The Bottom Line

Just when I was taking a breath, and thought things were maintaining some 'normalcy'.........Fannie Mae and Freddie Mac made changes as of January 10 to their risk based pricing models. What does risk based pricing mean? That for certain loan levels (based mainly on credit score and loan to value) there is a risk factor involved. Well, they just went up. ALOT. Why the change? Well, to make up for losses on the loans they made that they should not have, of course.

Here is a summary of some changes (keep in mind these 'hits' can come in the form of % to the rate, or upfront fee). These are 'examples' only.

25% is the new 20%. If you have an 800 credit score, and put 20% down. HIT. Equivalent to about .125% in rate, or $625 on a $250K loan. Investors do not consider 20% down the 'best' anymore, is my takeaway.
740 is the new 720. If you have below a 740 score, there are some significant hits to the price, depending on the down payment. For example:
20% down, score 700-719 is approximately .50% rate hit, or $2500 fee upfront
Add an 80/10 (total 90) - add another .25% in rate (that would be on top of the already increased fee for a score <720)
10% down (one 90% loan), score below 680- a 1.0% hit to the rate, or a fee of $6,875 upfront.
Should I continue? The matrix is quite extensive.

The BOTTOM LINE is that your buyers and sellers need to be sure and get preapproved BEFORE they start shopping for homes. I have seen clients with 20 years of pristine credit, and a recent collection to Time Warner of $30 they disputed for a late fee , drops the score 100 points. Really. No joke. Also, we see 'errors' all the time. On the most qualified of borrowers.

Everyone's credit is suceptible to mistakes. Everyone's. The most VALID website to pull credit for borrowers is www.myfico.com. The score given here most resembles mortgage credit scores. We have seen Equifax, Experian and Trans Union vary more than 50 points in some cases. The scores they are 'selling' is not the same as a mortgage credit score. They are selling a generic product. A money maker. Please encourage your buyers to discuss this with a mortgage professional.

As always, we are here to assist you with your clients mortgage needs! Just give anyone on my team a call (Kenny, Brianna, Nancy or myself). We are here to serve you and ensure an ontime and accurate closing. Also, did I tell you we can still close in 21 days or less on a conforming or FHA transaction?

Enjoy the weekend!

Jennifer Hernandez

RATES as of January 28, 2011 (FLAT FOR THE WEEK)
The following assumptions apply:
20% Down Payment (Conforming) / 25% Down Payment Jumbo (Lower down payments available – call for details)
1% Origination Fee
Escrows Required (if no escrow, higher fees may apply)
Purchase Transactions, Primary Residence (Refinances have different rates)
30 day closing
Credit Score 740 +
Debt to income ratio <=40%
Full Documentation of Income/Assets

Conforming ($200,000* - $417,000)
Jumbo ($417,001- $1,000,000*)
30 year (fixed) 4.875% APR 5.008%
30 year ( fixed ) 5.625% APR 5.746%
15 year (fixed) 4.250% APR 4.476%
15 year ( fixed ) 5.000% APR 5.201%
5/1 ARM 3.500% APR 3.300%
7/1 ARM 3.875% APR 3.532%
5/1 ARM 4.000% APR 3.643%
7/1 ARM 4.250% APR 3.848%
10/1 ARM 5.250% APR 4.552%
FHA/VA call for quote (max loan $270,000)




We do originate loans below $200,000. These amounts are chosen to show the most favorable rates.
For other product options or for loan amounts less than $200,000 or above $900,000 please call for quote.
Call for details!


If you know of someone who would appreciate my services, please contact me with their name and number and I will be happy to help them!


Jennifer Hernandez
Vice President/Mortgage Consultant
Patriot Bank Mortgage

Office: 713-337-8400
E-mail: jennifer@patriotbankusa.com
Blog: www.loanwithjennifer.blogspot.com