Logan Utah Mortgages and Real Estate

Mortgage Insurance Alternatives

John Neil (MetLife Home Loans) — Thu, 31 Mar 2011 21:31:17 -0400

I found the following article about mortgage insurance alternatives on the website MortgagesExplained.net. I received permission from the author to post it. It is one of the most comprehensive articles that I have found on alternatives to mortgage insurance.

If you are like most home owners you hate the idea of your hard earned money going down the drain with monthly mortgage insurance payments. And with so many homeowners defaulting on their mortgage payments over the last few years (google “housing crisis 2008 to 2011“) private mortage insurance companies and FHA alike have raised their premiums for the monthly mortgage insurance payments.

As of the date of this blog post, a $200,000 FHA 30 year mortgage has a mortgage insurance payment of $150/month. For this same loan it will go up to $191.67/month after April 18th, 2011. That’s the equivalent of the lease payments on a brand new Toyota Camry!

Private mortgage insurance on a conventional loan works a little bit different in that it is determined by different characteristics of the loan such as the borrowers credit score and the loan to value ratio. For a 30 year fixed conventional loan at $200,000, with a borrower credit score of 740 and a down payment of 5%, the MI will be around $160/month.

The fact that you could either pay monthly mortgage insurance or lease a brand new car for the same price is reason enough to consider the following options to getting rid of monthly mortgage insurance.

**Home Loans That Do NOT Require Mortgage Insurance**

There are a few loan programs that do not require monthly mortgage insurance whether you have a 20% down payment or not.

USDA Rural Housing is one of those programs. It offers 100% financing and a 30 year fixed mortgage for eligible home buyers looking to purchase a home that is located in an eligible rural area as defined by USDA. The interest rates should be on par with those of FHA and because it doesn’t require monthly mortgage insurance it will have a lower monthly payment than both FHA and Conventional loan programs.

What’s the downside to the USDA loan? It requires a funding fee of 3.5% (can be financed to bring total financing to 103.5%) which means you start your home ownership experience “upside down” (owing more than your house is worth). If you are going to buy a home as a short term investment, the USDA loan is probably not for you.
Also worth mentioning: It has been rumored that the USDA is considering a monthly mortgage insurance requirement and that it could be implemented as soon as late summer.

The VA Home Loan is another 100% financing program that doesn’t require mortgage insurance and the funding fee is only 2.15% (this can vary depending on the characteristics of the loan and your status with the VA).

VA Requirement: If you aren’t a veteran or married to one, you aren’t going to qualify for this loan program. If you are a veteran you should request your certificate of eligbility before visiting with a loan officer.

Portfolio Lenders: A portfolio lender is one that doesn’t sell their loans on the secondary market and consequently doesn’t have to follow the guidelines of Fannie Mae and Freddie Mac. This also means that they usually won’t require mortgage insurance on any of their loan programs. US Bank is one example of a portfolio lender that will allow you to put just 10% down and a home purchase and won’t require any mortgage insurance.

Always a downside: Because portfolio lenders take a greater risk by not selling their loans off, they usually demand a higher interest rate.

More Mortgage Insurance Alternatives!

If you are not eligible for a USDA or VA home loan, don’t fret because there are still some other options for avoiding monthly mortgage insurance or at least lessening the pain on your wallet, without putting 20% down on a conventional loan. Here are a couple of other options to consider…

FHA 15 year loan with 10% down: Besides being a great way to build equity quickly FHA does not require any monthly mortgage insurance on an FHA 15 year mortgage when you put 10% down. On April 18th, 2011 that is going to change, but it’s only going to a factor of .25%. On a $200,000 loan that’s only $41.67/month, which is significantly less than the 30 year MI.

80/10 Mortgage: It’s true that the 80/20 and 80/15 mortgages are non-existent but believe it or not, there are still some lenders that will give qualifying borrowers a 10% second mortgage so that they can have an 80% Conventional loan without mortgage insurance. The second will usually be a higher interest rate but 9 times out of 10 it will result in a lower mortgage payment. Take the savings to pay off the 2nd mortgage in 10 years instead of 30!

Lender-Paid Mortgage Insurance: For borrowers that wouldn’t be in their homes long enough to get rid of more traditional monthly MI, this can be a very good option. With this option, you can choose to take a higher interest rate and not pay monthly MI. For example, if the current rate on a Conventional 30 year fixed is 5.0%, you could choose the lender-paid mortgage insurance(LPMI for short) and take a 5.5% rate. On a $200,000 loan the higher rate will raise your payments almost $63 but that is much cheaper than the $125 you would pay for monthly MI on a Conventional loan with 10% down.

