| Welcome to the new world of financing a home. I | | | | to even pay back this loan, and will the equity in the |
| have been in the mortgage business for almost 17 | | | | property being secured be there next year, if values |
| years and have never seen anything like the | | | | continue to decline? The government on the other |
| environment we are in now. As I write this article, | | | | hand wants to give out loans in the 4%-5% range and |
| National lenders that go by Fannie Mae and Freddie | | | | have them backed by the same agencies. This will |
| Mac guidelines are continuing to tighten the guidelines. It | | | | help the borrower with reduced monthly expenses for |
| used to be that a 680 score could get you a great | | | | the term of their new loan, and will hopefully spur some |
| loan at a great rate. Although the score is still a good | | | | buying which will stabilize prices. (This in my opinion is |
| one, it is no longer good enough for these lenders to | | | | the best way to stimulate the economy. The saying is, |
| qualify for the best rates, which are the ones you are | | | | as housing goes, so does the economy. That is why |
| hearing about. Currently a score of 680 will cost you at | | | | they monitor housing so much.) This in turn will make |
| minimum of 1/2 point to 1.5 points in add on fees if you | | | | the lenders more comfortable lending. |
| wish to finance or refinance any amount over 60% of | | | | Again, which is it? It all depends on what the |
| the value of your home. This is where it starts. You will | | | | government wants to do with the money. If this |
| also have added on points for cash out over 60% of | | | | proposed portion of the stimulus actually comes to be, |
| the value also. A lender considers your loan to be cash | | | | we will see lower rates, if not, get your wallet out and |
| out if you are paying off any debt that was not used | | | | expect to pay more for a mortgage to refinance, or |
| to purchase your home. In addition it doesn't get much | | | | buy your next home. |
| better until your credit score exceeds 740. This | | | | I encourage all that are in need of making a move, to |
| pertains to your middle credit score of the three | | | | do so. A home mortgage is one of your biggest |
| bureaus in most cases. To make things worse, there is | | | | expenses if not the biggest of your lifetime. Waiting |
| a proposal to take these fees higher beginning in April | | | | may cost you serious money. If you don't have the |
| from Fannie Mae & Freddie Mac. | | | | time, and can't afford to gamble on what might or |
| So which is it? Do they want you to have a low cost | | | | might not happen with the stimulus package, I would |
| loan? In my opinion, the banks have no real interest in | | | | take the sure thing and lock in to what you have |
| this with the way the market is. Declining market | | | | available. Tomorrow the rules and guidelines could |
| values, economic instability, and so on. Who can blame | | | | change again, and what you had available may not be |
| them, with all the uncertainty in the marketplace. Will | | | | there for a long time. Good luck to all. |
| the person they're lending to have their job tomorrow | | | | |