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  #16  
Old 11-07-2012, 08:08 PM
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Default Free Advice :)

Hi Folks
I visited IV after a long time and saw this thread. I can dish out free advice on this subject . Use it at your own risk

I am a Mortgage bond trader at Fannie Mae. For those of you who don't know, we buy up all the mortgage loans- convert them into Mortgage Backed Securities(MBS)/Derivatives and sell it to investors.
The US mortgage market is controlled by what Fannie Mae,our cousin firm Freddie Mac & Ginnie Mae (collectively called GSE's/Agency's) do.

First off for the OP- If your income qualifies you for the mortgage you are getting, there is no reason why your wife's income/status is needed. The underwriters are very scared now due to "put back risk". Risk that the agency's will put the loan back to the underwriter if you default.
SO make sure the rule of thumb income to loan is 3 times. If Chase gives you a hard time, go to a smaller lender. Try Quicken loans for FHA loan.

If you can get a conforming loan or a loan that conforms to Fannie Maes good underwriting standards, that is better. The reason is Fannie Mae MBS is the most liquid bond in the world and the lender will make a smaller margin which translates to a lower rate/closing cost for the borrower.
You can get a conforming loan for about 15% down, you will have to pay insurance which ranges on how much you put down. For 5% down you can only get a FHA loan, you could have gotten a loan in olden days that banks would pool into their own security but that market is dead now.

Pay attention to the closing cost, its all useless money the bank is making off you. The bank makes % for servicing your loan (about 25 basis points), then they make the difference between what they slot the loan into and what they are charging you in interest.
To give you an idea the current coupon or the yield on a Fannie 30 yr MBS is at 2% today.This is what Fannie pays the investor for holding a MBS. Without going into the complicated details there is a healthy 0.5% the bank makes in extra servicing for a average buyer now.

Some lenders who keep low margin on loans are Amerisave, Cashcall, federal home loan bank etc. If you go to a mortgage lender he will sell it to an aggrigator like JPM, Ally or Wells. so two people keep a cut. Ask the lender if he sells directly to Fannie or if he is a warehouse or corrospondent lenger. This will unsettle them and will make them keep lower margin knowing you are someone who knows how the market works.

But this is a great time to buy a house, best of luck. I can answer any questions my fellow IV'ians have where the answer is not a conflict of interest
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  #17  
Old 11-16-2012, 10:07 AM
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Default FHA mortgage

FYI to anyone looking to get a FHA mortgage or anyone with a FHA mortgage looking to refi.

FHA will release its annual actuarial study today. It will show it needs Billions of dollars from the Treasury due to defaults in its 2005-2009 loans. This will also mean that it will jack up mortgage insurance premiums yet again. It has already done so 4 times since Apr 2010.

So if you are on the wall thinking to refi or not, consider your savings and do so now. If you are thinking of getting a FHA loan, again try to close soon.

Best alternative is to go for a conforming mortgage that can be securitized into a Fannie or Freddie MBS. Your premiums will be much lower and can be removed when LTV will be lesser than 78% either by value increase of the property or additional paydowns. On a FHA you have to pay PMI for 5 years regardless of Mark to Market LTV.

Best of luck
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  #18  
Old 11-17-2012, 09:57 PM
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Default Thanks

Quote:
Originally Posted by smisachu View Post
FYI to anyone looking to get a FHA mortgage or anyone with a FHA mortgage looking to refi.

FHA will release its annual actuarial study today. It will show it needs Billions of dollars from the Treasury due to defaults in its 2005-2009 loans. This will also mean that it will jack up mortgage insurance premiums yet again. It has already done so 4 times since Apr 2010.

So if you are on the wall thinking to refi or not, consider your savings and do so now. If you are thinking of getting a FHA loan, again try to close soon.

Best alternative is to go for a conforming mortgage that can be securitized into a Fannie or Freddie MBS. Your premiums will be much lower and can be removed when LTV will be lesser than 78% either by value increase of the property or additional paydowns. On a FHA you have to pay PMI for 5 years regardless of Mark to Market LTV.

Best of luck
Thanks a lot for your wonderful advice. I have been reading up on your posts on other topics since quite some time and enjoy those as well. Good to know a desi in a core housing function of MBS. Its going to be a fun time with The B(ern)ank(e) embarking on QEternity openly buying MBS' and housing market being propped up by Wall Street thugs' endless buying spree.....
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  #19  
Old 11-17-2012, 11:19 PM
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smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute smisachu has a reputation beyond repute
Default

Quote:
Originally Posted by gc_peshwa View Post
Thanks a lot for your wonderful advice. I have been reading up on your posts on other topics since quite some time and enjoy those as well. Good to know a desi in a core housing function of MBS. Its going to be a fun time with The B(ern)ank(e) embarking on QEternity openly buying MBS' and housing market being propped up by Wall Street thugs' endless buying spree.....
You are welcome. Glad my blabbering is informative and thanks for the compliment.

You are absolutely right in QE-E. The fed has broken the MBS market by buying $5b worth of MBS plus reinvesting their current income from MBS holdings into more MBS buying. This has caused a huge supply-demand disconnect and MBS bonds have swung wildly and lost all relations. Hedging has been quite difficult and has led to more innovation (read complex derivatives), some of the many un intended consequences. But main thing is they have not been effective. The "primary secondary spread" or spread between primary mortgage rates and yields on underlying MBS has widened to historic levels. This means banks are keeping a lot of margin, since demand is so high why sell cheap. Looser is the home buyer.

Further to my previous post on FHA- now I will say completely avoid FHA mortgage. Because FHA announced yesterday that it will stop eliminating Mortgage insurance after LTV is below 78%. Borrower has to pay insurance till he holds the loan. This means an extra $250 (on average) for the life of the loan. So whatever rate you are getting add about 1.5-2% on top to come to your real rate.

So a 3.5% FHA loan is actually 5%. So your best to get a non FHA mortgage. More updates as they happen...
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I-140 March 2006
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RD- Sep 4th 2007
EAD- Sep 17th 2007
FP- Sep 28th
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EB-2 Aug 2002-Employer Shut Down

GREENED AUG 5th 2010
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