About the Author

John Neil is a loan officer that is passionate about his profession. His goal with every transaction is to make a customer for life. The result is that 95% of his business comes from referrals of satisfied clients. If you need a cache valley mortgage, you can contact John at 435-770-2709. You can also follow him on twitter @LoganUTMortgage or facebook @facebook/MortgageNerd

Borrower DO's and DO NOT's for a smooth loan process

John Neil (MetLife Home Loans) — Tue, 15 Mar 2011 19:15:10 -0400

I had one of the worst experiences of my career as a loan officer last month. I had been helping a first time home buyer purchase a short sale home for the past month. Everything had gone smoothly as the borrowers were very solid with good credit, a large down payment, and a stable job. The closing went smoothly and everybody was happy.

The day after closing, I get a call from the funder expecting the good news that the loan had funded and the title company could record. Instead, I receive the dreaded news that the funder did a final verification of employment for the main borrower and his employer said that he had resigned the same day as the closing.

"What?!! Are you kidding me?!!"were the first things that came out of my mouth. You can imagine my disbelief. The result was that the loan did not fund and it won't until the borrower can provide 30 days worth of pay stubs from his new job.

You can imagine how much heartburn this caused everybody involved in the transaction and the phone calls that I had to make is not something that I ever want to do again. For this reason I have decided to make a "DO" and "DO NOT" list for my clients at the initial loan application. Because whether I like it or not, it's my fault that I didn't tell my clients not to make such a major change until the loan funded and recorded.

The Borrower "DO" list for a smooth loan process

DO provide all documentation in a timely manner.
DO provide all pages of bank statements, even if pg. 4 has nothing on it.
DO keep a copy of all pay stubs and bank statements received before closing
DO keep a paper trail of large deposits in your bank account
DO file your 2010 tax returns on time
DO continue working full time

The Borrower "DO NOT" list for a smooth loan process

DO NOT quit your job before the loan closes, funds, and records!!!
DO NOT make any large purchases (especially not on credit).
DO NOT make any large cash deposits into your bank accounts.
DO NOTmake any large deposits without keeping a paper trail.
DO NOT transfer money from one account to another without asking your loan officer first.
DO NOT be late on any debt obligations or rent payments for that matter.
DO NOT make any large financial decisions without consulting with your loan officer
DO NOT black out account #'s or anything else on your bank account statements

I will be adding to this list as I think about it some more and I hope that I can get some feedback from the Active Rain community. What are some other things that borrowers should or should not do during the loan process?

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Refinance Mortgage Debt

John Neil (MetLife Home Loans) — Sat, 29 Jan 2011 23:16:00 -0500

I came across a new website the other day called RefinanceMortgageDebt.com and I thought that it deserved a mention. This website has tons of information about refinancing and goes into specific detail about the mortgage programs available to the public for refinancing their mortgage. It discusses the advantages and disadvantages of refinancing with an FHA loan, conventional loan, USDA Rural Housing Loan, and VA Home Loan. I highly recommend that you check out this website if you are interested in refinancing your mortgage.

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Refinancing Your Mortgage Debt: Do's and Don'ts

John Neil (MetLife Home Loans) — Wed, 26 Jan 2011 19:05:11 -0500

Even though interest rates have come up in recent weeks, there are still many borrowers for whom it may still make sens to refinance. Thus, I write this blog post for those that are late to the party but haven't missed the boat entirely. When it comes to refinancing your home there are some things you should and shouldn't do.

Do...

-your "shopping around" on the same day. Mortgage rates can change a few times daily and so if you want a true apples to apples comparison, you should try to get all of your mortgage quotes on the same day and within a few hours if possible.

-ask lenders to give you a quote for a specific rate. This is the easiest way to see which lender has the least expensive closing costs.

-get referrals from friends and family. If your friend of family member had a good experience, it is likely that you will have a good experience as well.

Do NOT...

-refinance if your break even point is greater than 5 years. If your break-even point is greater than 5 years, even if you plan on being in the home longer than that, you would be better off to take the dollar amount of the closing costs and paying down your principal balance.

-trust a loan officer that tells you to float your interest rate. If the numbers add up and the refinance makes sense, your best option is to lock your interest rate and not worry about it. Besides, a good lender will have a free float-down option or renegotiation policy if rates drop significantly.

