Wow, has 2015 been a wild mortgage ride or what? We have seen huge property value increases, record low mortgage rates, FHA MI reduction program, HARP, TRID, QM and reasonable regulation from the CFPB, imagine that! I know all of this banker talk can get confusing as what is TRID, QM or CFPB? Let’s slow things down a bit and look ahead to the coming 2016 year and how real estate will impact the economy.
We all remember the mortgage meltdown fears of 2009? We heard terms like Alt-A, Stated and Sub-Prime all were bad. Well truth be told all of these programs did work and would still work if the original program guidelines were followed. For example, how does a person with a part-time job allowed to purchase a home with no money down with a $400,000 mortgage? This was done with 100% financing and the stated income program. The program was intended for people that are self-employed and only take from their business the amount of money needed to live. This allows for a business owner to invest in their business to help it grow and not penalize them for mortgage qualification in terms of income. These borrowers would still have to have assets and credit scores higher than full doc borrowers. This became an issue when the program was allowed to be opened up to everyone business owner or not. If you have a strong credit score you are good to go. Brings back memories of my parents saying cough, congrats, you are in.
The industry is moving toward helping people getting back into their dream homes. So how is this going to work? The primary mortgage options will be the Alt-A or NON-QM programs. These programs will have a little higher mortgage rates but will offer people one day removed from BK or Foreclosure the chance to obtain a new mortgage. Yes you do have to qualify for the program and it is paperwork heavy. These programs, with most Lenders, offer rates are .5% to 2% higher than the preferred Fannie Mae programs that we seen advertised everywhere. The more resent the negative event the higher your rate will be. The Fannie Mae programs are very good but life does get in the way which makes us choice a different path than some people.
Most of the bank Loan Officers/Mortgage Bankers that I have spoken with say their companies will not be offering these programs. Your best option will be to speak with a Direct Mortgage Lender or a Mortgage Broker as they can offer multiple options vs a single option as a bank LO. To find these companies I would do a google search for a direct lender or mortgage broker in my local area. This way you are speaking with a person that understands, in detail, how to address a mortgage on a property in the area you want to purchase or refinance. Many times the larger companies become factories and just push paper with no idea of the local market of the subject property. It is in your best interest to be sure you know a little bit about whom you are speaking with for your next mortgage.
If anyone would like more information on these mortgage programs of other programs please let me know.