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Friday’s Rates
Many changes with FHA financing will go into effect with the passage of HR 3221 by the time I post rates next Friday. Effective October 1, 2008:
- Down payment assistance programs (such as Nehemiah) will be a no-no (without the passage of new legislation).
- Minimum down payments are increased to 3.5% (from 3%). (This is effective 1/1/2009).
- Upfront mortgage insurance premiums are increased.
Also with the passage of HR 3221, FHA Jumbo and Conforming Jumbo loan limits will be decreased effective January 1, 2009 to 115% of the median home price. Based on current criteria, the limits would drop from $567,500 to $522,100 for King, Snohomish and Pierce Counties.
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a mid-low credit score of 720-739, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000. This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 45 day lock with no prepayment penalties on any of the rates quoted below.
30 Year Fixed @ 1 Pt: 6.000% (APR 6.157%) 
by 0.25% to rate
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.375% (APR 6.520%) unchanged
15 Year Fixed @ 1 Pt: 5.500% (APR 5.753%) unchanged
5/1 ARM - LIBOR @ 1 Pt: 6.000% (APR 7.200%) unchanged
Conforming-Jumbo Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.
30 Year Fixed @ 1 Pt: 6.000% (APR 6.148%) by 0.125% to rate
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 7.375% (APR 6.639 7.529%) by 0.875% to rate. (Note: the price hit to fixed period interest only has dramatically increased by 1.00 in fee over last week).
5/1 LIBOR @ 1 Pt: 6.875% (APR 7.550%) unchanged
FHA. Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: 6.250% (APR 6.933%) by 0.25% to rate
FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: 6.875% (APR 7.565%) by 0.50% to rate
VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available. Contact your local Mortgage Professional for more information.
30 Year Fixed @ 1 Pt: 6.375% (APR 6.497%) by 0.25% to rate
Prime Rate(what HELOCs are based on): 5.000%
This is just a small sample available of rates and products. Rates are as of Friday, September 26, 2008 at 1:15 p.m. and may change at any time. Available programs may change at anytime as well. This is not a guarantee nor is it a commitment of interest rate. To see live rate quotes, you can follow my Twitter.
Posted: September 26th, 2008 under Mortgage and Lending.
Tags: conforming, FHA, interest-rates, jumbo, Mortgage and Lending, va
About the Author: Rhonda Porter
- Author's website: http://www.mortgageporter.com
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Comments
3.
Comment
from Rhonda Porter
Time September 26, 2008 at 3:54 pm
vague, your question is very vague. 
It really depends on what type of loan you’re looking for. If you can go “full doc” and you’re in a jumbo conforming/jumbo fha loan amount range, you may be fine.
Do you have a more specific (less vague) scenario to run by me?
4.
Comment
from Roger Ingalls
Time September 26, 2008 at 4:40 pm
Vague…
If you mean in the last week, no, not much change, if you mean in the last year, oh yeah, loads of changes.
5.
Comment
from Rhonda Porter
Time September 26, 2008 at 4:57 pm
June 1st, when Fannie Maes 7.0 went into effect was the most recent “big change” for conventional. We’ve also seen changes with how conventional and FHA are treating homes that are being converted to second or investment properties w/regards to qualifying. Mortgage brokers still have many banks/lenders to work with. WaMU had quit wholesale scene quite a while ago.
I had an interview with MSN Real Estate yesterday where I recommended that home buyers get preapproved earlier than they typically would. Be prepared to go full doc and to possibly have to use FHA financing–even if you believe that you’re Fannie/Freddie material. Underwriting is tougher but not impossible.
If this didn’t answer your question, let me know.
6.
Comment
from christiangustafson
Time September 26, 2008 at 7:57 pm
“investment properties”
… giggle … that’s a funny one.
7.
Comment
from ARDELL
Time September 26, 2008 at 8:17 pm
LOL Are you suggesting that is an oxymoron?
8.
