Ro Troia

Rates Drop. But, Who Can Get Approved?

          The week opened up with a lot of excitement in the mortgage market.  Rates fell under 6% and of course you know about the what is going on with Fannie Mae and Freddie Mac bailout.  This is great for some people, but what about the first time home buyer, with no money?  Rates maybe low, but the qualification process keeps getting tighter and tighter.

          Last year I was looking at homes in Boulder and Denver, Colorado, getting ready to buy my first investment and looking forward to getting a home with next to nothing down and being able to go stated income.  My credit score was 780 and things were looking great!  Banks were banging down my door, trying to give me money.  I got really busy with work, so I decided to put the search on hold. 

          Then several months later, when I started thinking about buying again, no banks  would give me money.  One issue for me, is that I don’t have a lot of money to put down and I have to go stated income.  FHA, now only gives loans to people who can provide full documentation, but being a Realtor, who doesn’t make that much money after taxes, I can’t show my documentation. 

           FHA would be my only option.  Unless, I have a less than 40% debt to income ratio and a minimum credit score of 740.  Then, I would still have to apply as if I were going full documentation on the loan, but if I qualify for the “VIP” status, the bank would then tell me not to worry about documentation and I could potentially come with just 5% down.  It is a very confusing process and they are making it harder and harder for us first time homebuyers, who are just trying to find a reasonable route to a roof over our heads. 

            This is a great thing for our housing market, this new rate drop, and I hope it continues for a while, but we need to find a way for more people to take advantage of it.  Even with my impeccable credit, I cannot get into a loan!  I guess I will have to continue renting until I can come up with about $60 grand, so I can afford the down payment I will inevitably need, to finally be able to buy a home in Boulder. 

           I guess I just need to be patient, but right now is the best time I have seen in my life, to buy real estate.  Prices are down, and rates are now at some of the lowest levels we will ever see in any of our lifetimes.  If you can get the loan, buy the house… tomorrow!! You may never see another opportunity like this again.  If I had a rich uncle, I would be beating his door down for a personal loan. 

 Here is a quick look at this weeks rates and a few notes about the current market.

September 9, 2008PRODUCT                                                             0 pts               1

30 Yr Fixed                                                           6.125%       5.875%

FHA 30 Yr Fixed                                                  6.00%          5.625%

5 Yr ARM                                                             5.625%         5.375%

7 Yr ARM                                                             6.000%          5.750%

30 Yr Fixed Conforming Jumbo*                   6.625%         6.375%

FHA 30 Yr Fixed Jumbo*                                 6.25%          6.00%

5 Yr Jumbo ARM**                                          6%                 5.75%

7 Yr Jumbo ARM**                                          6.125%         5.875%

* $460K in Boulder County

** Up to $3 million

Today’s Market Commentary:

RATES IMPROVE

ON EMPLOYMENT DATA  as of September 9, 2008

Interest rates improved on the week on weaker than expected employment data. Today’s employment report for August showed job losses of 84,000 and an unemployment rate of 6.1%. Both levels were substantially weaker than expected. Average hourly earnings increased slightly more than expected, up 0.4% and 3.6% year over year. Yesterdays weekly jobless claims increased 15,000 on expectations that they would drop by 5,000. Weekly jobless claims increased to its highest levels in five years. On the flip side, July Factory Orders, the ISM Services Sector Index, and Q2 Worker Productivity were all stronger than expected.

The Dow Jones Industrial Average is currently at 11,154, down almost 400 points on the week. Crude Oil Futures are currently at $106.48 per barrel, down over $9 per barrel on the week. The Dollar fell versus the Yen and improved versus the Euro.

Next week look toward Thursdays International Trade report and Fridays Producer Price Index (PPI) and Retail Sales reports as potential market moving events.

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This entry was posted on Thursday, September 11th, 2008 at 3:34 pm and is filed under Buyer's Corner, First Time Buyers, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Kevin Kueneke said at September 12th, 2008 at 9:36 am

   Brody – as a 1099 independent contractor I feel your pain. However, FHA does have a little niche: they allow a non-occupant family member to go on the loan and basically carry the load. Income and debt from all parties are used to qualify, but the occupying borrower is not required to have any income or assets of their own. Very popular for parents buying their kids a place while in college (hence the nickname kiddie condos) or for adult children buying their parents a retirement home. As soon as your income is high enough to qualify (or when/if stated loans come back), you refinance the loan into your name releasing the family member. Also, you still get market rates. Drop me a line if you want to discuss this further.

2. advenedge said at January 8th, 2010 at 6:58 pm

   Bookmarked this. Sometimes non-standard due to you after sharing. Undoubtedly value my time.

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