Every week, we have speakers from Land Mortgage come to our Keller Williams meetings to speak about the mortgage industry and the recent happenings. In the past 3 days, I have heard 3 different representatives from mortgage companies come and update us. They all have the same things to say and wanted to stress the importance of making sure that our buyers are "pre-approved" not just "pre-qualified" before taking them out.
There seems to be a bank that seems to fold every day these days. What is exactly happening? Could it be a Mortgage Meltdown? A Land Mortgage loan officer explains that the loan programs that are affected and will be changing are the interest-only, no income verified, second liens, and jumbo loans (over $417,000). I will try to reiterate the explanation of the loan officers, without using the techno lingo. The secondary market are the loans that are sold to other banks. These original loans are not selling because borrowers have forfeited their loans, hence, the banks are less hesitant to purchase more of these type of loans. The 100% loans have tightened up and only those with higher credit scores will be able to obtain them or pay a higher interest rate. We will see more people get loans at a higher rate or people will have to put in a higher down payment. Remember the mortgage insurance? These are coming back once again after the 80% first loan/ 20% second loan or 100% financing became popular. A loan officer states "mortgage insurance is the most popular girl at the dance". Not only that, the fed has "put a new dress on it" which she refers to, mortgage insurance is now tax deductible if you earn less than the maximum yearly salary. Unfortunately, I cannot find my notes to that amount.
So for those in the process of buying a home or have put off buying a home because of all the mortgage lending changes, I suggest that you speak to a loan officer before you meet with your real estate agent. Get educated and find your options. There are still alot of loan programs out there and an experienced and professional lender is the best person to speak to. If you do not have one, I have a mortgage partner that I would be more than happy to recommend.