-refinance a mortgage to pay off student loans or car loans that may have a lower interest rate. Most mortgage terms are 15 to 30 years where student loans and cars are usually much shorter. Unless you need the extra cash flow and you are already being as frugal as possible, it is usually a better idea to leave these other loans alone.

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Logan Utah Mortgage Rate Update 1/10/2011

John Neil (MetLife Home Loans) — Mon, 10 Jan 2011 17:38:50 -0500

Mortgage Rates held steady today with not much movement in the bond market. Historically speaking, mortgage rates are still very low. Here are a few examples...

30 year fixed conventional 4.625% (APR 4.766%)
15 year fixed conventional 3.875% (APR 3.987%)
5/1 ARM conventional 3.5% (APR 3.445%)

FHA 30 year fixed 4.75% (APR 5.233%)
FHA 15 year fixed 4.0% (APR 4.445%)

USDA Rural Housing 30 year fixed 4.75% (APR 5.322%)

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7 Benefits of Using a Rural Housing Loan to Finance Your Cache Valley Utah Home Purchase

John Neil (MetLife Home Loans) — Fri, 07 Jan 2011 18:55:08 -0500

Recently, the Rural Housing mortgage program received more government funding. The purpose of this article is to highlight several of the wonderful benefits of the Rural Housing Loan for Cache Valley and some of the surrounding areas of Logan, Utah.

The Rural Housing Loan allows 100% financing. The Rural Housing mortgage is one of a few mortgage programs left that allow a borrower to purchase a home in Cache Valley, Utah with no down payment. This allows the borrower to keep some of their money in their bank accounts for a rainy day fund.
The Rural Housing Loan does not require monthly mortgage insurance. Besides the VA loan, there isn't a loan program available that doesn't require monthly mortgage insurance without a 20% down payment. This means that the Rural Housing loan will offer one of the lowest monthly payments per dollar borrowed for home buyers in Cache Valley, Utah.
The Rural Housing Loan still allows credit scores down to 620. With many FHA lenders raising their minimum credit score requirement to 640, Rural Housing is one of the few loan programs left that will allow borrowers to have a credit score down to 620.
The Rural Housing Loan allows the seller to pay for the buyers closing costs. Sellers can pay up to 6% of the buyers closing costs. Because of this, many Cache Valley home buyers can buy a home without bringing any money to the closing table.
The Rural Housing Loan has higher income limits than other first time home buyer programs. The annual income limit for a family size up to 4 in Cache Valley is $74,050, and $97,750 for a family of 5 or more. Visit this website to find out if you qualify for the Rural Housing loan in Cache Valley.
The Rural Housing Loan is not just for first time home buyers. There is a common misconception that the Rural Housing loan is just for 1st time buyers. This is not true. It works great for 1st time buyers because of the 100% financing but it also works great for any buyer that doesn't have 20% down.
The Rural Housing Loan is available for most of Cache Valley, Utah. Cache Valley has so many incredible places to live. With the Rural Housing mortgage, home buyers can purchase in cities such as Smithfield, Hyde Park, Nibley, Millville, Hyrum, Wellsville, Mendon, Paradise, Benson, Amalga, Newton, Clarkston, Trenton, Richmond, and Petersboro. Visit this website to type in an address and see if it is eligible for Rural Housing financing.

I personally love this program because it makes it possible for many Cache Valley home buyers with out a significant down payment to purchase a home. I can also be contacted at 435-755-2177 if you have any questions about the Rural Housing mortgage loan program.

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Logan Utah Mortgages 1/5/2011: Is It Possible to Predict Mortgage Rates?

John Neil (MetLife Home Loans) — Wed, 05 Jan 2011 14:17:57 -0500

Every time I do a loan application with a client I have to bring up the topic of locking or floating their interest rate. I ask them, "Do you want to lock in this rate or would you like to see if rates go lower?" My response hasn't changed for the past couple of years now. I tell them that if they are comfortable with the rate and their payments it is best to just lock it and not worry about it, whether it goes up or down.

There are experts who supposedly have an edge in predicting mortgage rates but my experience with these so-called experts is that their guess isn't any better than mine or my clients.

Maybe it will help to give you my understanding of how mortgage rates are determined. My understanding is that the yield on the 10 year bond is a benchmark that mortgage lenders use to set the daily rates. If the yield on the 10 year bond goes up than chances are that mortgage rates will go up.

However, the mortgage lenders also put a margin on top of the 10 year bond yield. For example, as of right now the yield on the 10 year bond is 3.46% but mortgage rates on a 30 year fixed are around 4.75%. This means that the current margin is around 1.3%.

