GSE Mortgage Options More Expensive?
Posted August 18, 2008 11:41 a.m. EDT
Updated August 18, 2008 11:43 a.m. EDT
So…Be prepared to pay a little more for conforming mortgages in the coming weeks and months. Fannie Mae and Freddie Mac have decided to increase their fees to lenders in response to the massive losses they have posted over the past few weeks. So what does this mean for you, the consumer?
It means that not only have tighter mortgage regulations been put into place – i.e. higher credit scores required for the most competitive of interest rates – but that risk evaluation has become a much bigger part of the decision process, and borrowers are being scrutinized like never before – making FICO scores a larger part of the underwriting/decision process.
Gone are most of the higher LTV (Loan to Value) mortgage options – with the exception of FHA. The ability to not provide documentation of income or assets with higher LTV’s has also disappeared. Borrower ability and the scrutiny of that ability are what the mortgage market is all about now… So here are a couple of tips surrounding the readiness or preparedness that one should be in tune with when either purchasing or refinancing a home in today’s market.
• You must be able to document both income and assets. If you are unable to do that, be prepared for a significantly higher down payment or equity stake in the property.
• Understand that mortgage expectations are higher now, so set realistic goals and guidelines. This can easily be done by making certain that you are partnering with experienced Mortgage Banking Professionals.
Jeremy M. Salemson
Corporate Investors Mortgage Group, Inc.