October 2009







 How to Tell Mortgage Rates Are Rising

What are the signs that mortgage rates, now at historic lows, are about to go up?

One way to catch a clue is to read the minutes of the Federal Reserve. For instance, the Federal Open Market Committee said in its September minutes that when it came to interest rates, there is “no policy change.” And the minutes said that while the Fed believes “an economic recovery is underway,” it regards a weak economy as a greater risk than inflation. Upcoming meeting minutes are likely to be just as forthcoming if an uptick is in the cards.

Other signs include:

  • Declining unemployment: The unemployment rate is sitting at 9.7 percent. If lots of Americans go back to work, an increase in interest rates is likely.
  • Rising discount rate: The rate the Fed charges banks that borrow from it directly stands at 0.5 percent. If it rises or the spread between it and the Federal Funds rate widens, then mortgage rate increases won’t be far behind.

Source: BusinesWeek.com, Marc Roth (10/28/2009)


When a Fixed Rate Mortgage is the Best Option

Mortgages are not one-size-fits all financing options. The type of mortgage that is right for your neighbor may be disastrous for your personal financial situation. Also, there is a major misconception that fixed rate mortgages are always the best option. Always is a strong term and there aren’t many things in this world that are “always.” The same is true with fixed rate mortgages.

So when is a fixed rate mortgage the way to go?

Personal Situation

The first aspect of your life you to need to review is your financial situation. Ask yourself the following questions to gain a better understanding of where you stand.

1. How long will I realistically live in or own this home? No matter how many years you say, see if there is a mortgage that matches or comes to close to the number of years in your answer. For example, if you say five years then a mortgage fixed for five years may afford you a lower interest rate than a 30 year fixed. 

2.  Do I live on a fixed income or will it stress me out if my monthly mortgage payment fluctuates? If you need to know exactly how much your monthly mortgage payment is going to be at all times or it stresses you out to think of your payment changing, then a fixed rate mortgage is the most beneficial one for you.

3. Did I have my past mortgage(s) for the entire time I lived in the home or did I refinance or sell before the end of the mortgage? The national American average reveals that homes are refinanced or sold in five to seven years. This means that it’s rare, if not non-existent, to hold a mortgage for a 15 or 30 year period. So if you can get a lower interest rate and lower monthly mortgage payment with another type of fixed rate or variable rate mortgage then it may be worth looking into it.

Interest Rate Environment

The other major item you need to consider before deciding on a fixed rate mortgage is the current interest rate environment. If the current interest rates are low, then locking in on the low rate with a fixed rate mortgage probably is the best way to go. If interest rates are high and are expected to drop in the near future, then a fixed rate mortgage may not be the best option as part of your long-term strategy.

When is a fixed rate mortgage the best option? It depends on your personal financial situation, emotional state and current interest rates. Long-term and short-term considerations can also affect your decision, so keep all of these things in mind when choosing your next mortgage

 The Meredith Mortgage Team








The Meredith Mortgage Team

 Erin & Kathleen

Your Partners In Success 

We Close Loans In 15 Days!  Ask Us How!

Mortgage Banking & Brokering Services

Erin Direct: 925.918.0585

Kathleen Direct: 925.735.6621








https://entp.hud.gov/idapp/html/hicostlook.cfm            Max Loan Amounts


http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm                  HOC Vacancy Factors

 http://www.hud.gov/offices/hsg/sfh/np/irstatus.cfm     Non Profit look up and status


http://www.hud.gov/offices/hsg/sfh/events/events.cfm                HUD Training Events

http://www.hud.gov/offices/hsg/sfh/ins/hoctenyr.pdf                    HUD approved 10 year warranty companies

http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4155.1/index.cfm    4155.1 on line



http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/       All Mortgagee Letters

https://entp.hud.gov/clas/index.cfm                                                      FHA Connection

 A little pitch and the basics of the loan:

Although this sounds too good to be true, Americans 62+ can now use the equity from the sale of their previous home, or other cash or savings, to move into a different home – just with a single down payment. You will never have to make another mortgage payment, as long as you remain in the home and pay your property taxes and insurance. Imagine the financial independence you can achieve by eliminating your mortgage payment once and for all. Best of all, if the untapped equity in your home increases over time, you or your heirs still “own” that equity – not the bank.

The basic eligibility requirements to purchase a home with a reverse mortgage are:

•           All titleholders must be aged 62 or over

•           The purchased home must be your principal residence

•           The purchased home must meet HUD’s minimum property standards and be either a single-family residence, a residence in a 1- to 4-             FotoFlexer_Photounit dwelling, certain condominiums, or an eligible manufactured home.