I have seen some occurrences where the yield on the 10 year bond has decreased significantly but mortgage rates did not go down at all. The only assumption that I can make is that lenders increased the margin that they are making on mortgage rates. They might do this when they feel that the risk for mortgage financing has increased and they need a greater return on their investment to compensate.

My point is that it really is impossible to predict mortgage rates on a day to day basis. Obviously there will be certain trends when rates go up or down for weeks or months at a time and its important that my clients understand this. For example, as of the last few weeks mortgage rates have definitely been trending upwards. But nobody can know if they will go up or down tomorrow or the next day or if the trend will reverse next Monday.

This is why I recommend to my clients to lock in the rate assuming they are comfortable and happy with the rate on the table.

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Preparing my Clients for the Loan Process Today

John Neil (MetLife Home Loans) — Wed, 29 Dec 2010 13:32:38 -0500

I am finding lately that some of my clients that may have bought a home a few years ago and are now buying a home again are stressing quite a bit about some of the "hurdles" that they have to go through to get a mortgage.

I am trying to think of ways that I can prepare these people for the new way of processing loans versus the way it was done in 2006. Let me first give you a summary of how loans were processed in 2006 versus today...

Loan Process in 2006

1. Meet with your loan officer
2. Underwriter then has you breathe on a mirror. (Foggy = approved)
3. Loan closes in 3-5 days

Loan Process Today

1. Meet with loan officer to take loan application.
2. Sign loan application and disclosures.
3. Provide income and asset documentation such as paystubs, tax returns with all schedules and W'2s, checking and savings account statements, copy of drivers license, divorce decree if applicable, etc. etc.
4. Loan officer submits loan package to underwriter who will review and either approve, conditionally approve, counter, or deny the file. (Most common is conditional approval)
5. Meet the requirements of the conditional approval (This is usually what borrowers find to be tedious).
6. Order an appraisal and make repairs if required by underwriter.

My point is that it takes a lot more to process a loan today than it did a few years ago and I think we all (Realtors, Escrow agents, Loan officers, etc) need to do a better job of preparing our clients for this. When my clients have 2006 expectations it makes my job much more difficult. Is there anything that you say or do to help your clients prepare for some of the hoops and hurdles they may encounter? I'd love to hear your feedback.

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Logan Utah Mortgages - Mortgage Rate Update 11/30/2010

John Neil (MetLife Home Loans) — Tue, 30 Nov 2010 17:25:49 -0500

Mortgage rates have been trending upwards for a couple of weeks now. I imagine it is a result of the weakness in the bond market lately. I imagine that this will continue if there are signs that the economy is improving and there is more fear of inflation in the market. Nevertheless, mortgage rates are still incredible and it may make sense for a lot of people at this time to refinance their current mortgage...

Conventional 30 year fixed 4.375% (APR 4.445%)
Conventional 15 year fixed 3.625% (APR 3.758%)
Conventional 5/1 ARM 3.25% (APR 3.119%)

FHA 30 year fixed 4.25% (APR 4.634%)
FHA 15 year fixed 4.0% (APR 4.332%)
FHA 5/1 ARM 3.25% (APR 3.435%)

USDA Rural Housing 30 year 4.25% (APR 4.635%)

Please feel free to give me a call at 435-755-2177 for a free consultation.

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Fannie Mae Home Path Financing in Utah

John Neil (MetLife Home Loans) — Fri, 17 Sep 2010 15:58:18 -0400

I came across an amazing mortgage loan program the other day that I think deserves a blog post. It's the Fannie Mae Home Path program, which is mortgage financing for properties that are owned by Fannie Mae. These are homes that Fannie Mae has repossessed due to people not making their mortgage payments and they offer this special mortgage program as an incentive to home buyers.

Some of the features of this program are...

     - minimum down payment option of 3%
     - No monthly mortgage insurance, even with just 3% down
     - No appraisal or inspections required
     - 10% down payment option for investors (no monthly mortgage insurance!!)
     - Gift funds for owner-occupied properties allowed
     - 30 year fixed, 15 year fixed, 3/1, 5/1, 7/1 ARMS available

Some of the requirements of this program are...

     - 660 fico credit score if over 80% LTV
     - 620 minimum fico score minimum
     - 45% maximum DTI (50% max with strong compensating factors)
     - property must be on this website to qualify

In Cache County, Utah there are currently 12 homes that are available to purchase through this program. They can be found here. Some of these home are very nice homes and through the homepath financing program, they are more affordable than ever. Give me a call at 435-755-2177 or 435-770-2709 if you are interested in this program or would like to get pre-approved.

