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My Preferred Lender

Stacey Drake with Windermere Mortgage Services

Direct: 206.256.0066 Email: stdrake@windermere.com

Stacey has been in the mortgage industry for a number of years. She is excellent at explaining different loan types and listening to your individual needs. Please contact her with all your mortgage questions.

Determining how much you can afford before you begin your home search will save you valuable time. 

Prequalification vs. Preapproval
Prequalifying for a mortgage generally helps you determine how much house you can afford.  Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your gross monthly income.Remember, becoming prequalified does not necessarily mean that you will be approved for a loan to that amount. Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount. (Two years of tax returns, current bank statements, credit score, ect.) Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home. 

Questions and Answers:

What is the “mortgage meltdown”?  This refers to the culmination of factors that led to massive tightening in credit standards among lenders.  The tightening is due to an excessive number of mortgages that are both delinquent and in default.  As a result of tighter credit standard and the devaluation of mortgage-backed securities, global investors are shying away from purchasing additional pools of loans, causing over 100 lenders to close and leaving many homebuyers unable to locate financing. 

Why should a home BUYER be concerned about this?  Buyers need to be Pre-Approved before entering the market.  Credit is becoming tougher and it is taking longer to complete a transaction.  What you qualify for today could change tomorrow in this volatile market.  Conforming loans: those loan amounts that are less than $417,000, are saleable to Fannie Mae and Freddie Mac, having buyers with good credit scores and down payments, have been the least impacted and interest rates have actually decreased. 

Which types of loans have been most impacted by credit tightening?  Sub Prime, and Alt A have suffered the greatest restrictions because of risk factors. Subprime loans are those loans which have typically been for borrowers with poor credit. Alt A loans are for borrowers that typically have good or excellent credit but are unable or unwilling to provide documentation of income and /or assets.  These loans now require higher down payments and higher credit scores. 

What about Jumbo loans?  Loan amounts greater than $417,000 and are saleable only to the secondary market as mortgage backed securities, where credit has tightened and liquidity has been a problem, the interest rates have increased. 

Why should a home Seller be concerned?  The pool of potential buyers will shrink as many find it more difficult to secure financing.  Experts have speculated that the number of potential buyers may contract 15%-30%.  If we have local glut of inventory home prices may decrease in value. 

What does this mean?  Choosing a qualified lender is more important than ever.  Windermere Mortgage Services is fortunate to be a banker/broker with strong relationships to not only HomeStreet Bank but some of the largest banks in the industry.  Even though we’ve witnessed product change and more restrictive underwriting guidelines, we are still able to offer excellent mortgage options and service to our clients. 

I found these articles to be very informative and help explain what has been occurring in the mortgage industry.

Article “Fallout from Mortgage Mess” Seattle Times 8/18/07

            This articles explains why credit scores are becoming more important, how ‘jumbo’ or loans over $417,000 are changing, the need for many borrowers to put at least 10% down. As well as more requirements that lenders are requiring. 

Article “Fed Cuts Discount Rate” CNNMoney.com 8/17/07

            This article discusses the pros and cons of the Federal Reserve’s cut on discount rate of half a percent.  This is said to help convince banks that it is okay to keep lending to companies and consumers that are actually credit worthy. 

Article “Fewer Choices in Mortgage Market” Seattle Times 8/16/07

            This article explains how less loan programs are available to sub-prime borrowers due to the large number of loans in defaults.  This creates fewer funds available for lenders to loan out.  30% of independent mortgage brokers may not survive the year.  However, many lenders who have been conservative with their loan products are having expectantly profitable years.

Article "Current Data" and "Current State of Mortgage Financing" Loan Central 8/17/07

            Publication with current rates and charts.  As well as simple breakdown of why lenders are losing money and loans are defaulting.  Without available funds lenders are going under. 

 

Contact your financial planner today for advice. 

I recommend Stacey Drake, Windermere Mortgage Services.
(206) 256-0066  stdrake@windermere.com