June 9th, 2012 12:46 PM by Diego Quintero
Article first published as "Underwriting Changes Boost Housing," on Technorati
The most recent underwriting changes in the mortgage industry have allowed housing to show some improvement. Albeit, the bargain prices and low interest rates are also an added benefit, but we are experiencing a loosening of loan guidelines much similar to years past. From loan guidelines, to mortgage insurance guidelines, all the way to the new government programs, we are seeing more people enter the mortgage arena with greater success.
Let’s start with HARP II, which is helping to stabilize the market as it prevents further foreclosures. This presidential creation of a loan program is allowing homeowner’s to refinance if the mortgage that they are carrying is held by Fannie Mae
Due to the advent of the program, there have been a large volume of loans submitted causing slight delays in the underwriting process. With a little patience and the submission of a complete package the process should still be relatively painless. Real Estate professionals who have sold homes to their clients prior to April 2009 are currently calling on these past relationships to offer their clients this option to refinance with local brokers. This Realtor referral strategy has led to the refinance of thousands of homeowners, and we thankful to those agents for helping to strengthen the industry.
Additionally, FHA borrowers who closed on homes or refinances in mid-2009 or earlier may be eligible for special refinancing mortgage insurance premiums. Many FHA borrowers who tried to refinance over the past few years have been watching the great rates pass them by. This was largely due to the fact that the updated premiums were preventing them from obtaining the minimum, five-percent monthly savings. Not everyone gets to take advantage of the lesser premiums, but it is helping many families reduce their monthly outlay.
What could be next? As we all know, conventional lenders work with third party mortgage insurance companies to protect themselves on loan amounts that exceed 80% of the value of the home. It had been a long time since the mortgage insurance companies required at least 700 FICO scores in order to obtain a mortgage above the 80% threshold. In May of 2012, several insurers have moved their standards way-down to requiring 620 FICO scores. Although the premiums are slightly more expensive, they have opened up the opportunity for homeownership to millions.
CoreLogic, reports a nationwide increase of 1.1% over last year April. States with the highest appreciation included Arizona with prices up 8.8%, followed by District of Columbia at 6.4% and Florida at 5.5%. Although some states are still pickup up the pieces, the overall Real Estate market is improving. Rates, programs, insurance, and low home prices are combining to create a stable marketplace, but more importantly, one where loan applicants are achieving more success seeking finance on Real Estate.
Your Trusted Mortgage Broker,
Diego L. Quintero