Beneficial Loan Programs For Our Current Market Conditions

With the economy apparently firing on all cylinders as of late, we have seen a consequent rise in Mortgage Interest Rates. This, coupled with the tight housing inventory across much of the United States, has driven home prices dramatically upward.


The average rate for a 30-year fixed-rate mortgage rose to 4.61% this week from 4.55% last week, according to data released Thursday by mortgage-finance giant Freddie Mac.

nd this combination of higher interest rates and higher housing prices is creating a "Perfect Storm" which, on the surface, looks to derail the home ownership dreams of thousands of families. The governmental regulations put in place after the economic meltdown of a decade ago had already cut out a large portion of the borrowing public - chiefly the Self-Employed small business owner. But the past year has seen a growing number of mortgage programs which cater to those borrowers who fall outside of the normal Fannie Mae or Freddie Mac channels. Credit score requirements have loosened up under many programs (including FNMA and FHLMC), and now we are also seeing Income Documentation requirements being widened for more reasonable assessment of a borrower's ability to repay.


While no one wants to return to the days of No Income No Asset (NINA) loans, or those mortgages that offered Negative Amortization, it is in everyone's best interest that lenders offer a wider variety of home loans to those who are financially responsible, yet for some reason don't fit inside the FNMA or FHLMC box (e.g. Self-Employed borrowers). For years many people could not get a mortgage (even when they had great credit and income), simply because they couldn't show the income using a very narrow set of parameters - a set designed by politicians in a knee-jerk reaction to the global economic recession.

Now we are seeing loan programs that look at alternative methods for determining income, with less stringent prohibitions against certain credit issues (shorter waiting periods for Bankruptcy; Short Sale; Foreclosures and other credit derogs) as long as credit has been satisfactorily reestablished:

  • BANK STATEMENT Programs for Self Employed Borrowers - Up to 90% LTV with Excellent Credit
  • ASSET DEPLETION Programs for Retirees or Borrowers with Large Assets but Minimal Income
  • STATED INCOME Programs for Investment Properties - Up to 80% LTV
  • FIX and FLIP Financing for Experienced Builders
  • STAND ALONE 2nd Mortgages to 95% CLTV - Haven't Seen These for Awhile!
  • 1st/2nd COMBO LOANS to Avoid Paying Mortgage Insurance or Jumbo Interest Rates

Please feel free to contact me at any time to discuss how we can help find you or your client the best possible loan based on their specific needs.


This week has five economic reports scheduled for release that have the potential to influence mortgage rates, one of which is considered to be very important. We are in earnings season also, where corporations post their quarterly earnings and projections. Strong earnings reports should fuel a stock rally that pressures bonds and leads to higher mortgage rates. However, disappointing earnings news should make bonds more attractive to investors and lead to rate improvements. 

The Commerce Department will start the week’s activities with the release of March's Retail Sales data at 8:30 AM ET Monday morning. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up over two-thirds of the U.S. economy. Forecasts are calling for a 0.4% rise in sales from February to March. If we see a larger increase in spending, the bond market will likely fall and mortgage rates will rise as it would indicate consumers are spending more than thought, fueling economic growth. On the other hand, a weaker than expected reading in sales could push bond prices higher and mortgage rates lower. 

Tuesday has two pieces of data, beginning with March's Housing Starts at 8:30 AM ET. This report tracks groundbreakings of new home construction, giving us a measurement of housing sector strength and future demand for mortgage credit. It is not considered to be highly important to the markets but does draw enough attention to influence trading if it reveals surprisingly strong or weak numbers. The report is expected to show an increase in starts last month. Good news for mortgage rates would be a sizable decline in starts that points toward housing sector weakness. 

Also Tuesday morning will be the release of March's Industrial Production data at 9:15 AM ET. It tracks output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for 0.3% increase in production from February's level. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates, while a decline in output would be favorable news for the bond market and mortgage shoppers. 

Wednesday's only relevant release comes during afternoon hours. That is when the Federal Reserve's Beige Book report will be posted. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising from the last update would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be ideal for mortgage rates. The report will be released at 2:00 PM ET, so any reaction will come during mid-afternoon trading. 

Next up is the Conference Board's Leading Economic Indicators (LEI) for March. This data attempts to predict economic activity over the next three to six months. It is also considered to be only a moderately important report, so at best we can expect to see a slight movement in rates as a result of this data. It is expected to show a 0.4% increase from February's reading, meaning it is predicting moderate growth in economic activity over the next several months. A decline would be considered good news for the bond market and could lead to slightly lower mortgage rates Thursday. 

Overall, it is likely to be another active week for mortgage rates. Monday has the single most important release of the week, so it is a good candidate for most important day. However, with corporate earnings starting to flow, they can take centerstage if there is an overwhelmingly weak or strong trend in the results of some of the big-name companies. That means any day could end up being the most active. The least important day of the week looks to be Friday. Unlike most weeks, the most important events are set for release the earlier days. Therefore, there is a good chance of seeing the most movement in rates the early part of the week

Congratulations on your decision to buy a new home!

There are many important things to consider throughout the process, especially if you're a first-time homebuyer. Here's some information that will keep you on track. 

In General.... 
A home purchase may be your largest financial transaction to date, so it's important to make the right decisions and to keep an eye on the details. With the assistance of your Real Estate Agent and Loan Officer, it should be an efficient, pleasant, and ultimately rewarding experience. 


Count On Your Real Estate Agent To: 

  1. Preview available homes to weed out those that are overpriced, or undesirable in some other way. 

  2. Present the homes that suit your needs as you've defined them.

  3. Help you determine the difference between a "good buy" and a property which, because of its nature (neighborhood, market appeal, etc.), might have to be discounted if you decide to sell in the future.

  4. Negotiate the best deal for you. With a Pre-Qualification letter from us in hand, your Real Estate Agent will be able to demonstrate that you are a qualified and capable borrower. This will strongly influence the Seller, and may make the difference between the Seller accepting your offer or someone else's -- even if your offer is lower!

Count On Your Loan Officer To: 

  1. Assist you in selecting the best loan to meet your personal situation and goals. (This single decision can save you thousands of dollars throughout the years!) 

  2. Keep you informed of your loan status throughout the entire process.

  3. Keep your Real Estate Agent informed of our loan progress (Note: your personal information is always kept confidential between you and us; only deal points and progress are shared).

  4. Get the appropriate loan for you at the best rates and fees. This will save you significant money "up front" and throughout the years to come.

Count On Yourself To:

  1. Keep your Real Estate Agent informed of any questions or concerns as they develop.

  2. Keep the process moving by providing documentation and decisions as soon as reasonably possible. By doing so, many of the details are taken care of early in the process so you can comfortably concentrate on any last-minute details or events that require your attention.

  3. Enjoy purchasing your home, but do remain objective throughout -- to make the business decisions that are best for you.

  4. Make sure you are pre-approved as early as possible. This will put the power of financing behind you so you can concentrate on selecting your home.

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