Sunday, January 11, 2009

Mortgage Rates Now a-la-carte

Mortgage rates have gotten sliced and diced in very narrow catagories and credit score ranges. Last year we were able to pool 700 ficos with 650.. this doesn't hold true any longer. I've included the MAIN FANNIE MAE AND FREDDIE MAC matrix below for what we as mortgage lenders have to look at before we price a loan. There is also matrices for cash-out refinances, condo's, investment properties and 2nd homes.

Don't expect any of the mortgage rates you see in the paper or online to hold true. The mortgage rates you see online are "base" rates and are only offered to a very small percentage of the population with the highest credits scores and largest down payments.

With declining property values, high loan defaults and lower credit scores so common now you will be better served working with a mortgage person you can first trust and one that has access to many lenders. Access to many lenders will help you find the right rate and approval for your particular needs.

As you can see on the below matrix 720 credit scores with lots of equity home owners are getting the best rates. This matrix applies to conventional loans only not FHA or VA loans. FHA and VA loans offer there own risk based adjustments. Guideline changes have been almost non stop since the end of 2007 due to the disrupted nature of mortgage lending.

Below adjustments are strictly for addtional points added for risk based add-ons. 1 point equals 1% of the loan amount. EX: 1 point for a $100,000 loan is $1,000, 2 points for a $100,000 loan is $2,000, and so on.

A borrower that doesn't want to pay risk based 'points' can typically increase their rate to absorb points. It usually costs a .25% increase in rate to eliminate 1 point.

Example: .25% increase in rate may eliminate a 1 point charge, .50% in rate may eliminate a 2 point charge. A 5.0% rate may have a 2 point charge or the client may pay 5.5% rate with 0 points.

The below risk based point adds are national guidelines that apply to all conventional mortgage lenders. Some lenders can add on their own additional "regional" risk premiums.

Clients can choose to incur the below addtional points or a higher rate to offset any additional points that must be charged due to additional risk.  

Fanne Freddie Conventional Conforming Adjusters       Increase rates or charge borrower below points or a combination of point/rate
LTV%     <=60% 60.01-<=70% 70.01-75% 75.01-80% 80.01-85% 85.01-90% 90.01-95% 95.01-97%
LTV / FICO Adjusters: All Products w/Terms > 15 Yrs            
>=740   FIXED/ARM (0.250) 0.000 0.000 0.000 0.000 0.000 0.000 n/a
720 - 739   FIXED/ARM (0.250) 0.000 0.000 0.250 0.000 0.000 0.000 n/a
700 - 719   FIXED/ARM (0.250) 0.500 0.500 0.750 n/a n/a n/a n/a
680 - 699   FIXED/ARM 0.000 0.500 1.000 1.500 n/a n/a n/a n/a
660 - 679   FIXED/ARM 0.000 1.000 2.000 2.500 n/a n/a n/a n/a
640 - 659   FIXED/ARM 0.500 1.250 2.500 3.000 n/a n/a n/a n/a
620 - 639   FIXED/ARM 0.500 1.500 3.000 3.000 n/a n/a n/a n/a
<620   FIXED/ARM n/a n/a n/a n/a n/a n/a n/a n/a

ADDITIONAL CONVENTIONAL CONFORMING ADJUSTERS

CHARGE A HIGHER RATE OR BORROWER MUST PAY ADDITIONAL BELOW POINTS

     
   
LTV > 90% <= 95% 0.250
15 -year FRM w/ 120-month term 0.250
Investment Property LTV <= 75% 1.750
Investment Property LTV >75% <= 80% 3.000
Investment Property LTV >80% <= 90% n/a
2 Unit Property 1.000
2 Unit Second Home Cash-Out refi <= 75% 0.500
3 & 4 Unit Property 1.000
Secondary Financing  
   75/20/5 LTV>65%/CLTV>90<=95% & FICO>=720 0.250
   75/20/5 LTV>65%/CLTV>90<=95% & FICO<720 0.500
   80/10/10 0.250
   All Other LTV>75% & FICO>=720 0.250
   All Other LTV>75% & FICO<720 0.500
Non-escrowed (except CA, IA, IL, MN, NJ, NY, OR) 0.250
Temporary buydowns >80% LTV w/no MI 1.000
Condo > 75% LTV         ALL PRODUCTS W/ TERMS > 15 YRS 0.750

Low Loan Size Adjuster  
$0 - $49,999 0.500
$50,000 - $99,999 0.250
               

Posted by gilkerk ( FHA, Government Home Loans, Home Loan application, VA, Home Appraisals, Credit Scores, USDA Loan, Refinance, Downpayment, Homeownership, Closings, Crystal Lake Real Estate Agents, Agonquin Real Estate Agents, Cary Illinois Real Estate Agents, Mortgages, Mortgage Interest Rates, Fannie Mae, Freddie Mac, FHA Appraisals, FHA Appraisers, HUD Owned Homes, HUD Homes, HUD Foreclosures, Lake in the Hills Mortgage, McHenry Home Loans, realestateloans.com, Integra Mortgage Schaumburg Illinois, Mortgage Buydowns, 2-1 buydown, FHA 2-1 Buydowns, Mortgage loan application, mortgage application, fnma 1003, 203ks, fha 203ks, 203k, Gil Kerbashian, FHA Gift Letter, (847) 794-5000, Condominiums, Allied Mortgage Capital Corp, Allied Mortgage ) :: Permalink :: Trackbacks (0)

fees [Reply]

?? you have to look at this every day with each client?

Comment by carol (01/17/2009 09:31)

Mortgage Matrix [Reply]

Excellent information, Gil, as always. Keep up the great work!

Comment by Debra Kukulski Re/Max 847-516-6760 (03/18/2009 16:46)