Clients always ask me about mortgages.  They ask:  What is the current rate?  How much of a loan can I get?  Etc., Etc.  Well, the answer is that there really is no one answer for those questions.  There are so many variables that come in to account that it is impossible to give solid answer.  So, I asked our good friend Christina Longo over at Prospect Mortgage if she at least has some basic criteria for my Boston condo buyers to use as a guide.  Here is what she gave me:

For First time Home Buyers –

Credit score above 650

Need full documentation files (W-2, pay-stubs, bank statements, tax returns)

3.5% of own funds needs to be own funds into the transaction – unless putting 20% or more down

Verbal verification of rent for 12 months – name and # of landlord

FHA allow as little as 3.5% down

MA housing as little as 5% down (approval predicated on low income qualifications)

Condo guidelines –

All New Construction buildings (where the developer hasn’t yet turned over to homeowners association) you need 51% pre-sale requirement

No litigation allowed against the development

If commercial space in building – must be less than 20% of building (or can go for an exception)

All common areas and unit must be 100% complete to close on the unit

PMI – less than 20% down you need Private Mortgage Insurance (PMI)

You cannot go over a 41% debt to income ratio

If buying a condo you MUST have 70% owner occupancy ratio

NO LITIGATION – NO EXCEPTIONS

No more than 10% of the units in the project can be owned by more than 1 person

I know that is a lot to comprehend but at least if you use it as a starting point it should help you narrow down what might be possible and what definitely isn’t.  If you have more questions about Boston mortgages, please call Christina Longo at 978-886-9359 or email her at christina.longo@prospectmtg.com.

We at Warren Residential Group are proud to announce our partnership with Christina Longo - Sr. Loan Officer at Prospect Mortgage Company.

We partnered with Christina/Prospect Mortgage because she has shown us – even in this changing credit environment - that she is a valuable resource to our clients and at Warren Residential Group it a priority that our clients receive A+ service.

In addition, Prospect Mortgage has the products that fit our clients needs.  As a strong direct lender with the flexibility to also act as a broker – they provide choice, convenience, and control throughout the entire home buying and lending process.  Prospect Mortgage offers a full suite of lending products as they recognize the importance of having the right loan for most situations.

If you are thinking of buying and would like to talk with our experienced professional, please call Christina today at 978 886 9359 or email Christina.longo@prospectmtg.com

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I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week’s survey may point you in the right direction.

The Bankrate.com survey is for conforming mortgages only. It is not specific to Cincinnati, nor does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or super jumbo mortgages. For a personal rate offer, // contact me directly.

Here’s the group’s 30-day prediction for mortgage rates:

• 18% predict mortgage rates will increase
• 18% predict mortgage rates will decrease
• 64% predict mortgage rates will remain unchanged

I am bucking the trend, predicting that mortgage rates will decrease over the next 30 days.

My advice not be appropriate for your individual situation and I’m not always accurate besides. Either way, here’s what I told Bankrate.com:

“Demand for dollars-denominated bonds helps rates to ease lower.”

Now, there are a lot of reasons why mortgage rates change.  Economics, politics, trends — take your pick.  Each plays an important role. But of equal importance is the value of the U.S. dollar.

The U.S. dollar matters to mortgage rates because it’s the currency in which mortgage bond investors are repaid.  When the dollar loses value, so does the value of those repayments.  Therefore, mortgage-backed securities lose their luster and rates rise in order to entice investors back.

When the dollar gains, the chain reaction flips in reverse.  And, as a result, mortgage rates fall.

The dollar should gain in the coming weeks.  The U.S. economy appears to be recovering from recession — probably faster than our global peers.  As a result, whenever there’s a perceived risk in the global economy, global cash seems to flow to the U.S. markets. To investors, it’s the safest place to be.

This partly explains why stocks and bonds have moved in the same direction of late.  The same forces that are pushing stock markets higher are helping the U.S. dollar to gain, too.  It’s causing bond prices to rise and rates to fall.

That said, markets remain volatile and rates do, too.  The global economy is in flux and there are countless outside influences for which to account.

As a loan officer, I watch mortgage-backed securities and track rates on a real-time basis.  If you’re not working with a loan officer and want to work with me, I’m never too far from my phone or // my email so just reach out anytime. I’ll help you try to time a market bottom so you don’t overpay on your rate or your fees.

Or, you get more passive about it.  Watch me on Twitter: Briancav I post updates all day long

Condominium lending has become tight to say the least.  When my agents are selling Boston condos they tell me the biggest reason why deals fall apart is because of financing.  Even with a pre-approval, a big down-payment and good credit, many borrowers are finding closings to be delayed or not possible because of the property they are buying.

Fannie Mae and Freddie Mac have tightened the condo borrowing regulations to try to limit risky lending on the segment which has seen a high chance of foreclosure over the past few years.  Other risks for condo lending include special assessments and high condo fees which can cause an owner to fall behind on their payments.  This was recently seen at the Harbor Towers complex on Boston’s Waterfront where condo owners were assessed from $80,000-$500,000 per unit for major renovation projects.

Unfortunately, the majority of the real estate market in downtown Boston and it’s surrounding neighbors is made up of condos.  Single family homes in this area are few and far between and few can afford them.

Another FHA new regulation for condo lending affecting many new construction condo projects like FP3, W Boston, 45 Province, and The 1850 is that 71 percent of the project much be sold or under agreement to people planning on owner occupying the units.  The project can appeal for a waiver if Fannie Mae officials rule that the project has a strong chance for success.

As if these problems weren’t enough, now PMI (Private Mortgage Insurance) companies who traditionally would insure the loans of greater than 80% are now requiring that buyers have a minimum of 10-15% down.  Prior to this, borrowers could put 5-10% down and still obtain financing.

With all of these new regulations, it helps to work with an educated Boston buyer’s agent when planning on buying a Boston condo.  If you have more questions or would like to be referred to some of our banking partners, please contact a Warren Residential Group agent at contact@warrenre.com or 617-848-9616 ext. 1.

Photo Courtesy of the LA Times

As of today, Bank of America has officially retired the Countrywide Home Loans brand which they acquired about 10 months ago and re-branded their mortgage division as “Bank of America Home Loans”.

Countrywide was formerly the nations largest home lender but recently met its demise do to its aggressive sub-prime lending over the past few years.  Bank of America said that the Countrywide brand name has been tarnished so much that a complete change must happen.

Bank of America’s new pledge to customers is keeping home loans simple, affordable, and explaining them clearly.  They have created a “Clarity Commitment” which is a one page document outlining the mortgage’s interest rate, terms, potential payment changes and other details of the loan.

My Thoughts:  I have a lot of friends and colleagues who work in the lending industry and a lot of them are making the move from well established names like Chase and Wells Fargo to Bank of America because of the merger with Countrywide.  Apparently Countrywide’s back-office systems and technology are second to none and combined with the Bank of America brand many of these bankers and lending professionals feel Bank of America is going to be the best lender for clients to go through.  If you’d like the contact information of some of our preferred lenders please contact me at nwarren@warrenre.com.

Rumor has it that mortgage rates may drop to 4.5% in the very near future with government intervention.  This will give you a good amount more buying power for the same monthly payment.  There is also a rumor that the conforming Jumbo rate could rise as well, giving more buying power to people looking for a larger loan.

For more information on current rates or to qualify for a loan please contact me, Nick Warren, at nwarren@warrenre.com or 617-848-9616 ext. 706 for a list of qualified professional lenders.