To make matters worse, I asked them to leave the pile on the curb because I did not want it spilling into the grass next to the driveway. Well, they took that instruction literally and dropped it right in front of the mailbox.
My mail carrier is a bit grumpy, so I have been trying to move it as quickly as possible. Heaven forbid I miss out on all the junk mail I receive.
Underwriting Updates*
A couple of quick underwriting updates that may add value for your clients going forward.
Fannie Mae recently announced changes to a few guidelines that will help many borrowers qualify more easily.
The first change relates to variable income such as commissions, bonuses, and overtime. We can now work with a 12-month history for qualifying purposes rather than the traditional 24-month requirement.
The second change relates to pay raises. If a raise takes effect within 60 days of closing, that income can now be used to qualify. Previously, the borrower generally had to receive the raise before closing for it to count.
One exception is borrowers employed by a family member or another interested party, as these changes would not apply.
Both are positive updates that should create additional opportunities for qualified borrowers.
Feel free to reach out with any questions.
Market Notes
It was a challenging week for mortgage rates, particularly toward the end of the week.
As mentioned last week, the non-farm payroll report was released Thursday morning. For the most part, mortgage rates have been taking their cues from developments in the Middle East. Rates had been trending lower over the past couple of weeks as headlines surrounding peace efforts and a potential ceasefire were generally positive.
Then came Thursday’s jobs report.
In typical market fashion, stronger-than-expected economic data pushed rates higher, with most programs ending the week roughly 0.125 to 0.25 percent above where they were a week ago.
The number of jobs created in May came in significantly stronger than expected. In fact, the figure was more than double many forecasts. To add insult to injury, the prior two months were revised higher as well.
Before the conflict began, market expectations pointed toward two short-term rate cuts by year-end. Following Thursday’s report, Fed futures are now reflecting the possibility of two rate hikes. That represents a swing of approximately 1 percent in expectations.
Looking Ahead
We have seen this type of volatility before, and it has become fairly common over the last several years.
Trying to time the market is not something most people do particularly well. The reality is that home values continue to rise, so waiting for rates to fall before purchasing a home does not always make financial sense.
A one percent decrease in mortgage rates combined with a ten percent increase in home values over a twelve-month period can result in a very similar monthly payment.
Enjoy a wonderful week. Please do not hesitate to call with any questions or needs. My back will certainly appreciate the break from the mulch pile.
-Steve-
*All loans are subject to credit approval and program guidelines.