Lowest Rates Found Through Rate ... by Nicholas Ballard

“What’s the lowest rate?” This is generally the first question I get asked by prospective buyers or clients looking to refinance. As savvy borrowers know, the true answer depends on a number of factors such as credit scores, the eventual loan-to-value ratio, and the feasibility of closing within a designated lock period. Unless these and other factors have been fully evaluated, any quoted rate is essentially meaningless. (To have your credentials properly assessed and to receive timely quotes based on your specific requirements see my Customized Rate Watch below.) The more relevant question is “how do I get the best rate?” With added delays brought on by newly mandated disclosures and HVCC-driven appraisals, your odds of getting a...

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How to Get a Good Appraisal in M... by Nicholas Ballard

Whether buying a new property or refinancing an existing loan, it is essential to get a professionally constructed and detailed appraisal report. Since every property is unique, with marketability determined not only by set amenities like the number of bedrooms and square footage, but also by more nuanced factors such as the view, a seasoned, local appraiser is crucial.  This is especially so in non-conforming areas such as Marin where architectural styles vary and geographic features distinguish small pocket neighborhoods, impacting values. Unfortunately, the Home Valuation Code of Conduct (HVCC) adopted by most lenders in May 2009 has made contracting a good appraiser a more tenuous prospect. HVCC requires appraisals to be ordered...

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Improving the Odds of Getting a ... by Nicholas Ballard

Although it’s common knowledge that the major banks have been criticized for denying millions of loans, there is a false assumption that one’s own credentials are necessarily stronger than those who’ve been declined. While many borrowers are rejected for low income, poor credit scores, lack of equity, etc, strongly credentialed candidates are also routinely denied mortgage financing. Many reasons explain why solid loan files get rejected, including shoddy underwriting, today’s compromised appraisal process, or minor anomalies within a borrower’s loan package. Some lenders may reject certain properties while others not. Keep in mind that the loan process is inherently chaotic –even in a good housing market –as its goal is to commodify...

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"Points" Versus "No Points" Mort... by Nicholas Ballard

I’m often asked by clients to explain whether it makes sense for them to pay “points” or “no points” on their proposed mortgage. My automatic response is, “How long do you intend to keep your new mortgage or remain in your home?” Once this question is answered, the decision is easily determined by simple mathematics and how willing or able a borrower is to cover the increased closing costs or refinance into a slightly larger loan. A “point,” also referred to as a “discount point,” is industry jargon for paying 1% of the loan amount to buy down the rate on a proposed loan. This cost is on top of the standard closing costs involved in the loan process, such as the lender’s processing and underwriting fees, title and escrow fees, etc....

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Mortgage Outlook for Marin and S... by Nicholas Ballard

As the New Year begins, prospective homebuyers in the high cost Bay Area are doubtless wondering if 2009’s record low mortgage rates will continue into 2010. Judging from market reaction to Chinese central banker Zhu Min’s December 17th statement that the U.S. can’t expect other nations to increase purchases of Treasuries to fund its entire fiscal shortfall, it appears the likely answer is “no.” In response to his comment, the yield curve on Treasuries shot up along with mortgage interest rates. Rates on 30-year fixed loans have since increased on average by .25% and most projections for 2010 suggest they may climb as much as 1% over 2009’s lows by year’s end. Although an increase of 1% is certainly significant, this would still keep...

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New Fannie Mae Guidelines will I... by Nicholas Ballard

As of December 12, 2009, Fannie Mae has introduced its new DU (Desktop Underwriter) Version 8.0, which all lenders are now required to use for conforming and high-balance conforming loan products (to $417,000 and up to $729,750 in high-limit counties such as Marin and San Francisco) that it purchases. The new system imposes more restrictive lender guidelines and is expected to limit the number of borrowers who will qualify for a loan. Since the majority of loans in this price range are sold through either Fannie Mae or Freddie Mac, even the most qualified borrowers shopping for a home should have their approvals updated to insure that their loan packages are in compliance with current guidelines.

Fannie Mae and Freddie Mac regularly...

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Are Mortgage Prospects Improving... by Nicholas Ballard

In contrast to some of the lowest mortgage rates ever is the stark fact that millions of borrowers liken the process of securing financing to being run through the meat grinder. Thus the question I am frequently asked by prospective borrowers, "Is it getting easier or harder to get a mortgage?" As is generally the case with complicated topics, there is no easy answer and the reality is a bit of both.

Lending guidelines and underwriting requirements are far more demanding today than just a couple of years ago. Stated income loans are virtually non-existent and anyone seeking 30-year fixed money at less than 5% must be able to fully document their income and assets. And, within a couple of weeks, current debt-to-income ratios will become...

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Extension of Conforming Limits S... by Nicholas Ballard

Both chambers of Congress recently passed a resolution extending current conforming loan limits through December 31, 2010.  The resolution, signed by President Obama on November 6th, sets the maximum conforming loan sizes that can be bought or guaranteed by Government Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac.  This extension maintains the regular conforming limit of $417,000 and the high-balance conforming limit for Marin and other Bay Area counties up to $729,750.  Without the extension, the maximum conforming loan would have been reduced to $625,500 at year's end.

Because they receive federal support, conforming loans carry significantly lower interest rates, especially for 30-year fixed pricing.  Over the past...

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