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.