The Los Angeles Times reports:

” The average rate for a 30-year fixed mortgage was 4.86% this week, up from 4.84% last week, mortgage company Freddie Mac said.

A 15-year fixed-rate mortgage averaged 4.52%, up just slightly from 4.51% last week.”

Average rates are still extremely low. However, they may not stay that way for long. Borrowers who can qualify to refinance have been applying. But, unfortunately, stricter lending policies have led banks to turn many away.

See Also:

FHA Mortgage Guide

Bloomberg reports:

“The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan increased 4.7 percent to 1,250.6 in the week ended April 3, a fifth straight gain, from 1.194.4 the prior week. The group’s refinancingpurchase measure jumped 11 percent. gauge rose 3.2 percent and its

The increases mean Federal Reserve efforts to lower mortgage rates and boost lending may succeed in preventing housing from slumping further.”

Unfortunately, more applications don’t always result in more mortgages. As we’ve seen during the past year, taking out a conventional loan can be very difficult in this market.

photo credit: TMAB2003

See Also:

Non-Conforming Bank Loans

Congressman Barney Frank is currently pushing legislation that would require banks to hold on to at least a portion of each mortgage they create, instead of selling the entire loan to investment groups.

A recent Reuters article reports:

“He said part of the reason the country finds itself in its current fiscal crisis is a shift from traditional bankers, who made loans but found themselves on the hook if the loans went bad, to complex financial deals that allowed mortgages to be combined and then sold — with little financial risk to those making the loans.

‘If only banks made mortgage loans, there would be no crisis,’ he said.”

As most borrowers know, the mortgage market is very tight right now. Although these laws may curtail another mortgage meltdown, they are likely to make it even more difficult to take out a loan in today’s market. Perhaps we’ll see yet another influx of borrowers seeking creative financing in the months to come.

photo credit: rjs1322

See Also:

FHA Mortgage Guide

But, it looks like the tide may be turning as a growing number of banks reintroduce jumbo mortgage  programs.

The Wall Street Journal reports:

“Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books. Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments…

Plus, banks have gotten assistance from the federal government, and record-low conforming mortgage rates have inspired more people to refinance loans — giving banks some more liquidity, he says.”

This is good news for potential buyers, who may now take out a jumbo mortgage from a traditional lender instead of seeking out more costly creative financing strategies.

See Also:

Non-Conforming Bank Loans

By adding an additional 10-years to their home loans, more creative financers are able to make the cut.

BankingMyWay reports:

“Despite their drawbacks, 40-year mortgages can be a helpful home-buying tool for those who use them wisely. A professional just starting out in her career, for example, may be able to get into a slightly pricier home using a 40-year mortgage. As her income grows, she can refinance into a mortgage product that allows equity to grow more rapidly.

The danger with using a 40-year mortgage to stretch buying power is getting into a more expensive home than you can truly afford. If the housing crisis has proved nothing else, it’s the lesson that just because you can get a mortgage for a home doesn’t mean you should. If housing prices continue to fall and you are stuck holding the bag on a 40-year mortgage with no equity, the next home foreclosure could be yours.”

It’s important to keep in mind that most 40-year mortgages have higher interest rates than 30-year loans. This certainly isn’t the right choice for everyone, but is a possibility that allows some borrowers to qualify in this tight market.

See Also:

FHA Mortgage Guide

Fannie Mae and Freddie Mac Conforming Loan Standards

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSE) that set the lending standards used by banks. They set terms such as limits on the maximum loan amount, down payment requirements, credit score requirements, and more. When banks make loans that meet these standards, they are called “conforming loans.” Banks are always able to sell conforming loans to other lenders or to Fannie Mae / Freddie Mac. Lenders view these loans as safe because they all meet the same lending standards.

If you cannot meet the conforming lending standards (i.e. your needed loan exceeds the limit or you have a poor credit score), a bank may still be willing to give you a mortgage. Instead of using the standards set by the GSEs, the bank will use its own requirements. The bank will not be able to sell your non-conforming mortgage to Fannie Mae or Freddie Mac. It may also have a more difficult time selling the mortgage to other lenders. Because of the perceived risk of default and the difficulty of selling your loan on the secondary market, the bank will give you a higher interest rate. Read more…

Wells Fargo Alternative Documentation Qualifications

Borrowers must meet traditional lending standards with the exception of proving their income. To prove income, they must submit six or twelve consecutive months of their most recent bank statements. Income is determined by the monthly average of the money deposited.

Wells Fargo Alternative Documentation Loan Terms

The alternative documentation solution may be applied to any personal home loan including both fixed-interest and adjustable loans. Borrowers should expect to pay a higher interest rate than may be offered for traditional qualifications.

Applying for a Wells Fargo Alternative Documentation Loan

You can apply for a Wells Fargo Alternative Documentation Loan by contacting a mortgage broker or calling Wells Fargo directly (1-877-937-9357). You can also visit their website for more details about this program.

Countrywide Fast and Easy Loan Qualifications

Fast and Easy borrowers must meet the standard mortgage qualifications with these exceptions: they are only required to turn in limited documentation, there is no income verification, and there is only verbal job verification. Borrowers must have extremely high credit scores to qualify and put at least 5-10% down.

Countrywide Fast and Easy Loan Terms

Borrowers can use the Fast and Easy program alongside almost any loan including ARMs, fixed-rates, and interest only. Borrowers generally pay for their convenience with a higher interest rate than they would receive through a traditional program.

Applying for a Countrywide Fast and Easy Loan

You can apply for a Countrywide Fast and Easy Loan by contacting a mortgage broker or calling Countrywide directly (1-888-231-7074). You can visit their website for more details about this program.

Countrywide House America Loan Qualifications

Countrywide House America customers must be able to meet traditional loan qualification standards with these exceptions: they can use cash from relatives or other non-traditional sources for their down payment, they can count non-traditional income sources towards their debt-to-income ratio (such as money made by family members), and they can use alternative payment records (such as rent payments or utility bills) to supplement an un-established credit score.

Countrywide House America Loan Terms

Aside from the altered qualifications, these loans are similar to traditional mortgages. Lenders generally charge a higher interest rate for borrowers using non-traditional qualifications.

Applying for a Countrywide House America Loan

You can apply for a Countrywide House America Loan by contacting a mortgage broker or calling Countrywide directly (1-888-231-7074). You can visit their website for more details about this program.