Living In Tucson Blog

With declining home values, rising interest rates and FHA, Fannie Mae and Freddie Mac changes around the corner, now is the time to take advantage of the Tucson housing market and buy that house! Even waiting 60 days could cost you thousands.

The Obama administration released their “white paper” this past week on the housing market. The impact of their proposals could launch major changes in the mortgage industry. FHA has already announced .25% higher mortgage insurance fees effective on April 18, 2010. You can expect monthly payments to rise $30 per month for a $150,000 mortgage. It is my understanding that the government would like to reduce FHA’s exposure from its 30% market share of mortgages down to 10%. It is unclear where homebuyers can turn to for loan programs that will be similar to today’s FHA mortgages. Tomorrow’s FHA home loans will consider raising the minimum down payment which are currently 3.5%. As you can imagine, most people are already strapped for down payment money. The report also suggested that higher down payments should also be considered for conventional loans. A 10% down payment was recommended. The current terms allow a 3% to 5% down payment depending on the borrower’s qualifications. Other changes include reducing the maximum loan amounts under FHA and conventional mortgages in the so-called “high cost areas”. Those changes do not appear to impact loan limits in Tucson or Phoenix. Fannie and Freddie have raised their fees charged to lenders to guarantee pools if their mortgages for resale to bond investors. Lenders will pass along those charges to consumers. The hits just keep on coming! Fannie and Freddie recently began charging additional fees for borrowers with a credit score below 740 and down payments less than 25%. Those charges will translate to slightly higher rates or points for consumers.

If you are on the fence to buy that house, don’t wait! Call me, David Wolsky for mortgage advice. I can be reached at (520) 275-2536 or at david@davidwolsky.com. My company, PHH Home Loans is offering a $350 lender credit towards are closing costs which are already amongst the lowest in the business.

The Arizona Daily Star published a good article last week by Adrian Sainz about mortgage rates that you can access by clicking here:

Puzzled by mortgage rates? Here’s Q & A help

According to the May 7th Freddie Mac survey the national average for 30 year fixed rate conventional mortgages is 4.84% with .7% in points. Wow!! Great rates!! Why is my quote higher or lower? Well…rates are not one size fits all. They are tiered based on your loan-to-value ratio (LTV) and your credit score. If you are purchasing a home and have a 10% down payment and a 680 FICO score, your rate will be slightly higher than a buyer with a 25% down payment with a 740 score. If you are refinancing your home and your LTV is over 70% and your score is under 740, you will likely be quoted a higher rate or higher points.

Fannie Mae (FNMA) and Freddie Mac have changed the rate or point structure significantly in the past eighteen months for borrowers with lower credit scores and higher LTV ratios. At the same time, credit guidelines have also tightened. Another recent change in mortgage rates is points! In the past fifteen years, lenders paid premiums or rebates to the originator in lieu of the borrower paying points to get a mortgage with low rates and fees. This year, the rebates are smaller and lenders are charging borrowers points. Here in Tucson at Sunstreet Mortgage, LLC, we have not seen as many zero point refinances or no cost refinances of conventional loans. One reason for this dynamic is because borrowers were refinancing the loans frequently and the lenders were not getting their money’s worth for the larger rebates. One positive aspect of the current rate and fee environment is the costs seem to pay for themselves within three years in most cases due to the historically low rates we are currently experiencing.

I would be happy to personally answer any mortgage related questions and concerns that you may have. I can be reached by calling me — David Wolsky – at 520-977-3300. I offer conventional, FHA and VA mortgages. I have fifteen years of experience originating mortgages. In fact, rates were double in 1994 than the current rates.