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Monday Morning Mortgages>
Monday Morning Mortgages
August 31, 2009
Monday Morning Mortgages ~ Monday 8/31/2009
Rates
Rates have improved nicely since last week (see below). See below for morning rates. Also, visit www.sonomcountyhomeloans.com for up-to-the-minute rates all day, everyday.
Tax Impounds Increase Closing Costs per Calendar
When I quote closing costs for a client, I’m not only including lending costs, but also escrow/title fees and prepaid insurance, taxes and interest. If I quote less than that, a buyer will not have a realistic idea of what funds it will take to close.
The number of tax months collected in escrow for impounds is standardized per an established calendar for lenders. This allows them to collect enough taxes upfront for the impound account so when the tax bill comes due in November and February there will be enough funds to cover taxes, according to what month the loan funds. Remember, a loan funding in November, will not begin paying mortgage payments, hence impounds, to the lender until January. So expect these fluctuations in closings costs on purchases that have mandatory impound accounts (FHA, first time home buyers, and less 20% down payments).
Closing Month # of months of Taxes collected for impounds
November 5
December 6
January 7
February 2
March 3
April 4
May 5
June 6
July 7
August 8
September 9
October 4
Fannie Mae Policy Changes
Fannie Mae establishes guidelines by which it will purchase mortgages originated by lenders and brokers. These guidelines change in reaction to changes risk levels. We have been in an environment of tightening guidelines for the past 2 years in response to the defaulting mortgages created by loose credit requirements of the past. In addition to Fannie Mae guidelines, lenders or investors buying the loans often impose even more strident “overlays”.
Here are some highlights from the latest Fannie Mae policy updates.
IRS 4506-T – This form gives the lender permission to verify IRS tax filings with information submitted by the borrower to the lender. It now needs to be submitted twice; once at the time of initial loan application, and again in final closing signing.
Credit Docs – Credit reports, income and assets documentation and employment verifications must be no older than 90 days, reduced from 120 days formerly.
Final HUD 1 – Final Settlement Statement must be signed by both buyers and sellers.
Asset Valuation – Stocks, bonds and mutual funds will be limited to using 70% as qualifyable assets, down from 100% before. Retirement accounts will be reduced to 60% from 70%.
2 Unit Properties – Duplexes are now limited to 80% LTV for owner occupied purchases and 75% for investor purchases. All scenarios on duplexes have FICO minimums higher than for single family homes.
Loan Closing Turn times for Escrow Timing
Conventional Mortgage 30-35 days
FHA 30-35 days
Note: I recommend increasing loan contingency release to 25 days from the standard 17 days.
Today's Rates (see current days throughout the day with APR calculations at
www.sonomacountyhomeloans.com
WITH ONE LOAN POINT
Conforming (<= $417,000)
30 Year 5.0%
5/1 ARM 4.125%
5/1 ARM IO 4.25%
7/1 ARM IO 4.25%
Jumbo Agency ($417,001 - $662,500 in Sonoma County)
30 Year 5.25 %
FHA Conforming (<= $417,000)
5.125%
FHA Jumbo (to $520,950)
5. 25%
Super Jumbo (<= $3 million)
30 year fixed 6.25%
3/1 ARM 3.875%
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