Are you too late to the home buying or refinancing game?
Some people still think that things are going to get better. So I decided to hold off one week on writing something, so this way I could write on what did happen. As they say, “Hindsight is 20/20.” Now, there is no arguing that things are getting worse.
May 1, 2009 - Policy went into effect whereby lenders are no longer accepting broker/3rd party appraisals. This is better known as the Home Valuation Code of Conduct (HVCC). Lenders will now order an appraisal for a newly submitted loan. Why is this bad?
Brokers must make a decision on what lender they will use prior to knowing the value of a the house. Some lenders have better “bumps” for varying LTVs. If the LTV comes in too high, the bumps may offset the “Par” rate. If it come in too low, the borrower could be missing out on a lower rate.
Brokers can no longer submit to more than one lender. Let’s say the lender all of a sudden becomes backlogged (YES, this does happen) and are no longer turning loans over in a couple of days but rather weeks, brokers used to be able to submit the file to another lender to get the faster turn time. Now that the broker no longer owns the appraisal, a new appraisal would need to be ordered for the new lender.
Relationships break down. Brokers and appraisers will no longer work in unison to help a borrower determine a range value for their house prior to ordering the appraisal and working on the file to make sure that a loan is even possible.
Home values will decrease, as appraisers will want to low ball a value to make sure that they stay on the lender’s good side to see future business. Etc. Etc. Etc.
May 4-8, 2009 - Mortgage rates started at 4.5% on Monday. On Friday, mortgage rates climb up to 4.75% for a 30 year fixed. This rate increase was sparked by the failure of mortgage backed securities (MBS) to be sold on the market Thursday. Fannie Mae stepped up to the plate to buy the MBS in hopes to keep rates down a little longer. But investors want rates to come back up before they will start buying MBS again. FNMA only has so much money and time left to keep rates low. A .25% increase in less than 5 days is a sign of things to come. Especially when you look at market trends. The ceiling is being tested… it is only a matter of time before the ceiling becomes the new floor.
I can go on about how time is coming to an end for low mortgages and favorable financing guidelines, but I felt that these two items were the most important of this week. One ties the hands of those who are here to protect you and get you the best possible deal, and the other proves that rates are on the rise.
The clock is striking eleven… don’t wait for it to strike twelve and the fairytale ends because there is no happily ever after for those waiting for lower rates.
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For some time now, Knightlines Mortgage Services has been offering the people of Florida a convenient way to finance and re-finance their residential property.
But that isn’t the entire story - we are also doing commercial lending in all 50 states. AND - now we can offer commercial financing OUTSIDE of the country as well. Caribbean, South America, etc - just call for the details.