| Finance Updates October 1st 2009
Good news is rates are currently much lower than I thought we would ever see again, with 30 yrs back under 5%.
I'm going to recommend that you visit local lenders who have the ability to do FHA loans, as they are now more important than ever:
With the government in control of lending, we were supposed to see easing of credit, but the new Fannie Mae changes coming in December look like they will cut more people out of financing. The big change is the Debt-to income ratios. They always said they wanted the ratio under 45%, but the automated approval system would take into account low Loan-to-Value with a good track record of paying bills (High FICO), and would approve loans with ratios well into the 50's (and sometimes 60's). Now it appears they are going to cut people off at 45%.
While it sounds noble to keep people from hurting themselves, the scenarios where I did these higher ratio loans always made sense; such as: the buyer really had higher income, but the way FNMA measured it, we had to use a lower amount, or the buyer was anticipating an upcoming financial event that would pay off the mortgage or increase their pay,etc. I would guess that perhaps 20% of my loans fall in this category.
These changes do not affect FHA loans. FHA has been our primary loan of choice for purchases with less than 20% down; we will probably start using it to catch the fallout from FNMAs changes.
Darel Ansley
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