Virginia mortgage rates and industry news

If you're one of the lucky ones who owes less than $417,000 on your home, you may want to pull the trigger and refinance now.  Even if you owe more than $417,000, you may still be able to capture these historically low rates with a first AND a second mortgage.  Yes.....we can do that for you! 

Looking to buy a home?  There's plenty to choose from!  Let us get you approved to purchase a home in less than 5 minutes AND secure the best interest rates for YOU!

Did you realize you can save more than $125 per month by locking in at 5.625% vs. 6.125% (based on $400,000 loan)? 

Got a question for me??  We'd love to hear from you!

For your reference, most of the content in this blog has been taken directly from interest.com on 1/30/2008.

The Federal Reserve is continuing its campaign to make borrowing cheaper, and boost consumer spending. The Fed's rate-setting committee cut what it charges commercial banks for overnight loans by another half-point on Wednesday -- the fifth reduction in five months and the second in just eight days.

By making it cheaper for banks to borrow money, the Federal Reserve hopes banks will lower the rates they charge all of us to borrow money for everything from homes and cars to holiday gifts and travel.

But you shouldn't expect mortgage rates to fall any further than they already have.

Despite what you've heard about the mortgage crisis, the great majority of borrowers are already finding the money they need at very reasonable rates. The average cost of a 30-year, fixed-rate loan is 5.57% according to Interest.com's latest weekly survey of major lenders taken Jan. 23.

That's the cheapest those loans have been since March 2004, 1.25 percentage points less than they cost last summer and 0.75 percentage points less than this time last year.

All of the turmoil you've heard about -- lenders going out of business, banks and investors losing hundreds of billions of dollars, thousands of employees being laid off, soaring foreclosure rates -- is very real.

But that crisis has really hurt only three types of borrowers:

• Those who need a lot of money -- more than $417,000 to be exact.
• Anyone with bad credit -- those with credit scores below 620.
• And anyone with little or no equity in their home

The Federal Reserve is doing what it can to get the country through the subprime mortgage crisis and avoid a recession by making borrowing cheaper. It acts as the nation's super bank, lending money to the commercial banks we deal with every day. When the Federal Reserve lowers its rates, those banks can obtain the money they need for consumer loans more cheaply.

That doesn't mean rates for all types of consumer loans immediately follow suit, or decline as much as the Federal Reserve would like.

It's actions have the biggest, most immediate impact on short-term loans. Other factors, such as inflation and stock market trends, play a larger role in the pricing of long-term debt such as mortgages.

As a result, the average 30-year, fixed-rate mortgage costs about six-tenths of a point less than it did in September even though the Federal Reserve has lowered its rates by 2.25 points since then.

With the Federal Reserve expected to continue pushing rates lower right through spring, mortgages will almost certainly remain a bargain over the next few months.

Just don't expect them to become better bargains than they are right now.

What exactly is a "declining market" you ask?  If you live in or around the beltway (Northern Virginia, Southern Maryland, Washington DC) then you're not so lucky these days in the eyes of Fannie Mae.  Property values, as most of us know, have fallen significantly, and will continue to for the next 12-24 months according to experts.  Being labeled a declining market no longer affords the borrower the opportunity for 100% financing for loans up to $417,000.  Just a year ago, 100% financing was available to just about anyone, and now it's not even available to those who need it the most....first time home buyers with decent credit.  Why is that important?  In order to stimulate the housing market, first time buyers are needed to create move up buyers, and move up buyers create more move up buyers. 

What other types of loans are effected?  Just about everything.  All lenders have a maximum "loan to value" or percentage of the value of a home, at which they will lend.  In a declining market, many lenders will reduce the maximum "loan to value" by 5%.  What does that mean?  If you are required to put 10% down, the bank will now require you to put 15% down instead.  Make sense?   

Are there any loopholes?  Glad you asked.  All banks, lenders (and brokers..think Loan Planet here..) are not created equal.  According to a source at one of the largest U.S. lending institutions, there are ways to legally circumvent the issue of "declining markets".  Want to know how and see if it could work for you?  Reply, email me, or give me a call.

Aside from bankruptcy, foreclosure and credit counseling, the single worst thing you can do to your credit rating is pay your mortgage late.  Just how late is late?  If you pay your mortgage more than 30 days late, expect that to be reported to the credit reporting bureaus.  Once it's reported, that negative piece of information will inevitably drop your credit score by 60 points or more (based on my experience). 

My recommendation?  Pay your mortgage before the 30 day mark.  Even if you have to pay a penalty for paying your mortgage 25 days late,  make sure your payment is received before 30 days is up.  I'm not advocating anyone pay their other creditors irresponsibly, but if you have to pay your credit cards and autos late, do that in lieu of making a mortgage payment late.  Why?  Once you have a mortgage late payment on your credit report, most lenders and mortgage companies will no longer be able to offer you financing for at least 12 months or more.  That means you won't be able to purchase or refinance real estate at decent rates for at least 12 months or more.   

The bottom line...do everything in your power to make your mortgage payments on time.  Lenders and mortgage companies don't look nearly as hard at other late payments as they do at mortgage late payments. 

Here's a news flash for you!  Did you know that if your current mortgage is serviced by WELLS FARGO (meaning, you pay Wells Fargo monthly) and is owned by FREDDIE MAC the following applies to you!

Check out the advantages listed below!!!

Borrower Benefits:

No Appraisal!

No Income or Asset Verification!

No Qualifying Ratios!

Program Requirements:

Owner Occupied or 2nd Homes

Rate and Term Refi

Conforming Loan Amount

IF YOUR LOAN MEETS THESE REQUIREMENTS - CALL ME ASAP!!!

Just a few months ago, almost anyone could get a stated income mortgage.  Whether you had good or bad credit, no money down, or needed a jumbo loan, it really didn't matter!  So, what is a "stated" income or "liar" loan?  In short, banks and lenders would allow the borrower to claim an income on their application without documenting the income was in fact accurate.  If you told the bank you made $8,000/mo, you didn't need to back that up with paystubs or tax returns (provided the income you stated was reasonable for your profession)   Let's face it....if you're self employed or highly commissioned, you may make A LOT more money then you actually claim on your taxes (after appropriate right offs, etc).  You may be able to afford a really expensive home, but you have serious problems verifying all of your income to qualify for the mortgage.  These types of loans have been available to borrowers for quite some time now, but what if they disappeared?

It's estimated that as much as 40% of the work force, categorized as a "move-up" buyer, is either self employed or highly commissioned.  If this type of loan goes away, how will this type of borrower get financing and how will this affect the real estate market and our overall economy?