Dennis' Mortgage Blog

Question of the week:  How do you determine which borrowers’ credit score to use?  Answer:  This is a common question.  When we have more than one borrower there are two scenarios lenders use.  The majority of mortgage guidelines use the credit score of the primary borrower.  The primary borrower is determined as the borrower who earns the highest income for most standard transactions.  So if the applicants are husband and wife or partners then the sole criteria for whose score we use is who has the highest income, very equitable!  Some programs have slightly different criteria, but for the most part the higher income is the score we will use.

If you have a question you would like me to answer send it to me!

This weekend I should have my initial podcast on Mortgage Insurance up on www.DennisCSmith.com  let me know what topics you are interested in for me to cover in the future.  By the way, you do not need an iPod to listen! Just a media player on your computer—which I am sure you do!

Every Friday morning I say to myself, “Self, today you are going to get your market and rate update out before lunch…”  Inevitably I do not and lately I have been glad since Friday rates have been so volatile.  Today the mortgage market started poorly and then towards mid-day turned even worse resulting in price changes for the higher.  Despite poor performances today and yesterday, Monday was incredibly strong and resulted in a slight Friday-to-Friday decline in rates.  Woo-hoo!

This week it was published that homes sales in the Southern California region climbed dramatically from September to September, over 60% in Orange County, and that median prices dropped.  This is a phenomenon I have addressed earlier and shows what I have been commenting on for several weeks.  Our activity is some what healthy considering the overall economic news in the nation and around the globe, as we are working with a lot of first time homebuyers.  They are actively purchasing the entry level homes and condos, in many cases up to the middle of the market, and creating a movement of stabilization in many markets.  Because of the average buyer in the market today and their affordability most of the activity is concentrated on the bottom of the price spectrum resulting in lower median prices—see my blurb last week on apples. 

Increasing home sales is not just a SoCal trend; nationally existing home sales (as opposed to newly constructed home sales) are up 5.5% from a year ago.  So while new home starts—new construction homes) are way down, existing homes sales are showing some gathering momentum.  This is very good news.

I will continue my caution of the loan limits expiring at the end of December.  For loans over $417,000 for Fannie and Freddie, and especially if the loan amount is over the proposed new limit of $625,000, funding after Thanksgiving could be a real issue.  See My Blog for letter (Loan Limit Expiration Affecting Closing) I sent earlier this week to real estate agents (scroll to entry after this rate/market update).  Please call me to discuss our scenario and avoid getting caught in this potential funding gap.

Rates flat and a bit down this week thanks to a late rally.

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 740 AND ABOVE (change from last Friday):

30 year conventional at 1 point 6.125%            ê 0.125%

30 year conforming-jumbo at 1 point 6.25%              ê 0.125%

30 year FHA at 1 point 6.00%                                    ê 0.25%

30 year jumbo at         NO PRICE CALL FOR INFORMATION  

Note the larger decline recently in FHA mortgages, a very hot item on the mortgage backed securities market lately.

For over a year we have been working with changing guidelines, programs, loan limits and many other challenges.  Each step of the way I hope I have been able to keep you adequately informed and apprised of coming changes, or sudden changes, and what they mean to home buyers, home owners and real estate professionals.  I will continue to do so and appreciate the support many of you have shown with your business and referrals.  If there is any topic you would like me to comment on, publicly or privately, please contact me.

Have a great weekend, enjoy your family and friends.  I you are buying a house or need assistance I am available for you.  Next week Halloween!!

Dennis

Remember this update is posted weekly on My Blog at www.DennisCSmith.com , feel free to forward the link to family and friends who may be interested in past commentaries.