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Logan Utah Mortgage Rate Update 8/9/2010

John Neil (MetLife Home Loans) — Mon, 09 Aug 2010 13:39:44 -0400

Interest rates for the Logan Utah mortgage market are better than they have ever been this morning. Check out some of these rates!

30 year fixed 4.25% (APR 4.344%)
15 year fixed 3.75% (APR 3.882%)
5/1 ARM 3.375% (APR 3.399%)
7/1 ARM 3.75% (APR 3.787%)

FHA 30 year 4.25% (APR 4.554%)
FHA 15 year 4.0% (APR 4.433%)

"NO COST" 30 year 4.625% (APR 4.625%)
"NO COST" 15 year 4.375% (APR 4.375%)

"NO COST" FHA 30 year 4.5% (APR 4.788%)
"NO COST" FHA 15 year 4.25% (APR 4.537%)

Please call me at 435-755-2177 for details about the "NO COST" option to see if you are eligible.

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Logan Utah Mortgage Rate Update 07/01/2010

John Neil (MetLife Home Loans) — Thu, 01 Jul 2010 15:25:26 -0400

Mortgage rates continued to fall this week...

Conventional

30 year fixed 4.375% (APR 4.445%)
15 year fixed 4.000% (APR 4.127%)
5/1 ARM 3.625% (APR 3.554%)
7/1 ARM 3.875% (APR 3.644%)

FHA

30 year fixed 4.5% (APR 4.995%)
15 year fixed 4.0% (APR 4.449%)

With interest rates being lower than they ever have been in 50 years, now may be a great time to refinance. Give me a call at 435-755-2177 to see if it makes sense for you to refinance.

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FNMA Pushing Lenders to Pull New Credit Reports Right before Closings!

John Neil (MetLife Home Loans) — Mon, 21 Jun 2010 17:47:09 -0400

Via Drew Sygit (The Lending Edge) Real Estate Financing Expert (The Lending Edge):

FNMA Pushing Lenders to Pull New Credit Reports Right before Closings!

The lending world just keeps getting tougher.

As of June 1, 2010 FNMA guidelines now require lenders to pull a new credit report right before closing a loan in addition to the credit report pulled at application.

This new required practice will take some time for homebuyers and industry professionals to get used to. Unfortunately, it'll become more common for purchase transactions to fall apart at the last minute.

How?

Let's say a homebuyer barely has the credit score required to qualify for their mortgage. They get pre-approved for a conforming mortgage, find a home they like, sign a purchae contract and apply for their mortgage. So far, so good. Then, sometime during the approval process, they innocently charge a tank of gas for their car on a credit card. That small transaction could drop their credit score enough to kill their deal.

Or a homebuyer could go out and open a new account at Best Buy and purchase their new appliances ahead of time. The additional credit payments could exceed the debt tolerance they were initially approved for and again kill their transacation at the last minute.

The least controllable situation - the new credit report pulled before closing discloses something a homebuyer did BEFORE they even applied for their mortgage. It's easy to forget that information can take up to 90 days to appear on a credit report. So, an innocent credit transaction leading to an increased balance could pop up and kill a transaction.

So homebuyers need to be VERY prudent about what they do with their credit when buying a home.  Here are some tips:

Turn in all your credit card statements from the last 90 days when applying for a mortgage.

Review your credit report with your Loan Officer and compare what's reported to what's on your credit card statements.

Consider paying down account balances where there's a discrepency.

Disclose any recent new credit accounts opened or large charges.

If you're credit is borderline, consider an FHA mortgage (which isn't requiring the additional credit pull yet)

Be very careful with the use of credit accounts before the closing of your home purchase.

Real estate agents also need to be more aware of this new requrement and start educating homebuyers about it as soon as they start showing them homes.  There will definitely be transactions affected, but throwing a temper tantrum and making the problem 100% the lender's fault will not solve anything. Be professional and part of the solution, not part of the problem!

I do not wish that ugly situation on anyone and I'm dreading when it occurs on one of my transactions.

A more in depth explanation of the new requirement

It's important to note that FNMA hasn't come out and required lenders to pull new credit reports right before closing. What they've done is introduce a new requirement called, "Loan Quality Initiative" (LQI) and that is forcing lenders to take this action to meet the LQI requirements.

Here's the language from FNMA leading to lenders pulling new credit reports right before closings:

Lender must determine that borrower liabilities incurred up to, and concurrent with, closing are disclosed and evaluated in qualifying the borrower for the loan.

