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Old 11-21-2007, 10:21 AM   #18
Marshall F. Graham
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Join Date: Nov 2007
Location: Shreveport
Age: 41
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Quote:
Originally Posted by j.nc View Post
Hi Mr. Graham - given the issues in your market right now, and the possible fallout (and present fallout) - (1) how will the process of applying for and qualifying for a mortgage change from this point going forward? (2) Will 1st time homebuyers have it harder? (3) If I am relocating from let's say North Carolina to Seattle to be closer to my main office and want to maintain the same size and level of housing I will need a -much - larger mortgage. Will the current fallout make my chances harder to qualify (assuming lateral xfer and no pay increase).
Thanks for your insight.
Thank you for your question!
Over the last 7 years, we have all witnessed a more relaxed industry in regards to the availability of home ownership.. "(no credit, bad credit) (No money down).. etc. I'm sure you've seen all the commercials!" The recent fallout, as you called it, has had some affect on the mortgage industry. Fannie Mae has tightened regulations on loans that statistically are more inclined to default. Unfortunately, this regulation does affect the first time home buyer... Why? because these clients typically do not have a favorable amount of liquid assets set aside, and are therefore more inclined to seek 100% financing. Five months ago, a client with a 650 credit score with no cash on hand would have no problem receiving a prime rate. Today, you better be in the 700's...

If your credit score is < 700 and you're looking for 100% financing you better have at least 2 months cash reserves in the bank. A reserve = 1 months housing payment.
So, if your estimated housing payment is $1500, you must be able to document a minimum of $3000 + closing closts and prepaids..

In regards to your transfer:
There are only 4 variables in regards to mortgage lending. Term, Payment, Rate, and PV (Loan Amt)
Assuming your term is 30yrs (360months)
Interest rates are still excellent. The current market rate for 100% financing 30 Year Fixed Rate is 6.25% Your larger mortgage payment would therefore depend on purchase price. I am unfamiliar with the housing marketing in Seatle, but as a whole, the housing market has increased significantly over the last 5 years....Your issue therefore is Debt Ratio,, which is basically a clients ability to comfortably make their payment. Typically, a debt ratio will need to be 40 something percent.
So, look at it this way:
Income $50,000
Monthly $4,166
50% $2,083
So, take the $2,083 and subtract all of your current payments... Including: all installment and revolving accounts
Car $350
Credit Card $100
Credit Card $20
Student Loan $230
So your estimated housing payment (including escrow) cannot be more then $1383
So depending on the taxes and insurance in that area, you're probably looking at a purchase price of around $160,000...

We are currently offering our first time home buyers a 5.55% Fixed 30yr 100%financing loan, but unfortunately, this program only applies to purchases within Louisiana....
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