May God bless America, we’re going to need it! It doesn’t seem there are ever more than 3 months or so before new lending guidelines are implemented. The latest takes the cake for being the most apropos to where we are as a nation. Since June 1st, if you lie on your loan application, it’s my fault because I didn’t figure it out. Nice huh? How’s that for “Made in America”?
Today I spoke to a group of awesome Realtors from the Niceville MLS tour about a couple of things that seemed to pique everyone’s interest. These included a CNN article entitled “Housing Shortgage Coming Soon?” and a brief explanation of the new Loan Quality Initiatives (LQI) implemented by both Fannie Mae and Freddie Mac on June 1. The new LQI states, in a nutshell, that “the lender is responsible for any and all borrower debt up to and concurrent with the closing.” You can click the links in order to see the actual documents.
A couple of points that we didn’t mention about the new LQI include: many lenders may still not be aware of this new guideline, nor how it will impact their loans; and this only applies to loans where the application was completed on or after June 1, 2010 so very little experience has been had with it thus far. As I’ve said in previous newsletters, as you see increasing responsibility being placed on the originating lender you’re going to see lender fees and/or interest rates come up across the board to offset risk and cover increased costs.
Perhaps the best piece of advice given to Realtors today was to be very emphatic with their buyers about the importance that they not do anything unusual with their credit during the escrow process. If you’re considering borrowing money to buy a home, don’t apply for new credit (after the mortgage) anywhere, don’t have your credit report pulled, and don’t allow existing credit account balances to increase dramatically, and keep paying your bills on time! Finally, be sure to disclose everything up front as lenders will be finding new and innovative ways to scrutinize your financials even more closely now than before. After all, I don’t want to get in trouble because I didn’t realize you weren’t being entirely honest with me!
I know many of you have closed on a mortgage loan in the last couple of years. If you applied for a mortgage these days, you’d be surprised at how many questions are asked, and how much paperwork is needed. I know you’d prefer it be easy like it used to be, but it isn’t. That doesn’t mean that qualifying for a loan is too difficult these days, because it isn’t, really! Meeting all of the lender requests for information may mean you need a vacation afterward, but really it’s not that bad. Just be honest with us, and understand that times are different now.
Steve and I are committed to your financial understanding, especially as it relates to all things real estate. If we can do anything at all to help you please don’t hesitate to ask either of us
And by the way, interest rates are again about the lowest they’ve ever been. Now is the time to lock in a low rate to refinance an existing mortgage, or purchase the home you really want!
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