Mortgage Medicine

Your Prescription for Mortgage News- Refinance, Home Purchase, Subprime Loans, Option Arm information right here.
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Many homeowners are holding out hopes that rates will continue to drop.  However with the recent increase in Gas prices as well as household items,  Inflation is at an all time high for the month of May.  Because of this rates for mortgages have been on a steady climb.  Many economists are predicting 7% for 30 year fixed rates by the end of the year. 

Also on the horizon are changes coming to the FHA.  FHA used to offer one rate for all borrowers regardless of risk.   Beginning July 14th the FHA will introduce for the first time credit risk base pricing.  Currently Fannie Mae and Freddie Mac were the only GSE's to have risked based pricing.  This will increase interest rates and costs for those looking to refinance.  So if you are looking to cash out for the summer, update the house with home improvements or refinance out of your adjustable rate, do it before July 14th and save yourself some additional money.  Also keep in mind that the increase in mortgage loan limits will expire at the end of the year.
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Posted by Mortgage Doctor at 6/13/2008 8:48 AM | View Comments (0) | Add Comment | Trackbacks (0)
Higher Loan limts for FHA
Finally relief is near for those with Jumbo mortgages.  The FHA administration have now updated their mortgage limits per county  see attached link for your county https://entp.hud.gov/idapp/html/hicostlook.cfm, loan limits raised anywhere from a few thousand dollars to several hundred thousand.  Depending on your particular situation you find yourself with your mortgage amount you may find that your rate might be higher than what you see published.  I will explain.

Prior to the recent changes in the loan limits  anyone that had a mortgage balance of $417,000 or lower was considered a conforming loan amount; anything above $417,000 was a jumbo mortgage.  With the increase loan limits most banks have the ability in some counties to lend up to $729,750.  However all lenders are being tight as to actually lending to the higher loan limits.  Many banks have yet to offer the higher limit and others are increasing the interest rates on those loans higher than 417,000.  So in essence while it is a good thing to see the higher loan limits it will and you will be able to refinance be aware that the interest rate for FHA will more than likely be anywhere from a .25% to .375% higher than those with loan amounts less than $417,000. 

The good news is that these new rates are much less than a typical jumbo interest rate and should provide necessary relief for homeowners with jumbo ARM mortgages. 

Should you have a question on limits and what more information you can contact me at mpaul@directmortgageloans.com or visit www.directmortgageloans.com and visit the FHA page.
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Posted by Mortgage Doctor at 3/25/2008 9:47 AM | View Comments (0) | Add Comment | Trackbacks (0)
Fed Drops Interest Rates what about Jumbo Loans
In the past two weeks the Federal Reserve Board voted to reduce interest rates down.  So why are 30 year mortgage interest rates not falling and why can't I get a loan for over $417,000   It is simple.  Banks still do not want to lend their money because the only place they can sell their loans to currently are the GSE's-  FHA, Fannie Mae and Freddie Mac  which loan limits are $417,000 or lower.

The fed is lowering interest rates to try and help consumers and for the most part I see more loans that make sense for the borrowers in that they can save money and lock in at a fixed rate  The problem with the credit crisis over the last 12 months that lowering interest rates can't cure is the willinginess to ease underwriting guidelines to help those consumers that truely need assistance.  For the most part Homeowners with marginal credit are still struggling to get qualified as well as those with balances on their mortgage over $417,000. 

So what do you do....  Over the next few weeks Congress will be packaging the stimulus package that will increase loan limits for FHA, Fannie Mae and Freddie Mac,   once this passes I would expect applications for mortgages to rise and banks to loosen some requirements as now they will no longer have to hold the paper on the loans and will have someone to sell them to.

Talks of increasing the loan limit to 417,000 and above for FHA will do wonders for those in Option Arms or Neg Am Loans.  Many of the homeowners in these particular loans are upside down on the loans.  FHA will allow for you the homowner to secure a 2nd mortgage over equity and still take advantage of low interest rates.

If you are in the market for a home loan and owe more than $417,000 hope is around the corner hang tight and watch for this bill to pass.  Once it does you might be able to get a loan again.
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Posted by Mortgage Doctor at 2/4/2008 11:11 PM | View Comments (0) | Add Comment | Trackbacks (0)
Feds reduce the Prime Rate
With the Fed announcing a reduction in the rates again as a borrower now is the time to get out of the adjustable rate mortgage you have and into a Fannie Mae or FHA fixed rate loan. 

Look for rates to creep down over the next week so if you plan on locking in a loan I would wait to see how the markets play out over this week to see where the average 30 year fixed rates end up. 

