Get In, While the Getting's Good (and lock the door behind you!)

Today's market for home lending is one full of opportunities and obstacles. Mortgage interest rates are not far off from all-time lows (mostly around 5% or below at time of this post). Home prices are attractive and arguably at their low point. HOWEVER....

Lenders and mortgage insurance companies have been tightening their guidelines, making it harder for consumers to take advantage of these low rates and prices. It seems every week a new restriction or extra cost is announced.

Here is what we know is coming around the bend:

- a .25% increase in the FHA Annual M.I. Premium. This increase in your mortgage insurance will increase your payment and reduce your buying power. FHA Case numbers assigned 4/18, or after, will be subjected to this higher premium. Payments would increase by over $41 on a $200,000 loan.

- changes to loan officer compensation. There is still, with just a couple of weeks to go before this rule takes effect, much debate on how this will impact "pricing" for the consumer. What we do know is that it will reduce the consumer's choices and that lenders will be increasing their margins to cover the potential costs that they've not been able to measure under these new compensation rules.

- higher rates. OK. I don't own a crystal ball or know how to use one but all the forecasts are for higher rates. As the economy shows a sign of recovery, the Fed will be forced to raise their rates. Money will flow toward the stock market and out of the bond market requiring lower bond prices and thus higher mortgage rates. The question is only "when and how high"?

So we know about those changes. Here are some changes that are rumored to happen in the months ahead:

- FHA to increase down payment requirements from 3.5% to five or even ten percent.

- Conventional loans to restrict Loan-to-Values on refinances and purchases (even more than they already have)

- higher credit score requirements (does anyone remember when you didn't even need a credit score for a FHA loan?)

- Fannie Mae and Freddie Mac to be disolved. The uncertainty of how the market will function with these insuring agencies is ominous. It could foster competition from private investors but will likely suggest more risk which translates into higher rates or even more restrictive underwriting.


But here is the thing. In spite of all this doom and gloom, people will still buy houses and they will obtain mortgages to pay for them. And there will be loan officers to guide them through the process. Now, more than ever, consumers need a knowledgeable and trustworthy loan officer to help them navigate their way through this crazy world of mortgage lending.

My message today is one of urgency. If you, or someone you know, is in the market for a home or considering a change to your current mortgage, then please contact me today as I strongly believe you'll have more attractive options now than you will later.