
-0.75
|
-0.50
|
| 660-679 |
0.00
|
-1.00
|
-2.00
|
-2.50
|
-2.25
|
-1.75
|
-1.25
|
| 640-659 |
-0.50
|
-1.25
|
-2.50
|
-3.00
|
-2.75
|
-2.25
|
-1.75
|
| 620-639 |
-0.50
|
-1.50
|
-3.00
|
-3.00
|
-3.00
|
-2.75
|
-2.50
|
| <620 |
-0.50
|
-1.50
|
-3.00
|
-3.00
|
-3.00
|
-3.00
|
-3.00
|
Cash-Out Refinance
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
| FICO |
<=60%
|
60.01-70%
|
70.01-75%
|
75.01-80%
|
80.01-85%
|
85.01-90%
|
>90%
|
| >=740 |
0.00
|
-0.25
|
-0.25
|
-0.50
|
-0.625
|
-0.625
|
N/A
|
| 700-739 |
0.00
|
-0.625
|
-0.625
|
-0.75
|
-1.50
|
-1.00
|
N/A
|
| 680-699 |
0.00
|
-0.75
|
-0.75
|
-1.375
|
-2.50
|
-2.00
|
N/A
|
| 660-679 |
-0.25
|
-0.75
|
-0.75
|
-1.50
|
-2.50
|
-2.00
|
N/A
|
| 640-659 |
-0.25
|
-1.25
|
-1.25
|
-2.25
|
-3.00
|
-2.50
|
N/A
|
| 620-639 |
-0.25
|
-1.25
|
-1.25
|
-2.75
|
-3.00
|
-2.50
|
N/A
|
| <620 |
-1.25
|
-2.25
|
-2.25
|
-2.75
|
-3.00
|
-3.00
|
N/A
|
Condominium and Cooperative Property Types
|
Adjustment Name
|
Old Adjustment
|
New Adjustment
|
|
LTV >75%
|
N/A
|
-0.75
|
Here are the current (soon to be former) price adjustments from Fannie.
How Much Reserves are Required When Refinancing?
January 8, 2009 by 5 Comments
I had a great question yesterday from a potential client who asked how come my Good Faith Estimate was showing more reserves being required than the other lenders he was comparing me to. [Read more…]
Credit Scores for the Ages
January 2, 2009 by Leave a Comment
I’m taking a few days off from “blogging” to enjoy a little break…this article was orignally posted at Rain City Guide. You can read the original, along with comments, by clicking here.
It’s funny how sometimes a post will take on a life of it’s own within the comments…such is the case with my recent interview of Jillayne Schlicke. My intentions were to call out to Washington State LOs to make sure they’re up to speed with the new year approaching…the comments have turned into a discussion of credit scores. Most likely because of Jillayne’s prediction:
“I expect that underwriting guidelines will continue to go up as banks and conforming paper sold to Fannie and Freddie will raise minimum credit score requirements to 800 and require 20% down. Everyone else will be pushed to FHA.”
Ardell offered stats from 2005 on credit scores and age so I thought I’d share credit score information from credit reports I’ve provided since the start of 2008. Not all of the subjects obtained a mortgage loan.
- Age 18 – 29: average credit score = 697. Don’t let age fool ya, this group had a high score of 807 and a low of 513. (This group = 12% of the demographic).
- Age 30 – 39: average credit score = 735. High score of 811 and the low at 614. (36% of demographic).
- Age 40 – 49: average credit score = 739. High score of 819 and a low of 592. (31% of demographic).
- Age 50 – 59: average credit score = 759. High score of 820 and the low at 680. (15% of the demographic).
- Age 60 – 69: average credit score = 714. High score of 813 and a low at 589. (4% of the demographic).
- Age 70 plus: average credit score = 805. High and low score: 805. (1% of the demographic).
The average mid scores, year to date credit reports I’ve ran is 732 for the borrower and 720 for the co-borrower. This means that if they are considering locking, the rate would be based on the lower of the two mid scores. I’m also pleased to see that the credit score criteria that I use (credit scores from 720-739) seems to be appropriate for when I’m post.
From the same interview with Jillayne post, Ardell asks:
“What good is it to say interest rates are at 5.875%, if only people 70 plus can get that rate? False advertising…no? If the average person buying a home can only get a rate of 6.5%, then we have to stop encouraging people to think their rate is going to be something that is unlikely”
Using the credit score data above, it’s very likely that the younger group would be FHA candidates. Not just because of having an average credit score of 697, most are still working on building their savings and do not have 20% down payment. Combine a 697 mid score with a 90% loan to value and (now costly) private mortgage insurance and FHA may be the better option. The key is to investigate all available options if someone decides they should buy a home at this stage of their life.
The next two groups, 30-49 year olds, would fit the rates that I quote at RCG since the credit score criteria I use is based on 720-739. Based on Friday’s rates, their rate would be 5.875% at 1 point (total shown in lines 801, 802 and 808 of the Good Faith Estimate or HUD). This combined group is 67% of the applications with credit reports that I have worked with year to date.
Credit scores 740 and above qualify for a slightly better rate. Based on Friday’s scenario, they would have 0.25% improvement to fee–so 5.875% would be at 0.75% points (using the above example). Or depending on how rates were, they could possibly obtain an 0.125% better rate.
The slight dip in average credit score to 714 for ages 60-69 I think just reflects that “life happens”. Maybe something medical has taken place or you were on vacation and thought you paid that credit card or you’re helping your kids with college or you have an unknown parking ticket or an overdue library book turned into a collection. I’ve seen many surprised people over the years where they had no idea their credit score dropped. This is in no way a reflection on this age group, it’s just how the stats came in for this report based on my data.
FHA credit scores (where the credit report was ran and FHA was the identified loan program, the loan may be closed or just prequalified) averaged 680. FHA is not as credit score sensitive as Fannie/Freddie. FHA is looking for clean credit (no lates) in the past 12 months.
This data is hardly scientific and is really just a reflection of the people I work with which is really pretty diverse. I don’t advertise or do cold calling or try to “specialize” in a niche market…so I’d like to think that this group is a good “norm”.
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