The Mortgage Market in 2011

Happy New Year to all!

As the New Year hits us with feelings of hope, new chances and resolve; it also can come with a feeling of uncertainty. As the media talks about “rebounds” in the economy and a better overall outlook in 2011, it’s a whole different ballgame in the housing market and, as a result, the mortgage market. There is still several months worth of inventory left on the market, near record numbers of homeowners behind on their mortgages, rising interest rates……not to even mention tighter than ever lending restrictions!  Even with today’s unemployment rate drop to 9.4%, the fact remains millions remain out of work and can’t pay their mortgages.

The mortgage market has made great progress toward correcting the lending practices of the early part of the last decade. Many of these changes have been implemented over the last couple of years and continue to be tweaked. A National Mortgage Lending System, better known as NMLS, requires individual state licensing and regulation of loan officers. The homeowner is able to access this database to insure the loan officer company they are working with is licensed person and has a clean track record. Banks and regulatory agencies are required to verify all loan officers and lenders are properly licensed and can more easily track those who are not.

Other changes include requiring the appraiser to be independent of the loan officer, the ban on upfront fees collected at application through the Mortgage Disclosure Information Act (MDIA)  and the Good Faith Estimate changes implemented on 1/1/2010 banning fee changes at settlement. These, as well as many other changes have given us better lending practices, and thus better loans. This will result in a stronger, long term housing market which will benefit all homeowners.

As many of you may know, just qualifying for a home loan is a challenge. Just having a solid job, good credit and equity in your home doesn’t guarantee an easy loan process in 2011. Easy loan underwriting with limited documentation is a thing of the past. Get ready for lenders to delve much further into your records this year to qualify for a loan. Those who haven’t gone through the loan process in the last few years will see how exceedingly different the lending process has become. These higher standards for loan origination strengthen the lending system, and hopefully will continue to help the market as a whole. As we move forward into a more prosperous market in 2011, we do so with the knowledge that it is also a stronger market, one not plagued with the weakness of bad lending practices.

Fortunately, 2011 brings a lot of positives. Rates, while having risen up to .75 to the rate over the last two months, are still at record lows. Everyone knows someone who still hasn’t refinanced – thinking rates would continue to drop. Rates remain quite volatile and can change several times a day. It is still a very good time to refinance or even reduce  your loan term to a 15 year mortgage. For those who may have little equity or no equity at all - The government’s Making Home Affordable Program is still in effect through June 2011, allowing many to refinance to today’s low rates even with reduced housing values. For those thinking of moving this year or buying their first home, this year looks like it will continue to be a buyers market. There are many sites to search for home– but I recommend Homes Data Base. This site provides clearer information on the subject property, better research tools, and filters out more unwanted information in the home buying search.

We’ll get more into these topics weekly over the coming months. Please feel free to contact us with any requested topics. Also, Integrated Financial Solutions, LLC is now on Facebook. By becoming a fan, you will get market updates and weekly postings and specials!