The Mortgage Environment and upcoming changes...

Given the recent changes in the lending landscape it is important to know what the new rules are and how they may impact your next home purchase or refinance. Despite the ongoing strains in the credit markets, banks are still lending. Although underwriting standards have increased making it more difficult for marginal borrowers to get qualified, borrowers with good credit scores, stable income, and strong liquid assets will still find approvals easy to obtain and rates near historical lows. Below are some notable changes:

Conforming Mortgages - (Mortgages which are sold to, and guaranteed by, Fannie Mae and Freddie Mac.)

• Fannie Mae's new conforming loan limits are being adjusted up to $625,500 in high-cost areas, which covers most of the Washington DC Metropolitan Area, effective January 1, 2009
  
• 90% financing is the highest currently available in most areas due to problems obtaining Private Mortgage Insurance (PMI) and revisions to Fannie guidelines.
  
• 95% financing is available on single family detached primary residences only.
  
• Lower credit scores are now being penalized with risk adjustment premiums, increasing interest rates and resulting in larger down payment requirements.
  
• Investment properties are also facing risk-adjusted, higher interest rates and larger down payment requirements.
  
• New Construction Condos now face greater scrutiny and are fully vetted just as the borrower's are.
  

FHA Mortgages – (Mortgages which are insured by the Federal Housing Administration, which is part of HUD.)

• Low down payments – as little as 3.5% starting January 1, 2009
  
• Easy credit qualifying – lower credit scores accepted
  
• Lending limits vary based on property type and county
  
• FHA loans require mortgage insurance (to protect lenders against losses that result from defaults on home mortgages)
  
• FHA Secure – Helps current homeowners who have sub-prime mortgages, high interest rates and/or “upside-down” on their current primary residence
  

Jumbo Mortgages - (Mortgages that exceed the $625,500 conforming limit. They are sold on the secondary market or retained by the lender.)

• Down payment requirements for most jumbo mortgages have been increased to 20-30%, depending on the purchase price.
  
• Loan documentation requirements have increased and underwriting standards have become much more thorough.
  
• Loans in some declining markets are requiring even larger down payments and increased appraisal scrutiny. (CA, AZ, UT, FL, NV)
  

Please let us know if you have any questions.

Please feel free to forward the information and my contact information to any friends or colleagues that would be interested or in need of mortgage financing.

Best Regards,

Ray P. Cruz
Vice President


Bank of America
1801 K Street, NW, Suite 440
Washington, DC 20006
Office: 202-624-3794
Mobile: 202-438-9700
Fax: 202.350.9500
Apply Online: www.raypcruz.com