In the mortgage world, it seems like this past year flew by!! Over the last couple of years, it has been a constant world of change and 2011 wasn't any different!
Some of the major changes were the increased FHA monthly mortgage insurance. The monthly mortgage insurance almost doubled from where it used to be. The upfront mortgage insurance dropped, but the overall payments are still higher. FHA loans are still popular, but many have switched back to conventional loans if they can qualify.
Conventional loans stayed about the same but some mortgage insurance costs actually dropped a little. A couple mortgage insurance companies went out of business over the past year, that has also affected some of the mortgage programs.
Rural development loans added a small annual fee that is paid on a monthly basis. They also reduced the guarantee fee. The program still allows for zero down mortgages!
VA loans went through a possible change, but in the end, the VA funding fee stayed where it has been over the last few years! For a month or so, it looked like the funding fee was going to drop, but Congress did issue a change that reinstated the previous funding fees.
Overall, mortgage qualifying stayed about the same. Credit scores are required to be about 640-660 for conventional loans, 620-640 is required by most lenders for FHA loans. FHA allows for lower scores, but many lenders won't allow that.
The biggest change in qualifying over the last year is simply documentation. We need to show 2 years of w-2's and tax returns, 30 days of paystubs, 1-2 months of bank statements. We need more letters of explanation – especially on credit inquiries and large deposits into bank accounts. We need to verify that credit reports and employment haven't changed right before closing.
Mortgage interest rates have dropped to some of the lowest levels ever seen! A year ago I would never have expected to see rates where they are now, I expected they would be at least 1-2% higher than they are!! I expect that rates will increase slowly in 2012, but who knows!! We do know that they shouldn't get much lower at all – how much lower can they realistically go?!
Now what will happen in 2012?? I would expect rates to slowly increase, mortgage documentation to stay about the same. Home prices will probably slowly increase. It will be interesting to see what other changes there will be in the mortgage world!!
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email – Website
