Hi again,
I received another update on changing guidance in mortgage lending from Rachel Van Emon at Opes Advisors. While she consistently seems to be the bearer of bad news lately, she is actually a delightful person! So . . . don’t shoot the messenger.
A key point she brings out in her latest article is mortgage guidelines can change withour notice. This means that if you haven’t locked a mortgage and rate on a particular property, you can find that funding scenario disappearing in the wind.
A prominent national lender recently changed their guidelines to include the following:
· To qualify for an Interest Only Jumbo loan (over $417,000), a fully amortized payment must be used. This means borrowers must make more income to qualify for the same loan amount and program.
· On loans where over 40% of the combined annual income of both borrowers is from verifiable sources (salary, W2, etc.), Stated Income will not be allowed.
· For No-Income verifier loans, first time buyers are not allowed and payment shock is limited to 12% of current housing payment.
In an area where a number of first - time buyers are purchasing with 10% or less down payments, and many others are self employed, consultants, or contractors, these new guidelines can have a ripple effect on even the market in Silicon Valley where, unlike most of the country, we are enjoying rising property values and strong housing demand.
Unfortunately, most major lenders provide loans nationally, and so need to take a “one size fits all” approach.
Click here to link to the full article.
Thanks for reading.
Tags: bay-area-real-estate, Home buying, Loan Application, No Documentation (ND), No Ratio (NR), Preapproval, Prequalification, Real estate, Stated Income Verified Assets (SIVA)
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3 responses so far ↓
1 Teresa // May 8, 2007 at 11:59 am
Good to know, thanks. For those of you looking for a better understanding of how real estate works, you should definitely check out the new reality show Bought & Sold on HGTV, have you heard of it? I think it will be very beneficial to all of you! http://web.hgtv.com/webhgtv/images/pac/59889/start_at_home.html?section=boughtsold,panel=videos. It’s a great show and you can really get a great idea on how the industry works, from the inner workings, to the stories, the drama behind the sales, and the lengths brokers will go to just to get the deal. I work with HGTV, and you won’t believe what happens this season. Good luck, and enjoy the show! Don’t forget, the show airs Sundays at 10pm. I’m sure it will be helpful.
2 Brian LeBars // May 8, 2007 at 8:55 pm
Allot of smaller lending institutions who have a weak secondary market to sell too, I would be wary of. Know your lender and you should be fine. You may want to watch my series “Pays to know a dedicated mortgage Broker”. http://blog.brianlebars.com/2007/05/home-financing-strategy-pays-to-know.html. I like to discuss and educate similar topics.
Cheers.
3 Rachel Van Emon // May 11, 2007 at 2:57 pm
Thank you, Chris.
We continue to see lenders limit their programs at the margins. We are a mortgage bank and underwrite for all of the major lending institutions - all the big names you could list. Granted, we see some of the smaller ones are tightening faster, but we’re keeping our eye on the big players as well.
Having said that, a well qualified borrower will, I think, always find a bank that wants them as a customer.
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