Distressed Market and FNMA Announcement

FNMA announced today that it's raising its Loan to Value (LTV) limits.

FNMA announced today that it's raising its Loan to Value (LTV) limits. This means that home buyers can put a lot less money down to buy their dream home.

It all sounds great, right? Fabulous news!

NOT Really!

Well it's not as it seems just like all the other announcements that have been made recently. FNMA is trying hard, but we need to look at other factors.

Yes... FNMA will allow you to get a loan with as little as 3% down.
Any loan amount or a combination of loans, if you're fortunate to find a bank that will offer a 2nd trust deed at this time, over 80% will require Property Mortgage Insurance (PMI).
Word in the banking industry is that there are announcements from PMI companies indicating significant mortgage insurance retractions that impacted a host of programs - meaning that beginning immediately it will be much more difficult and more expensive to get PMI insurance.

If you are a home buyer in the Pasadena and surrounding cities, be prepared to still come up with a significant downpayment between 20% and 25% down.

There are investors that are offering programs with less money down, but they require FICO scores higher than 700 and at least 6 months of payments in reserves.

Mortgage industry guidelines and programs are changing on a daily basis.

It is critical that buyers are speaking with a Mortgage Professional early in the process.

Sellers make sure that your Real Estate Agent doesn't just show you a pre-approval letter for a potential buyer, but gets on the phone and speaks with the lender to understand if the buyer is truly qualified and approved to purchase your home.

Be aware of the changes in the market place and stay tuned. I'll be posting more information on mortgage industry changes as it becomes available.

In the meantime, if you have questions or would like me to address specific issues, please do no hesitate to comment here or send me an email at Irina@Irina4RealEstate.com

Pasadena CA Real Estate: Recurring and Non-Recurring Closing Costs

http://www.pasadenacarealestatehomes.com/003496

Posted on May 16, 2008 15:21:22

Posted in Mortgage Information, Behind Closed Doors, Buyers, Sellers

Posted by:

irina.netchaev

Comment from: Ricardo Bueno [Visitor]

· http://www.industry-report.com

I'm in agreement that the best of opportunities exist for those with a greater source of down payment because the fact is, PMI raises the issue of affordability for those with little to put down. (If it's affordable, more power to you).

Fannie Mae lowering their downpayment standard might help but only a very small fraction of those trying really hard to get qualified.

A great option would be to do a combo 1st & 2nd but with the market for 2nd mortgage retracting, many lenders are approving your 1st but asking that you find a 2nd elsewhere in which case the prospects for a high CLTV are dim.

Some portfolio lenders come to mind that will service a 1st and 2nd combo but they don't lend on short-sales and the likeB.

The more I discuss scenarios, the more I think...boy a lot has changed since the credit requirements of the heyday huh?

Irina, today's market requires that you not be afraid to ask questions and you hilight that point clearly. There's no reason why anyone should be wondering "what to do" because like I said before, if you're not getting any answers, you're working with the wrong professional.

Permalink May 17, 2008 01:36:58

Comment from: irina.netchaev [Member]

· http://www.pasadenacarealestatehomes.com/

Ricardo, thanks for weighing in on this subject. A need for stellar credit and some reserves are needed to obtain a 2nd loan with the few investors that are still offering them.

I can't emphasize the need for buyers to engage in conversation with a mortgage professional like yourself to truly understand what they can and can not depend on it today's market. This conversation should take place before putting an offer on a house, opening escrow and accummulating expenses for physical inspections and appraisals.

Permalink May 17, 2008 01:47:04

Comment from: Ricardo Bueno [Visitor]

· http://www.industry-report.com

Especially for the safety of your security deposit...

Permalink May 17, 2008 19:09:44

Comment from: Dawn - Pasadena Note Queen [Visitor]

· http://www.notequeen.com

As I've come to expect, great content and insight. I've heard a couple of buyers in the last week sort of frothing at the mouth with the 3% down program, thinking they need to hurry and buy something. Not that they shouldn't buy something, but I'm guessing they may not realize the whole picture when it comes to the PMI. It makes sense that it's disappearing/becoming more expensive, I just didn't have it in my mind when I got the phone calls, so thanks for the jump start.

The mortgage challenges make me like the idea of seller financing more than ever. Putting a deal together without needing bank financing can really make sense sometimes, but the seller needs to understand how to underwrite their own deal, and kind of think like the banks and PMI companies are thinking. Carrying a note is great if you understand and harmonize the inherent risks and rewards.

Permalink May 20, 2008 15:46:54

Comment from: irina.netchaev [Member]

· http://www.pasadenacarealestatehomes.com/

Dawn, thanks for visiting! Seller financing is always an option most sellers are not educated on. Your website provides a lot of relevant content on the subject. I know that I learn something new every time I visit.

Permalink May 20, 2008 19:25:57

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