Now, to take this even a step further Fannie Mae has announced that they will be updating their Automated Underwriting System (AUS) effective December 12, 2009 to restrict the level of an acceptable Debt to Income Ratio to 45% with possibly a 50% ratio allowed with compensating factors. Upon the release of this stricter guideline from Fannie Mae, individual Lenders have been releasing their own DTI guidelines where many are going to be restricting the acceptable DTI’s to 45% regardless of Fannie Mae’s allowance to 50% with compensating factors.
What does all of this mean?
It means the lower the interest rate not only directly affects your monthly payment, it also could determine your approval or denial for a particular mortgage since the lower the payment, the lower your debt to income ratio will be and therefore the better chance of getting your loan whether it be a purchase or refinance approved by your lender.
Once the rate start increasing again, which I guarantee they will, not only will the guidelines affect the probability of your loan approval so will the interest rate at that given time.
With the Governments announcement of the extension and expansion of the homebuyers tax credit, along with interest rates at their current ridiculously low levels, home values still near the bottom there may be no better time in our lifetimes to purchase the home of your dreams.
I am sure you have either heard someone else remark or possible say it yourself, Remember the Good Old Days” well…..in spite of some of the serious economic challenges we are facing at this time as a nation, in some aspects with regards to home buying and/or refinancing your current mortgage…These ARE the Good Old days we are living in live and in person at this time and will be referring too in days gone bye in the future.
I cannot believe that I just closed on a home for under 6%. I was literally bankrupt less than three years ago and never thought I’d borrow for less than 9 or 10. I financed with a smaller bank like yours, licensed in New York, which I think helped, and they put all my paperwork in order and got me a really great 30 year fixed rate. I would encourage people who’ve been through financial hardship who are now back on their feet to try getting a loan in this market.
My wife and I divorced a few years ago and I went through a bad bankruptcy. My credit is on its way back, now, though, and I’m thinking of trying to buy. Where did you get your loan in NY?
I got a 30 year fixed rate of 4.5%. I know it’s pretty low, but do you think I should wait longer? If I lock in a rate now, will I be able to change it later?
Wow , you learn something new everyday!…
Martin, I hope you locked something in already because I don’t think rates are heading down anytime soon. And you know if you lock in and then rates do go down you can adjust your rate! Plus, 4.5% isn’t bad at all.
Actually I did lock in the 4.5%. I’m still going to wait until after the New Year to close in case rates go down, but I met with a few other banks and 4.5% is at least .2-.3 lower than I could find anywhere else.
My wife and I are considering getting a reverse mortgage on our home in Connecticut. Can anyone recommend a good lender or suggest when to get one, what to ask, etc.?
Total Mortgage - of course. Check out rates at http://www.totalmortgage.com/current-mortgage-rates.asp