Rates
Well, all the headlines this week have been how low can rates go, we are seeing FHA hold pretty firm in the low 3’s while conventional has been sniffing the mid 3’s but staying in the high 3’s. But that has come to a head today.
A couple of countries in OPEC, you know the oil monopoly, are talking about cutting production, this has caused oil to spike 10% today up $3.23 today to $29.44 per barrel. This has caused the stock market to rally a little, currently up 268 points, and thus, yep you guessed it, rates have gone up today.
But a few talking heads indicate that the OPEC talk could just be chatter, and that come next week, when nothing works out, oil could again fall. The upside for us and mortgage rates is that $24 per barrel mark, if we hit that, and stay there, we are going to start to see some VERY sweet rates, and could rival ALL TIME LOWES!!!
But any movement above $30 and all of our rate improvements over the last 2 months will erode.
Also this week, Janet Yellen, in my opinion the most powerful person in the world, spoke be fore Congress, pretty much a song and dance, but she did, for the first time, indicate or hit that the Federal Reserve could go “negative” on interest rates. Which means a bank, say US Bank, wanted to park a Billion Dollars in the Federal reserve overnight, today would get a .25% return on their money. But if the Fed goes negative, as the Bank of Japan did, and a Swiss Bank did last week, it would actually COST a bank money to park their funds in the Federal Reserve.
This will cause banks, who don’t want to risk money, say in lending to homeowners, which is risky, to find somewhere else to park their money, and the alternative is in US Bonds.
IF this happens, and it is a HUGE IF, we could potentially see rates at unheard of levels, can we say “2’s”
I am in a locking mode, rates are rallied since December 17th, which is about the longest rally I can remember, every. Be happy with the rate. Gamble, and it could hurt.
Sub Prime Mortgage
As we get further and further from the Home Peak of 2008, people are forgetting we had subprime mortgages, where pretty much anyone who fogged a mirror could get a home. Well then we had the Great Recession, that caused the government to crimp down on these loans, and the loans went away. Well they are BACK!!!!
Yep, Sub Prime is making a comeback, and each week it seems that more and more lenders are doing different Alt-A or subprime loans.
So if you are:
- 1 day out of BK, you can get a home.
- 1 day of or a short sale, you can get a home.
- 1 day out of foreclosure, you can get a home.
- Self-employed, have 24 months of bank statements, you can get a home.
- Have a 500 FICO score, 1 day out of BK & FC, you can get a home!
Now keep in mind you are going to have to have a downpayment, so the 100% financing 1 day out of BK is possible yet…YET, we have products that can get people into homes.
And these are not ARM loans, we are talking about 30 year fixed rate and NO PREPAYMENT PENALITY!!!
We even have Sub Prime mortgage up to 90% loan to value.
Find out more here: http://www.375loan.com/loan_products/non_prime_lending/
And keep checking back, as more and more lender release stuff I will update the web site!
June Fannie/Freddie Changes
I can’t stress it enough, be aware that Fannie Mae and Freddie Mac will be redoing their guidelines in June and all Credit Reports will be further scrubbed.
The new FICO calculation will be called FICO 9, and this will look at a person history for the last 2+ year, rather than a most current snapshot.
One example of how a person could get declined or have to go FHA, say a person’s FICO score is a 740, which is a GREAT FICO score, but they carry large balances on their credit cards, and only make the minimum payment. This person could then be categorized as a “revolver” and Fannie/Freddie could decline them, even if they have 10% down.
This would mean this individual will have to go FHA, ouch.
There is more info coming, and as I have training calls I will pass this info along, but this is a HUGE Change in underwriting, HUGE.