Heads up borrowers!

Inman News published an article yesterday (See “Borrowers face new set of credit challenges”) describing Fannie Mae’s roll out of its Loan Quality Initiative (LQI) on June 1st.  The bottom line is that lenders must now “refresh” credit reports in the 11th hour before a mortgage loan is approved. Other last minute verifications and discovery of so-called “undisclosed liabilities” may also be performed, making the loan processing obstacle course all  the more challenging, particularly for first-timers.

In practical terms, under the LQI, at the last minute lenders can increase the interest rate, ask for a larger downpayment, and delay or cancel the closing. Borrowers could potentially lose earnest money deposits and other associated real estate costs such as appraisal fees, home inspection fees etc.

You can bet realtors and mortgage brokers will be carefully coaching homebuyers in contract!

Lenders interviewed for the article had mixed reviews of the new regulation. But all agree that it is more important than ever for homebuyers to align themselves with knowledgeable and highly communicative mortgage brokers and realtors.

“The mortgage lending business as we have known it is over,” according to Boston’s MetLife Home Loans’ senior mortgage consultant, Brian Cavanaugh. “Quality loan service and counseling will replace rate shopping because mortgage pricing is so competitive.”

Borrowers, first-timers and veterans, choose your loan consultant carefully! Don’t let rate quotes fool you. Get to know your broker/realtor team well ahead of time and be prepared when you initiate your loan application. Make sure your broker can clearly explain the whole loan process and any potential pitfalls of your unique situation.

Trust your gut. Do you trust your loan officer to stay on top of your file in order to foresee issues that might delay  your closing and cost you money?

Now more than ever, do the extra leg-work to find trustworthy professionals who can run the mortgage gauntlet all the way to the finish for you.

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Mortgage interest rates; float or lock?

Our financial world is changing fast. And there has never been more  information available via the Internet. Type the term “mortgage interest rates” into Google and you get pages of rate comparison tables. It seems there has never been a better time to easily shop a mortgage loan. But be careful!

Many people are surprised to learn that mortgage interest rates can change on a daily and sometimes hourly basis.  Interest rates fluctuate in response to changes in the financial markets.  The bond market is generally the best indicator of the general trend for mortgage interest rates.  What you need to understand is that the interest rates that are available on one day, may not be available the next, and so you should be prepared to lock when the time is right for you.

While it is easy to follow the news of fluctuations in the financial markets on the Internet, proceed with caution when shopping around for mortgage rates.  Rate comparison tables,  once published, are instantly outdated, and pulling the trigger at the wrong time can cost thousands over the life of a loan. First time buyers and seasoned homebuyers alike must find a professional mortgage ally who has a proven track record watching financial markets, keeping tabs on rates and juggling the rate sheets of many different loan products,  information not easily accessed by the general public.

Please don’t hesitate to contact me if you have any questions about mortgage rates or any other aspect of home lending. I take pride in keeping my clients as well-informed as possible for that all-important decision about when to lock.

Francene Grewe

Premier Mortgage Resources