I have started my own mortgage company with the help of 3 very excellent colleges so look for many more updates to this blog as we begin to educate you and direct you the right mortgage.  you can look us up at www.directmortgageloans.com
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Posted by Mortgage Doctor at 12/11/2007 11:15 PM | View Comments (0) | Add Comment | Trackbacks (0)
FHA vs. other loans
Which loan is right for you how do you know whether FHA or conventional Fannie or Freddie is the best for you.  Where here is a quick guide to help you make your decision.

FHA max loan amount will depend on your area and currently in a few areas the max they will lend is $362,000  however should Congress and the current administration pass legislation FHA might be able to lend up to two times that loan limit. 

FHA will carry mortgage insurance on all transaction except for 15 year loans where your loan amount is less than 89.99% of your homes value.

FHA closing costs are about the same as conventional financing the only difference is you end up paying up front mortgage insurance on FHA equal to 1.5% of the total loan amount. 

FHA will allow you to borrower depending on your credit profile up to 95% of your homes value for cash out.  Conventional Fannie Mae and Freddie Mac will cap you at 90%. Other companies that portfolio their loans can go up to 100%.

FHA appraisals are not as difficult as they used to be so chances are same rules apply for all loan types.

If your total loan amount is less than 80% and you qualify for a loan other than FHA that sells to Fannie Mae or Freddie Mac take this loan as you will not have to pay mortgage insurance.

Rates really are not any different for FHA vs other conventional financing.

For a more detailed list email me at mpaul@directmortgageloans.com

Good luck.
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Posted by Mortgage Doctor at 9/19/2007 9:46 PM | View Comments (0) | Add Comment | Trackbacks (0)
Going to Refinance what should you expect now
If you have applied in the last week for a refinance there are probably a few things you should know from a consumers perspective.

1.  Act Fast -  Guidelines and rates are changing faster than anything in our industry.  If you like a loan lock it in that night and don't pay a rate lock fee or application fee to lock in.  Ask for confirmation from the loan officer that you are locked in... (keep in mind this does not mean that your rate is set it is contingent of full approval but at least you are protected should the program change)

2. Once you are locked in get your documentation and appraisal done as fast as possible.  Again lenders are requiring that loans be in underwriting to be protected from product or pricing changes.  If you drag your feet on the loan and terms change right now it is probably not your loan officers fault.

3.  If you want to shop have the loan officer you are working with quote you up to 3 options and maybe look one other shop.  Right now most experienced loan officers can get back to you within a few hours if your credit situation is not so stellar  if your credit score is 660 or higher you should here back from us within 30 minutes.

4.  Second mortgages-  are disappearing and getting harder to qualify for.

5.  Stated Income loans- requiring with most companies a score in the 600 there are a handful still doing loans under 600 but it is becoming a marked line.

6.  MTA or Option Arms-  Finally we are seeing this product disappear.  This was a terrible product for most borrowers.  IF you have high income and are investor and know how to work this loan than you still have a few options left.


Still this market has a few bright spots in it...

If you can save a few months of mortgage payments in the bank it will probably improve your chances at getting approved. 

The market is about done with the craziness, my thoughts are you will see a few more lenders go belly up before it is all over with. 

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Posted by Mortgage Doctor at 8/15/2007 9:03 PM | View Comments (0) | Add Comment | Trackbacks (0)
Subprime melt down affects other prime borrowers
That was the headline I read today in one newspaper and on Yahoo Finance section.  How scary for you the public to read something like that and not know how to interpret the information so you can act. 

Well lets start by saying that yes the Subprime market will affect everyone else however those that have mortgage loans below 80% of their homes value will not be affected all that much.  Also those borrowers that have FICO scores (credit scores) above 660 will not be affected.

If you are in the market for a mortgage you have probably heard a few phrases recently.  You must take this loan otherwise the lender will no longer offer that program as of .... date  or it might have went like this...

We had your loan in underwriting and because of the recent changes we can no longer offer product A but we have found a home with product b.

Things you should ask to determine if it is true that this has happened with your mortgage application.

1.  What is my credit score -  If below 600 FICO and you are going above 85%  there is a good chance your loan officer is telling the truth.
2.  What loan to value are we qualified for-  see answer to question 1.  Higher LTV loans are being eliminated from the market place.  We just had 2 over equity (125%) lenders just say to us the other day that they no longer will guarantee a rate until you are approved...
3.  Can I see a copy of my denial letter.  By law Mortgage companies have to deny your mortgage loan and send you a copy as to why you are no longer qualified to receive the mortgage loan that you applied for.  Ask them to fax you a copy as proof before you sign on the dotted line on a new deal.  However if the company is eliminating your program and you must close by x period, see if they can forward you any information that would show you to act now.