Why is FNMA doing this? Well here's as excerpt from FNMA's announcement 2010-03 about LQI released February 26th that supposedly explains why:

Historically, many issues related to compliance with Fannie Mae selling policies are not detected until after loans are delinquent or through the foreclosure process. Loan repurchase requests to lenders have increased in the past three years, highlighting the need for an improved approach for working with lenders to deliver loans that meet Fannie Mae's underwriting and eligibility guidelines. Fannie Mae conducted an extensive analysis to determine the primary drivers of repurchase requests and is launching the Loan Quality Initiative (LQI) to identify and implement policy, process, and technology enhancements to improve the compliance with underwriting and eligibility guidelines and mitigate repurchase risk.

Working with its lender partners, Fannie Mae is implementing the LQI enhancements to promote improved loan delivery data that is complete, accurate, and fully reflective of the terms of the mortgage. The LQI will also help ensure that the loan meets the credit and eligibility standards, pricing guidelines, and other requirements of the Selling Guide or negotiated variances. A primary focus is on capturing critical loan data earlier in the process and validating it before, during, and immediately after loan delivery.

This updated approach is designed to stand the test of time across market cycles and risk tolerances, thus supporting market stability and reducing investor and lender risk. Changes introduced under the LQI are intended to reduce repurchase requests through improved data integrity and consistent and early feedback on policy compliance while maintaining the current business model of relying on lenders to make appropriate decisions in accordance with Fannie Mae's guidelines.

The announcement actually covers a lot more items than just pulling new credit before closings.

Lenders now also have to:

Confirm the identity of all borrowers

Verify all borrowers have a valid social security number

Verify a borrower intends to owner occupy a property

Validate all parties to a transaction and make sure they're not on any government exclusion lists

Reporting & validation of mortgage insurance coverage

Credit scores must be 620 or higher (with some exceptions)

..and more.

FNMA's vagueness about LQI caused such an uproar in the industry that they had to release a clarification statement March 29th.

Oh but wait, it get's better! Because their bureaucratic mumbo jumbo is so clear, FNMA had to publish additional clarifying statements on April 7th and again on June 7th.

FNMA has also created an index page on their website to assist lenders with understanding what they're after.

Is it any wonder why it's seems so difficult to get approved for a mortgage these days?

MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY

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Logan Utah Mortgage Rate Update 6/9/10

John Neil (MetLife Home Loans) — Tue, 08 Jun 2010 19:33:37 -0400

Interest rates have dropped to truly ridiculous levels today...

30 year fixed 4.625% (APR 4.699%)
15 year fixed 4.125% (APR 4.217%)
7/1 ARM 3.875% (APR 3.755%)
5/1 ARM 3.500% (APR 3.431%)

FHA 30 year fixed 4.5% (APR 4.988%)
FHA 15 year fixed 4.0% (APR 4.456%)
FHA 7/1 ARM 4.0% (APR 4.223%)
FHA 5/1 ARM 3.75% (APR 4.011%)

Based on these incredibly low interest rates, it may be a great time to buy or refinance. Give me a call at 435-770-2709 to see if a purchase or refinance is possible.

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Fannie Mae Continues to Tighten Credit Guidelines: Interest Only Loans

John Neil (MetLife Home Loans) — Tue, 08 Jun 2010 19:23:50 -0400

Via Mike Jones (SUNSTREET MORTGAGE, LLC):

Interest only loan

My borrowers bought a beautiful second home here in Tucson at the end of May, and wanted to make the smallest possible monthly payment until their retirement in a few years.

The loan that they chose has an Interest Only feature that reduced their payment by many hundreds of dollars when compared to a fully amortized payment. They paid 20% at closing, and financed 80%.

Fannie Mae continues to tighten credit guidelines

Today, FNMA reduced the maximum LTV/CLTV (loan to value / combined loan to value) to 70% on all interest only loans. Had my clients waited a month, they would have had to come out of pocket another 10%!

Fannie Mae announced that they will no longer accept the following transactions with an interest only feature:

Cashout

FLEX mortgages

My Community loans

Investment properties

Duplex to Four Family units

Credit scores below 720

Borrowers with less than 24 months reserves

I'm Mike in Tucson, your preferred Tucson Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE llc ~ Mortgage Bankers, Not Brokers!
Offices in Scottsdale, Tucson, and Nogales, AZ, and Albuquerque, NM.

Reach me any time on my Blackberry (520) 349-9090

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