Hopefully you all have plenty of water, batteries, food, and whatever else you feel you might need to weather the Y2K Bug, if it becomes necessary. But most importantly, I pray that you all have your family and friends around you and are safe and happy as you end this year and enter the fresh and exciting New Millenium, the year 2000.  I'm sure it will be difficult for all of us to get used to filling out checks and correspondence with dates using other than a number in the 1900's. 

As an early Christmas present, the Conforming loan limits are being lifted as follows: (Fannie/Freddie usually have the lowest and best rates available) 

  1 unit  -   $252,700 
  2 units -   $323,400 
  3 units - $390,900 
  4 units -  $485,800 

New FHA limits are now being figured as 87% of the conforming limits, which gives us these loan amounts in High Cost Areas of: 

  1 unit  -  $219,849 
  2 units - $281,358 
  3 units -  $340,083 
  4 units - $422,646 

Other new starts for the Millenium in the mortgage industry, is the greater numbers of lenders offering 100% loans, both conventionally and with government financing. I'm now closing a purchase transaction on a house for my sister and her husband in Antioch, CA., with the FHA Access loan that allows a 97% LTV first loan at the prevailing 30 year fixed rate, and a 5% CLTV, silent second at 6% interest with NO PAYMENTS for 20 years. The silent second gave them enough money to cover the normal 3% down payment and covered some of their closing costs as well!!! We received a seller credit for most of the difference, so they were able to get in with only enough money to cover the normal cost of Hazard Insurance, approximately $500. Plus, I was able to get them into the Contra Costa MCC (Mortgage Credit Certificate) program which will allow them to write off an additional 20% of the mortgage interest on their taxes and take more money home every month on their pay checks to help cover the payments.  If you know of anyone that could benefit from this program, let me know, and I would love to help them move into their first home as well. 

Lenders are still using the newest standards for Credit Scoring in making loan decisions and in giving mortgage loan quotes for interest rates and maximum Loan To Values for individual clients.  "Risk" managing will continue to direct current and future underwriting decisions all around the United States for years to come.  What used to be considered prudent lending ratios of 28/36 are easily becoming 40/50 if you have a client that has credit scores of in the high 700's or even 800's.  In some cases, even higher than that, if there is 20% down or more and they have reserves. On the opposite side of the scale, if your credit scores are in the 500's or even lower, you might not be able to get a loan at all without putting a lot of money down and paying higher than market rates and fees.  SO.. your credit has become more and more important in buying a home. 

On January 20th I start teaching my newest Real Estate Finance class at Contra Costa College in El Sabrante, CA. If any of you are interested in learning more about mortgage loans, qualifying others, or being qualified yourself, feel free to come and join us. If you are a Real Estate Agent and wish to learn more about the lending process so that you might improve your knowledge and become a better Realtor, come and learn with us.  Classes this semester will be on Thursday nights from 7 to 10 p.m. on campus. We have a great deal of fun as well as learning a lot. 

Interest rates have continued to steadily rise from the high 6's for a conforming 30 year fixed loan, up into the high 7's or even low 8's. I'm afraid to say that the increase in rates doesn't seem to be coming to an end anytime soon. It is fully expected that Alan Greenspan is planning on raising the interest rates at their next meeting in February, which is coming up here in a few weeks. Hopefully, immediately upon the announcement that he has actually done what the market expects, raise rates, then they will settle back down and maybe things will improve, but no one knows what will happen. I've had a number of clients lately ask me what I thought would happen with the rates. Oh how I wish that I knew!!! I could be really rich today if I was able to predict what was going to happen and be right. But I can't. :~(  This I do know, it is better to be safe than sorry. So if it's a rate that is fine for you, lock it in when you can and don't wait to see what will happen later, it may not be there when you need it later if you are trying to play the market.  Play it safe - LOCK! (I'm one of the ones who ordered 25 gallons of water  for the Y2K - JUST IN CASE. - Besides, I can always drink it later, and an earthquake could hit us. Heaven forbid). 

As part of my New Years Resolutions and goals this next year I would like to find out all of my friends, clients and students that have e-mail addresses and are on the net. For those of you who are online, could you please e-mail me at: cambclg@home.net  and give me your e-mail address's for my data base and if you wish, I can send you these updates and letters online instead of through the snail mail system. 

 

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