Mortgage Hackr?

Industry chatter (not necessarily economist predictions) seems to be gelling around another 3-4 quarters before the decline in home sales stabilizes.

This is a very general aggregate, national perspective. Real estate is local, so that doesn’t mean some markets won’t go ape shit while others continue to die on the vine for much longer than that.

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The market, however, is not seeing any surge in inventory. The number of active listings is about 21% higher than it was a year ago, according to Redfin, a real estate brokerage. That is mostly because homes are now sitting on the market longer, with far fewer sales. New listings of homes for sale are down 22% year over year.

key portion

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I approached my lender about removing escrow and paying myself as I’ve been with them for a year after the servicing was transferred and my LTV is around 50%. They are going to let me do it, but are going to charge me .25% of the current balance as fee, which is close to $900?! I’ve never heard/seen this before - is this common?

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What does your note say?

Good idea - will check

KB Homes cancellation rate hits 68% in Q4 2022. So, 2/3 of homebuyers walked away from their contracts in the quarter. Leaving KB Homes with piled-up inventory. 2021 Q4 cancellation rate was just 13%.

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Heads up – Fannie/Freddie (Most conventional loans) are making some big changes this year.

  • Refi cash out rates will be a LOT higher than before (being told that it will be about the same rate as investment mortgages, which have been ~75-100 bps higher than primary loans in my experience)
  • Lower credit scores aren’t as punished as harshly as before
  • DTI will now impact what rate you get

Seeing houses start to move with multiple offers again (if priced well and in good condition) and old inventory (60-90+ days on market) starting to clear out. Will be an interesting year. Mortgage applications are up 25% week over week, which supports what I’m seeing, at least in the areas I actively track (DFW, Austin, Houston, Northern VA, CT)

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How was it used before? only to approve/deny if you go over certain DTI?

Correct – I believe for conventional loans, it was up to 50% DTI and only to qualify/approve a loan (no negative impact for being 49.99% DTI vs 5% DTI). Now if it is over 40% DTI + more than 60% loan to value (40% down) rates are higher. Effective 5/1/23.

In case anyone is interested, full details of new loan adjustment matrix effective 5/1/23 are here:
https://singlefamily.fanniemae.com/media/9391/display

Current loan adjustment matrix effective until 5/1/23 is here:
https://singlefamily.fanniemae.com/media/33201/display

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Correct – I believe for conventional loans, it was up to 50% DTI and only to qualify/approve a loan

Does this mean with new rules one still has chance of approval if DTI is slightly over 50%? Of course I’m not talking about extreme cases (like 80-90%).

Do you think this helps people who are looking to purchase vacation homes?

I’m not a lender, so not 100% sure, but several lenders I’ve worked with told me they are able to usually squeeze DTI of 51% or 52% through, but not sure on details of how. It doesn’t seem like any requirements are changing from what I’ve heard / read, but just that it will be more expensive for some loans/scenarios.

Probably doesn’t help, but just makes it more expensive.

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“This recent low point in home sales activity is likely over,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

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Perma optimist Lawrence Yun - I’ve never heard him utter a single negative thing about housing his entire career :upside_down_face:- basically an economics salesman (its always a good time to buy house!)

A day or two ago the CEO of Redfin had a bunch of tweets about the housing market. He thinks that the market may be turning. Also, if you look at all the home builders’ stock prices, the big funds seem to think that the housing market will turn within 12 months.