Good luck in shopping for a mortgage and don't hesitate to ask some questions.. Remember it is your home.
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Posted by Mortgage Doctor at 4/4/2007 9:22 PM | View Comments (0) | Add Comment | Trackbacks (0)
Second Mortgages better off at you hometown bank
The next product to see backlash from the fallout of the mortgage industry is the familiar second mortgage loan.  Typically many homeowners would get a second mortgage on a high loan to value loan where they wanted to avoid PMI and or were refinancing to pay off debts.  Because these loans were typically adjustable or at a higher interest rate than a typical first mortgage.  Second mortgage loans have carried a higher delinquency than first mortgage loans.

Currently if you are in the market for a HELOC or fixed rate second mortgage you have some options however limited they may be.  For the most part if your credit score is not 680 or higher you are probably going to get a loan.  You might find one or 4 companies left that are being competitive under a 680 credit score however I would say your time is limited in getting these loans.

Since the middle of the 1st quarter we have seen many lenders trim back that product line to the brink of extinction.  I would venture to say that many lenders will move to a more traditional one loan program avoid a second lien on your home.

How does this affect homeowners-  Well you still have your local banks equity line that you can count on for a quick cash influx if you are in the market for a second mortgage, the other option is that you will find banks forcing you to either refi your existing first mortgage or stand pat with your current loan.

If you are in the market for a second mortgage for either consolidating debt or taking some cash out you might look down to your corner bank first before you consider a mortgage broker.  As I stated earlier I am in this business to do loans but at the same time I want to be smart about it for the consumer.  If you currently bank somewhere they will typically waive the closing costs as long as you keep their loan for 3 years and you typically pay little or no costs.  I have had 2 second mortgages and both I got from my local bank and I am in the business. 

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Posted by Mortgage Doctor at 3/25/2007 8:22 PM | View Comments (0) | Add Comment | Trackbacks (0)
Subprime goes BUST?
It has been a while since I posted last.  Too much chaos right now in the industry.  For those undecided what to do at this point if you are shopping for a loan.   I looked at a magazine article the other day and realized 5 of the top 10 Subprime loan companies have either 1. Shut down, 2. Possible Bankruptcy 3.  Got rid of top management due to loan issues or plain are up for sale.  Just last week a top company that we work with shut off access to programs for borrowers with less than 600 credit scores. 

The market for mortgages is still very good. Meaning if you have a good credit, assets in the bank and low loan to value you can get some pretty good deals out there.  However if you have a credit below 600 and must refinance due to cash needs my advice get a longer term than 2 years just in case.  Also make your broker get a secondary loan ready and locked in just in case your loan becomes no longer available.

For the customers and borrowers out there reading this, it isn't doomsday however you need to be aware that these issues exist.  What the US economy is facing right now with the way the mortgage industry is going, I would expect the following items to occur over the next 3 to 6 months.

1.  Foreclosures and Bankruptcy filings spike as subprime lenders trim back there products forcing those with adjustable rate mortgages into a financial pinch as those rates increase.

2.  Recession towards the start of summer to catch up to other industries.  Here me out on this one.
      People will not be able to free up cash flow by refinancing thus eliminating their buying power. Defaults will increase on those items that seem to help spur the economy.

3.  Feds will have to reduce rates come Aug/September to curb off fears of a full blown recession however they will react a little too late forcing multiple rate reductions before years end.

Right now if you are shopping for a loan get your broker/loan officer to secure two loans with different lenders for you and make sure they are giving you a longer fixed period than 2 years. Focus on a 3 or 5 year fixed rate if you have to have one. 

If you are in an adjustable rate mortgage currently and you are set to adjust within the next 6 months. Refi into a fixed rate loan now.  Even though these are my thoughts about what might happen I am only giving you my opinion, when it comes to your finances it is always better to be safe than to risk a market where your payment keeps increasing and you can't refi because no one can qualify you.
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Posted by Mortgage Doctor at 3/11/2007 9:51 PM | View Comments (0) | Add Comment | Trackbacks (0)
Rates are low

So what are we to do. Here it is end of year tax time will be upon us sooner rather than later, Christmas bills will start coming in during the next 6 weeks.  Where will I get the money for all of this. 

If you are asking these questions and have a rate that is 6.875% or higher.  You might consider refinancing now.  Rates are at year lows currently and continue to spin downward.  Now don't get too ahead and think we will see rates as low as we did during the refi boom.  I will say that you will continue to see rates anywhere from 5.5% to 6.5% depending on your program and what you want to accomplish.

Market data suggests that rates will stay strong through the first of the year.  So don't shop too long you just might shop outside of a rate thinking we will see the low 5% rates that we say in the beginning of 2004.  Lock and relax.  Then let the lender work for you.
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Posted by Mortgage Doctor at 12/8/2006 12:22 AM | View Comments (0) | Add Comment | Trackbacks (0)
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