It’s been a while since I have posted anything on here regarding the mortgage and real estate world, so, I figured I should give you all an update!
We’ll start with the mortgage industry. First off, there have been some major changes in the lending industry over the past month and a half alone. One big change that is coming down the pipe is a term called – QRM. What QRM stands for is a, Qualified Residential Mortgage. What this entails, is the big 4 banks (Chase, Wells Fargo, Bank of America, and Citi) are trying to require every lender to hold 5% of the loan amount in reserve until that loan is paid off. That may not seem like a big deal, until you think about the hundreds of millions of dollars lenders accumulate in writing loans over the course of a year... Here are some of the guidelines they are looking at imposing during this plan, which are not set in stone yet by the way. It will require you as the borrower to put 20% down, have debt to income ratios or 28% over 36%, have no 30 day late payments in the last 12 months, and no 60 day late payments in the last 24 months. If you fall under any of these categories, such as not having 20% down, you will have to look at other loan programs such as an FHA loan or USDA loan. However, naturally forcing many buyers to look at those programs, both FHA and USDA are likely going to raise their fees and monthly mortgage insurance premiums as well to capitalize and make profits. Meanwhile, the lender will most likely have to keep 5% in the game on those loans as well. Overall, the big 4 are collaborating and trying to impose QRM on the lending industry in hopes to knock out all of the smaller banks / lenders and force all of you as consumers to go to them for your home loan needs. Behind that, the big 4 will then monopolize the market and potentially “fix” rates and jack up costs and we as the consumer are going to basically take it in the shorts in the end. We are working with several major advocacy groups across the United States to try and put a stop to QRM before it goes in to affect and hurts us as the consumer.
This same thing happened with oil prices and the oil sheiks back in the day… This is how OPEC was formed. One oil sheik would charge a less than the others and steal the business. While another, would charge more, and sell less to make his money. Then the roles would reverse and he would drop his price and the others would go up. Then they all got smart and collaborated and fixed the pricing on oil and started raising the price slowly, therefore everyone was making more money and working together. The big banks are in theory doing the same thing by trying to enforce QRM.
Aside from the QRM news, mortgage rates have once again come back down in to the 4’s on 30 year rates, and remain in the low 4’s on fixed 15 year rates. For first time homebuyers there has honestly never been a better time to buy than right now! USDA loans can be achieved in rural areas with 100% financing available, and first time homebuyers can even qualify for an FHA 203K rehab loan to purchase a fixer-upper and make repairs all in one shot with little or no monies down. The cost of owning a home and making a mortgage payment right now, in some cases, is cheaper than paying rent.
As for the real estate side of things, there are large quantities of bank owned properties on the market with some extremely good deals out there. The bank owned properties are selling at a pretty fast pace, therefore if you are not paying cash, making sure you are fully pre-approved and ready to pull the trigger when the right houses pops up is a must! If you are considering purchasing a short sale, I personally recommend looking at a bank owned property or a conventional sale as I have dealt with several short sales over the last few months and they are all nightmares for the buyer. Most of them take two to six months to even get an answer from the bank on your offer in the first place. If you can find a Fannie Mae owned property there is a loan program called “HomePath.” Basically this program allows you to purchase as Fannie Mae owned property with as little as 3% down, NO monthly mortgage insurance, and NO appraisal required. I have done several of these loans over the past few months and they are a great way to go!
Overall Thoughts –
-Mortgage rates are at all time lows so don’t miss the opportunities while they last
- There are plenty of great bank owned properties out there – stay away from short sales
- First time buyer programs are readily available
- Down payment assistance programs exist for those with little or no money down
- Last, make sure your loan officer is licensed by the state of Washington DFI
Last - here's our weekly industry news video from last week with some pretty funny comments / predicitons from the news and government.
http://youtu.be/qa-ZAecbqa4 If you have any questions about lending, or real estate in general, please don’t hesitate to give me a call or send me an email and I will do my best to answer your questions.
Take care,
