10-3-07
MGIC and Radian, the two primary Mortgage Insurance companies, have both announced guideline changes that will affect all of us in the real estate field.
Due to the increasing number of defaults and skyrocketing claims to these companies the following changes have been put in place to be effective 11/1/2007.
- Loans with a borrower credit score of less than 575 will no longer be eligible for Mortgage Insurance regardless of the Fannie Mae decision.
- Loans with a score of 660 and a loan 97% or higher of the purchase price will be only be eligible for A minus rates.
What this means is that any deals that you may have that your client is receiving 100% financing might be invalid after 10/31. The A minus rates are much higher and could possibly cause the borrower not to qualify based on the total debt to income ratio.
This is good information to have if you have some one with a middle range score that is sitting on the fence right now. Waiting, in this case, could cost them dearly.
Heath Dotson Asheville Metro Mortgage (828) 225-6550 (p)
8/3/07
Bad news sells, good news gets ignored. This, I’m afraid, is just a simple fact of life. You opened this because you saw the headline right? If it would have said “good news” would you have even opened it?
The media thinks the real estate world is spiraling down the drain, and you are well aware of this if you have read a paper or turned on the television in the last year. The Headlines say, “Foreclosures are up 60-90% over last year. It is impossible to get financing anymore. Rates are rising. The SKY IS FALLING! The apocalypse is upon us! GET OUT NOW!!!
Well I’m here to tell you that things are really just not that bad. In fact I’ll go as far as to say that for a motivated professional now is a great time to be in the market. Sure, the market is not as robust as it was last year or even the year before, but here in our lovely little Asheville things are pretty good.
Let’s take a look at the GOOD NEWS for a second. Asheville has been mentioned time and time again as a number one destination and a place to live. From a cover story in Outside magazine to full blown article in the London Sunday Express (with a link to KW’s website I might add). Plain and simple, Asheville is HOT!
If you still want bad news, try selling real estate in Detroit where the average time on market is 24 months. WOW, that is two whole years. Makes 60-90 days on market seem like a blink of an eye.
Rates have gone up but only slightly. Right now a 30yr fixed rate is around 6.5%, which is actually lower than last year at this time. Let’s compare this to other years. The average rate in the 80’s was 12.702%. The average for the 90’s was 8.118. So far in the new millennium the average has been 6.501.* It really wasn’t until the last few years that we even started seeing rates below seven!!
Lending standards are tightening up. These actions are a direct response to the rising foreclosure rates. This, despite what you have heard, is NOT a bad thing. This simply means that people who are qualified for the mortgage can actually make the payment. Wow, seems like common sense to me, but in Wall Street’s zeal for profits from the only profitable sector, guidelines became so lax that anyone with a heart beat could get a loan. However, when those super cheap rates adjusted, well, those hearts stopped beating.
Be on the lookout for more sensible financing in the future. Also an idea that is taking hold in the states the money merge account that allows people to actually pay off their mortgages instead of simply refinancing time and time again.
I’m here to say there is not much to be scared of. Rates are still low, mortgages are readily available and sellers are motivated. There is not a better time to buy in one of the country’s best markets.
Heath Dotson Asheville Metro Mortgage
