This week we saw rates take a breather, and settle into a nice trading pattern. Like I indicated last week, it was going to be really hard for rates to break through another barrier and fall much further.
Oil looks like it has settled into a trading range also, with Russia and Saudi Arabia not pulling back, but holding at January levels. This comments and the fact that more and more US production is being taken off the market, seems to have put oil trading in the $33/barrel range.
If the trend continues and oil keep increasing, we will definitely see more and more people get back into the stock market and less into bonds, thus making mortgage rate increase.
Not worth the risk, lock them loans.
Also, I saw a news article yesterday, based on data from the last 2 quarters, there is a 81% chance of the US going into recession late this year, early next year. Recession will make mortgage rates definitely drop, even further than right now, but on the flip side, YUCK, not another one.
Down Payment Assistance
I have created cool new video on Down Payment Assistance in Idaho. A day doesn’t go by with out people asking why there isn’t 100% financing available. Or I read in the news that home buyers need 20% down to buy a home.
So hopefully this video will help and people can realize that 1st Time Home Buyers and sometimes 2nd Time home buyers DO NOT need down payments out of their own pockets. There is help.
I received an interesting call yesterday, the person on the line was wondering why Idaho doesn’t do more Rural Development Loans, especially when 90% of Idaho is rural development eligible. Just here in the area, Kuna, Star, Middleton are all eligible for RD loan.
Rural Development offers 100% financing, at a stupid loan interest rate. Now there is income limits, but these limits are quite high, a 1-4 person household has to make <$75,650, and a 5+ person household can make up to $99,850.00.
Also RD will go down to a 580 FICO score, although some lenders require a minimum 620 FICO score.
Check out the web site for more information: Link Here!
Really and truly, anyone buying a home in a RD area, should be getting a RD loan, so BRING THEM ON!
And finally today….Fannie Mae Changes
I am going to harp and harp on this for the next few months, because of how important it is going to be to get the word out.
Fannie Mae on 6/25/2016 is going to release their latest version of underwriting guidelines #10. Things are going to change, a lot, here is exert from Fannie Mae:
Credit reports currently used in mortgage lending indicate only the outstanding balance, utilization and
availability of credit, and if a borrower has been on time or delinquent on existing credit accounts such as credit cards, mortgages, or student loans. DU Version 10.0 will use trended credit data in the credit risk assessment, which provides access to historical monthly data (when available) on several factors, including: balance, scheduled payment, and actual payment amount that a borrower has made on the account.
Leveraging trended data in the DU risk assessment allows a smarter, more thorough analysis of the borrower’s credit history. The use of trended data is a powerful predictor of risk, and its use enhances the DU risk assessment to better support access to credit for creditworthy borrowers.
So in a nut shell what does this mean, well underwriters are not going to analyze a borrower’s ability to be responsible with their credit cards for a 24-month period. List below will be some of the examples of risk Fannie will be looking at:
- Carrying high balances vs credit limit: If a person has a $3000 credit limit and has a balance of $2500, that is bad.
- Only making minimum payments each month: If a person’s minimum payment is $100 and they only pay $100, that is bad.
- Carrying a balance for a long period of time: Charging $3000 and paying on it for a long time, i.e. over 24 months, making the minimum payment, this is bad.
- New credit cards with <24 month history is not going to be favored, so no spiking a person’s credit score anymore by having them get a credit card and start charging on it.
Moral of this story:
A person who has a $2800 balance on a $3000 credit limit, making only the minimum payments for the last 24 months, but has a High Credit score, say 720, may not get a loan without putting more money down or may have to go FHA.
A person who has a low balance, say $900 on a $3000 credit limit, making more than the minimum payment, or even paying them off each month, say has a 650 FICO score, will have a better chance of getting a home loan.
More changes coming in following blogs, and I have training come also, which I will pass along.