October 25, 2007 Mortgage Market Update

The turmoil of seeing mortgage companies go out of business on a weekly basis has subsided (although Bank of America just announced that they are exiting the wholesale business at the end of the year) and interest rates are excellent. There are a glut of houses for sale, which is driving prices down and this is an excellent time to purchase if you are in the market.

Conforming interest rates have dropped significantly, partly due to the Federal Reserve’s pending meeting the end of this month where it is expected that they will once again lower short term lending rates by .50%. As per the norm, banks will lower the prime rate (currently 7.75%) also. This will help adjustable rates or home equity loans. The mortgage market has already incorporated this expectation and, if rates aren’t lowered as expected we could see a spike. As of today, 30 year fixed rates are as low as 5.875% and 15 year fixed rates as low as 5.625%.

The jumbo fixed market continues to price higher than it should, due to the lack of secondary market investors. Your best bet is to look at 5/1 or 7/1 ARMs when obtaining jumbo financing.

For those with lower credit, or other issues that may preclude obtaining a conforming loan, I offer FHA financing. The rates are good and the qualification process, while all income and job history and assets need to be documented, is not as credit score dependent as conforming and can be easier financing to obtain. There are still a few “sub-prime” mortgage companies operating but rates remain extremely high and they are offering lower loan-to-value mortgages than in the past.

I am also offering a program that is offering 100% financing with a 6% sellers concession, no reserve requirements, and no job history requirements. You do need a minimum of a 620 FICO score to qualify but I have not seen a program this aggressive in some time. While you do need to qualify, you can literally purchase a home with no money down and no money in the bank!

If you are in the market for a mortgage, please contact me. I am very accessible either via phone, email, or my website. I look forward to doing business with you in the future.