On the weekend of December 11,2010, Fannie Mae will release Desktop Underwriter Version 8.2. All conventional loans are ran through Fannie Mae's automated underwriting system to receive a preliminary loan approval. The new version going into effect this weekend will have some updated guideline changes. The most important one to take note of concerns previous foreclosures. If you have had a foreclosure on your record you will now have to wait 7 years before buying a new home in your own name, regardless of credit score. Pre foreclosure sales (i am assuming short sales and potentially deed in lieu's)are now two years.
The rate train has been steadily moving higher and higher, with yesterday being an absolutely brutal day in the bond market. If you were quoted a rate on Monday, by Tuesday afternoon that same rate would have cost you an extra 100 basis points (1% of the loan amount) to keep it. If you kept the same fee structure as you were quoted on Monday, your rate would be .25-.375% higher over a 24 hour span.
The generally accepted culprit of yesterday's rout is twofold, beginning with an Irish budget cut and intensifying with a Congressional compromise on extending both the Bush era tax cuts and unemployment benefits. Tax cut extensions lifted the stock market right out of the gate (and hurt bonds) while news that Ireland was close to confirming austerity measures was an early motivator of interest rate weakness in U.S. benchmarks (stole demand from Treasuries).
Today's advice is the same as yesterday. Volatility and uncertainty remain ways of life. We are NOT in a position yet to say we've reached some important support levels that should allow mortgage rates to recover. Things can get worse before they get better, and judging by what we've seen in recent weeks, will probably do a little bit of both in rapid succession. For those who must pull the trigger in December, get safe and get out with a livable payment. All others are at the whim of a market that makes no promises as to when or if it will see improved loan pricing (rates).
Current market rates for well qualified buyers are hovering around 4.75%. Please call to inquire about the definition of a well qualified buyer in today's market.
Crystal Clear Mortgage
888-634-6911
Wednesday, December 8, 2010
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