Comment
from cautious buyer
Time September 26, 2008 at 11:32 pm
In light of the recent big news, I am wondering what your take is on your part of the credit market. Are you seeing trouble getting credit that is “historically” high? I don’t know how long you have been in the business but can you compare it with earlier in your career? Do you have an idea how it compares to the 80s in the S&L scandal?
I know a lot of people are interpreting the current administration as saying people are having a harder time getting credit than since the great depression. I am skeptical since I am getting the same amount of offers as always. Are credit worthy people with verified income having trouble getting fixed rate loans?
9.
Comment
from cautious buyer
Time September 26, 2008 at 11:34 pm
I know that if you read deeply into the news the big problem is with interbank lending, but have you seen trickle down to the consumer mortgage market that is worse than any other time in your career, that would be consistent with the armageddon I am hearing about?
10.
Comment
from Roger Ingalls
Time September 27, 2008 at 7:24 am
CB:
After listening all week to the need for a bailout (Bush’s radio summary this morning actually made sense), you’d think that banks were not giving loans to anybody.
That has not been my recent experience. I am still closing good loans. So, people with good credit with verified income are still getting loans. There are still interest only loans available, but at lower LTV’s than in the past.
We have seen big changes from a year ago, but it has been in the form of gradual tightening of underwriting guidelines, in areas like lower LTV, higher FICO scores, elimination of some programs.
So, like you, I am a tad puzzled by the claims of a credit lockdown. It may be true, at the higher levels of interbank lending, and business lending, and it may be that it has not yet trickled down to home loans.
11.
Comment
from Roger Ingalls
Time September 27, 2008 at 7:35 am
CG and Ardell:
You aren’t seriously suggesting that there are no conditions that would warrant buying properties as investments, are you?
If an investor can buy a property that cash flows positive, at a price 25% below current appraised value, why should they not invest? Of course, it could lose even more value, as well as increase in value, but what is investing without risk?
Rhonda’s comment about investment properties refers to sensible guidelines recently imposed by FHA to prevent the buy and bail phenomenon.
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-25ml.doc
Here’s the link.
12.
Comment
from ARDELL
Time September 27, 2008 at 8:23 am
Roger,
I was just having a giggle at CG’s comment, but since you asked. The main reason someone would buy an investment property today would be to complete a 1031 exchange. They would have to weigh the tax benefits with the value projections. Trading out properties that have a lower expectation for recovery with ones that have a higher expectation, same as trading out stocks in a portfolio.
I was greatly concerned back in 2004 when I heard an elderly couple say there were selling off their properties and putting the proceeds into REITs that qualified as 1031 exchange. They were tired of managing the properties and were opting for an easier to manage (for them) hold posiition.
Has anyone been following any of the REIT funds?
13.
Comment
from ARDELL
Time September 27, 2008 at 8:34 am
Cautious Buyer,
At present I am not seeing people’s ability to borrow being worse than any time in my business career. The real estate market is similar to the days of double digit interest rates. It wasn’t so much about people’s ability to borrow as it was people’s reluctance to borrow. Those that could wouldn’t and those that wanted to couldn’t.
The banking industry reminds me of that time as well. We were told in 1984 or so that there would be 3 to 5 banks left standing. Much had to do with their gambling that rates wouldn’t go higher than 9% and those that put all their monies out at 9% were caught with their pants down when short term rates went as high as 18%. Seems to me this was around the same time as the “bailout” of New York City.
The main difference I see between then and now is that FICO/Credit scoring didn’t exist. That’s about the only difference I am seeing as to how Mr. Everyman has been affected.
14.
Comment
from Kary L. Krismer
Time September 27, 2008 at 8:52 am
To follow up on Ardell’s comment, I’ve been wondering for almost a year what interest rates would be like if more people did want to borrow. They system has been able to handle the lower level of transactions okay, but what if volumes returned to what they were 3 years ago?
15.
Comment
from Kary L. Krismer
Time September 27, 2008 at 8:55 am
In talking to one big player, and one 1031 consultant, I think 1031 exchanges have become a tool for amateurs only (small players). The 15% tax rate is pretty attractive compared to a likely higher rate down the road, especially when coupled with increased depreciation on the new property.
