What’s up with mortgage rates
If you’re like me you may wonder if things are so bad, the 10-year treasury bond has dropped and the prime rate is almost a negitive–so why aren’t the rates lower than they are?
One of the reasons is the changes to the industry. Just a year ago it was pretty easy to obtain 100% financing or at least a 5% down program. With all the issues the industry has had over the last couple of years, things are changing quickly.
Just last month FannieMae and FreddieMac “the ones that actually do the lending” made changes to how banks and mortgage brokers actually broker loans. In an effort to offset the loses they are having from defaults, they added a few bumps to the cost of a mortgage. This is across the board—every lender in the country so you can’t avoid it.
Here’s a short example:
640-659 credit score and 20% down - right now the lender will pay a fee of 1.5% of the loan amount. On a $100,000 loan that would cost them $1,500 and guess who they are passing it on to.
If there’s one thing I can recommend right now it’s get your credit score up! And I mean way up, like 700+ because it’s not going to get better for at least 6 months or more.
One thing to consider is the old stand-by “FHA”. They offer low down payment programs(sometimes no down) and in a couple of weeks the government is expected to raise the loan limit. In Phoenix it could be above $300,000 which will help a lot people.
For more on this or to request your free “how to improve your credit score” simply send me an email to Jay@ValleyREadvisor.com.