•           The down payment must be from qualifying sources (proceeds from sale of existing home, or HUD approved gift funds)

•           You must complete a HUD-approved counseling session

FotoFlexer_PhotoAppraisal Guideline:

On an FHA appraisal, the case # is assigned to the property and is valid for 6 months.  What this means is…

If an FHA appraisal is completed, and the property falls out of contract…the original appraisal and value must be used if the home is sold within 6 months from the original appraisal date, and financed thru FHA financing.    

This is important for agents on either side of a transaction.  As a listing agent, it would be prudent to ask your client if they have had an FHA appraisal within the past 6 months.  And as the sellers agent, you would want to know that as well.

Beginning January, 2010…the 6 month case # assignment will be reduced to 120 days (4 months).

NOTE: If you want to see if a condo complex is approved,  click on “Condo Approval” link and search by zip code. It will give a list of ALL condo complexes that are approved and that have been rejected.



FotoFlexer_PhotoThe following additional FHA overlays are being added and will be effective for all FHA loans received starting October 1, 2009.

The program guides will be updated with these changes shortly:

1. Ratios on loans with an AU approval may not exceed 41.99/51.99;

2. Loans with non-occupant co-borrowers (unless a “true kiddie condo scenario”): a. The occupying borrower’s housing ratio cannot exceed 51.99% b. If the occupying borrower’s net income is insufficient to make the house payment plus their additional monthly obligations, the non-occupant co-borrower(s) must provide a signed statement that they are aware that they will need to assist monthly in helping them to make their housing and/or additional obligation payments.

3. Non-occupant co-borrowers for 2 – 4 unit properties, not accepted.

4. Loans that receive a “Refer” that warrant a manual underwrite (i.e., prior BK’s) the maximum housing and DTI ratios are 39.99/45.99 and must have a minimum of three “strong” compensating factors (see some examples below).

5. When there’s a non-purchasing spouse on a property located in a community property state we will require that those spouses outstanding judgments, delinquencies or collections be paid or brought current.

6. Streamline Refinances – HUD has issued a bulletin requiring changes to this program effective in November. We are requiring compliance with the following now: a. Borrower(s) must have made at least six payments on the mortgage being refinanced by application date; b. There must be a net tangible benefit as a result of the streamline refi. The total mortgage payment must be reduced by 5% on a Fixed to Fixed Rate loan; ARM to ARM loan; or a 203k to a 203b loan; c. Transactions that are reducing the mortgage term must be underwritten and closed as a rate and term refinance (credit qualifying); d. Validation that the borrower is employed and has income at the time of loan closing; e. If assets are needed to close, of any amount, it must be documented and verified; f. If subordinate financing is to remain in place the maximum CLTV is 125%.

The following are examples (but not conclusive) of compensating factors:

A. Established history for the past 12 – 24 months of housing expense greater than or equal to the proposed housing payment;

B. Significant cash down payment (10% or more) on purchase of the property;

C. Demonstrated ability to accumulate savings and a conservative attitude toward the use of credit;

D. Previous credit history showing that the ability to devote a greater portion of income to housing expenses;

E. The borrower receives documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage;

F. Minimal increase in housing expense;

G. Substantial documented cash reserves (at least 3 months) after closing;

H. Substantial non-taxable income (if no adjustment was made previously in the ratio computations);

I. Potential for increased earnings, as indicated by job training or education in the borrower’s profession;

J. Purchase transaction as a result of relocation of the primary wage-earner, and the secondary wage-earner has an established history of employment, is expected to return to work, and employment opportunities in a similar occupation are available in the new area . (Documentation the availability of possible employment.)

Thank you (in advance) for signing the hvccpetition.com

We humbly request that you spread the word and send every Realtor, Loan Officer and potential home buyer or seller you know to our site. The elimination of HVCC is being deliberated on the house floor in coming days and we MUST reverse its effects if we expect the housing market to recover. Interview with the president of NAMB regarding the impact of our collective efforts: http://www.thinkbigworksmall.com/mypage/archive/1/23333 Thanks again for your support and please forward our petition. HVCCPETITION.COM

The Meredith Mortgage Team

Erin & Kathleen Your Partners In Success

Mortgage Banking/Brokering Services

Erin Direct: 925.918.0585

Kathleen Direct: 925.735.6621





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