16.
Comment
from Rhonda Porter
Time September 27, 2008 at 9:23 am
cautious buyer, the biggest issue that I have seen with credit worthy borrowers is for refinances with higher loan to values.
17.
Comment
from Kary L. Krismer
Time September 27, 2008 at 9:33 am
Rhonda, do you mean lower values to loan? 
18.
Comment
from Roger Ingalls
Time September 27, 2008 at 9:33 am
Ardell:
I think you summed it up pretty well. Banks are willing to lend to credit worthy borrowers with moderate risks, but the borrowers are reluctant to borrow, at today’s prices.
19.
Comment
from ARDELL
Time September 27, 2008 at 6:33 pm
I do remember that those who had FHA mortgages were more able to sell their homes in a bad market with higher interest rates, because the FHA loans were assumable at the lower rates. Are FHA loans still assumable? If we expect that rates might rise dramamtically in the next 3-5 years, that assumable feature would be good to have.
20.
Comment
from Jillayne Schlicke
Time September 27, 2008 at 6:38 pm
FHA 203b loans are fully assumable. The new homebuyer would, of course, have to qualify under FHA’s underwriting guidelines and then pay any downpayment requirement.
21.
Comment
from Kary L. Krismer
Time September 27, 2008 at 9:39 pm
If they’d just repeal the Garn act, then it wouldn’t matter if the loans were assumable.
http://blog.seattlepi.nwsource.com/realestate/archives/148591.asp
Well, the seller would prefer it if the loan were assumed, but at least they could sell.
22.
Comment
from cautious buyer
Time September 29, 2008 at 10:33 am
Thanks for your input everyone. You pretty much confirmed what I thought. Most people I talk to believe that no-on can get a mortgage, credit card, or student loan right now, and a Seattle times article yesterday said all the above were difficult. This seems like a heck of a big misunderstanding when $700,000,000,000.00 is on the line.
Ardell,
They didn’t have FICO/credit scores in the 80s? I had no idea they were that new.
23.
Comment
from Roger Ingalls
Time September 29, 2008 at 10:53 am
CB:
After further study, it seems that the credit crisis is real at the interbank level.
I will not try to paraphase the explanation of the “TED spread”, but this link may help.
http://www.econbrowser.com/archives/2008/09/understanding_t.html
The politicians and talking heads know there is no point talking about the TED, because most don’t understand it, and certainly don’t think that voters and viewers will.
Thankfully, there are bloggers that do, and occassionally they will try to dumb it down a bit, so that people who aren’t accustomed to pushing around piles of money with 9 zeros can vaguely grasp it.
God bless the internet, and save us all!
24.
Comment
from cautious buyer
Time September 29, 2008 at 11:35 am
Roger,
I have some understanding of the TED spread from the same sources you mentioned. Basically, high TED spread = banks not doing well.
Most people I talk to don’t look into it that deeply, and think they won’t be able to get a car loan until Congress passes the bill. Some people writing articles in major news sources think the same thing. I don’t think average Joe would be as moved to spend public money reducing TED spread as he would if he thinks student loans and mortgages have ceased.
Will the interbank lending problem eventually end credit for consumers? I have no idea. I would be more comfortable if Robert Shiller or some other prominent academic economists who predicted the problem had spent the last week advising congress about solutions. I don’t trust the guys who made this problem (while enriching themselves tremendously) to fix it.
25.
Comment
from cautious buyer
Time September 29, 2008 at 11:41 am
It also occurs to me that banks don’t actually produce anything, they just move resources (money) around to (hopefully) where it can best be used and collect a fee from producers (manufacturers, etc.) for doing so. We are spending an awfully large portion of the total gross national product (US total production) just to smooth out the way resources (money) are moved around.
1. Comment from vague
Time September 26, 2008 at 2:52 pm
I have a very vague question…
Has loan availability changed much recently with all that’s going on?