Category: Mortgage

12 Jun 2010

What Really Affects Mortgage Interest Rates?

Many of you have questions about what really affects Mortgage Interest Rates.  I don’t have a crystal ball that can answer your questions but what I do have is information about some of the underlying fundamental indicators that determine the general direction of mortgage interest rates.

Many people are surprised to learn that what the Fed does with the prime rate has less of an effect on Mortgage interest rates. Contrary to popular belief, the prime rate sets the tone for rates on business borrowings and consumer accounts.   More often than not, Mortgage rates have anticipated what the Fed will do and have already factored in a corresponding move, be it up or down.  Only if the market is wrong in their estimate will rates change with a Fed move.

So what would affect mortgage rates?

4 Jun 2010

Why Do Lenders Ask So Many Questions?

The past 2 years have seen tremendous changes in the Mortgage process, especially when it comes to documentation. Just when we think we have seen the last of possible changes in Mortgage underwriting, new ones come along.  The underlying reason for this is that during the past few years, loans were made with little or no documentation.  This led to the many delinquencies and foreclosures which has given us the housing market issues we see today.

The new requirements are the same for all borrowers, whether it is your first or 7th home purchase. Every borrower is subject to a thorough examination of income, assets and credit.  Recently, lenders have placed more focus on whether or not home-owners can prove that the property they intend to purchase will be used as their primary residence.

Let’s say you are in a situation where you have purchased a new home, be it in the same market or not, before selling the home you are currently occupying. Whether you leave the current property vacant or make it available to renters, your lender will undoubtedly ask several questions as to why you are buying a new primary residence.  In order to avoid the montage of questions, write a letter outlining why this new property will be your primary residence and including it upfront with your application.


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