Category: mortgages

By CNBC  | Posted Mar 13th 2013 12:00PM

By Diana Olick

Sometimes financial terms sound complicated and arcane; other times they sound exactly like what they are. That’s the case with a jumbo mortgage. CNBC explains:

What is a jumbo mortgage?

A jumbo mortgage is a home loan whose value is larger than that of a conventional mortgage. A conventional mortgage is one that can be purchased by government-sponsored entities Fannie Mae and Freddie Mac. These two entities set the maximum value of loans they will purchase.

At what value does a mortgage become jumbo?

The current maximum value for a conventional loan is generally $417,000, but after the housing crash the limit was raised in certain designated “high cost” areas. At first it was raised to $729,750; but then in October 2011, it was reduced to $625,500.

More here.

>By Corbett B. Daly

WASHINGTON | Wed Apr 13, 2011 5:46pm EDT

WASHINGTON (Reuters) – A proposed rule requiring a minimum 20 percent down payment on mortgages that lenders could then sell to investors without keeping some of the risk on their books might prevent some potential borrowers from getting a loan, a top U.S. housing official said.

While the rule “is designed to create a class of loans that have a lower likelihood of default, in its proposed definition it has the potential to exclude a number of buyers,” Acting Federal Housing Administration Commissioner Bob Ryan said in prepared testimony.

Ryan is to deliver his remarks Thursday to a House Financial Services Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises. They were posted on the panel’s website on Wednesday.

The Federal Deposit Insurance Corp and the Federal Reserve a few weeks ago endorsed the “qualified residential mortgage” proposal that is intended to restore lending discipline and define the safest form of mortgages that can be completely resold to other investors.

Loans backed by mortgage finance giants Fannie Mae and Freddie Mac and the Federal Housing Administration are exempt from the rule. Together they back almost nine in 10 new mortgages.

Read the full article here.

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>By Zachary A. Goldfarb, Tuesday, March 29, 2:44 PM

As Washington confronted the future of American housing on several fronts Tuesday, there was no doubt that getting a home loan is going to be tougher unless a borrower has pristine credit and a hefty down payment.

U.S. bank regulators decided to propose a high standard for home buyers to get the best mortgage rates: Only those who can make a 20 percent down payment and have not had problems paying mortgages in the recent past would be eligible.

The regulators announced that plan and other proposals for new rules designed to prevent the kinds of practices that dumped so many risky mortgages into the financial system several years ago.

One of the key new regulations would require mortgage lenders to invest in the loans they make, so that if the loans went bad, the lender would suffer. In the years leading up to the financial crisis, lenders could hand off loans, many of which were high-risk, to other companies for a fee. Without skin in the game, they could then continue to make risky loans.

Read the full article here.

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There’s a host of information a mortgage broker or banker won’t tell you up front that may increase the cost of your financing.

You could pay much more on a mortgage than your initial quote rate based on a rating system used by government mortgage insurers Fannie Mae and Freddie Mac. Brokers and bankers rarely tell you this coming in the door. They want to lock you in to a loan as soon as possible. With rates rising, this is really important to know.

In the wake of the biggest real estate meltdown in American history, the devil’s in the details when you apply for a loan. This hidden rating system will penalize you with a higher rate if your credit score is low or you apply for certain types of loans. It’s being employed by Fannie Mae and Freddie Mac, the government’s captive mortgage entities, which account for about 80 percent of new loans now.

As of January 1, mortgage brokers and bankers have to tell you that you may not get the best rate if your credit report is flawed, although they may not give you essential details up front on what else could bump up your finance rate.

You need to ask about how you will fare in the Fannie/Freddie “risk-based pricing” regime, which is basically a computer-run scoring matrix run by your banker. Here are some factors that could raise your cost of credit:

•Credit scores (based on the FICO system) below 740.
•High loan-to-value ratios (the percentage of the property’s value that’s mortgaged). The more equity you have or the more money you put down, the lower your rate.
•Adjustable-rate, Interest-only or 40-year loans.
•Cash-out refinancings.
•Investment properties.
•Condominiums and cooperatives.
•Manufactured homes.
•Multiple-unit properties.

The risk-based pricing program evaluates the type of loan, your credit score and loan-to-value ratio and determine what “add-ons” will boost your quoted rate, if any.

Read the full article here.

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By Lynn Adler

NEW YORK | Thu Aug 12, 2010 10:52am EDT

NEW YORK (Reuters) – Home loan rates set new lows in the latest week on more evidence of a soft U.S. economy and high unemployment, home funding company Freddie Mac said on Thursday.

The average 30-year mortgage rate fell to 4.44 percent in the week ended August 12, the lowest since Freddie Mac records began in 1971. The prior record low was 4.49 percent a week ago, which was well below 5.29 percent a year ago.

Record low mortgage rates have lifted demand to refinance loans and buy homes. But the pace has nonetheless been tepid with unemployment flirting with 10 percent, consumer confidence dim and lending standards restrictive.

The refi applications index remains at least 40 percent below the peak seen last year.

Fifteen-year mortgage rates dropped 0.03 percentage point to average 3.92 percent, the lowest since records began in 1991. And five-year Treasury-indexed adjustable-rate mortgages (ARMs) at 3.56 percent also set a record low, dating back to 2005.

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If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

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