Home Fixed interest Zero mortgages are back a decade after mortgage collapse – Orange County Register

Zero mortgages are back a decade after mortgage collapse – Orange County Register


The highest home prices are upon us. Like the 17th-century tulip mania, everyone must take the path to homeownership.

Now even first-time buyers without a deposit can take part in the action. This means that there is no skin in the game, just like the good old days Great Mortgage Meltdown.

No down payment loans are available up to $ 1.25 million as long as the primary employee has at least an average FICO credit score of 700.

If you don’t show enough income from your daily work or self-employment to qualify, you can document your income with bank statements, averaging the last 24 months of deposits on personal bank statements.

The prices are disagreeable on this so-called 80/20 piggyback mortgage. But beggars cannot choose.

There is a minimum “floor rate” of 4.5% on the 30-year mortgage. It is subject to a first tariff adjustment after the first 5 years. The second mortgage has a floor of 9.99%, fully amortizing over 15 years.

Here’s an example: Suppose you buy a house for $ 1.25 million. The first mortgage rate of $ 1 million is 4.5%, with an initial principal and interest payment of $ 5,067.

You then take out a 15-year fixed rate loan for the remaining $ 250,000 at 9.99% with a down payment of $ 2,685.

Suppose the monthly property taxes would be $ 1,302 and your monthly fire insurance payment would be $ 200 per month. Then your total home payment would be $ 7,952, excluding any potential HOA fees.

The only significant differences between this current crop of exotic zero-down mortgages and the so-called no-down sub-prime category of yesteryear are today’s mortgages which prohibit lump-sum payments and prepayment penalties, thanks to the Dodd-Frank Act of 2010.

And the current minimum average FICO score of 700 is higher than it used to be.

But remember, the race to the bottom before the Great Recession. It was always about competing mortgage lenders undermining the underwriting standards of other guys or girls. Take this to the seizure prevention department.

How about a little more memory lane craziness?

Can you fog a mirror? Of course you can. Mirror Mortgages are available now with only 20% down payment on a purchase and 25% equity on refinance for loan amounts of $ 3 million.

No income or jobs listed whatsoever? No tax declaration? No payslips? No 12- or 24-month average bank deposits to calculate income? You will only need the first page of your bank account statement to get your deposit funds, provided that you do not receive 100% of the donation funds.

Don’t worry if the lender sees these bad checks or other financial hardship on page two of your bank statement. Rates start at 4%.

What about investor instruments? Believe it or not, fog type mortgages start even lower for investment property loans than for principal residence mortgages. How do you like 3.75% on a 30 year mortgage that adjusts after the first five years?

You need a minimum of 15% down. The loan amount is $ 1.5 million. You will have a three-year prepayment penalty (the prepayment penalty is 80% of six months of interest).

If you’re considering one of these mortgages because you can’t qualify for a traditionally cheaper Fannie or Freddie mortgage, let’s start by being realistic.

Think about it. House prices are peaking. Unless you’re triply confident that you can handle the higher real estate payments, have a family lifeline to rely on, have lots and lots of cash stacks, and have the courage to overcome the possible decline in the value of the property, then do not. Don’t stretch out too much.

Freddie Mac Rate News: The 30-year fixed rate averaged 2.9%, 8 basis points lower than last week. The 15-year fixed rate averaged 2.2%, 6 basis points lower than last week.

The Mortgage Bankers Association reported a 1.8% drop in mortgage application volume from the previous week.

At the end of the line : Assuming a borrower gets the 30-year average fixed rate on a compliant loan of $ 548,250, last year’s payment was $ 38 more than this week’s payment of $ 2,306.

What I see: Locally, well-qualified borrowers can obtain the following fixed rate mortgages with a cost of 1 point: a 30-year FHA at 2.25%, a 15-year conventional at 1.875%, a 30-year conventional at 2, 5%, a 15-year conventional high-balance contract ($ 548,251 to $ 822,375) at 1.99%, a 30-year conventional high-balance at 2.625% and a 30-year fixed jumbo at 2.75% .

Eye-catcher loan of the week: A 30-year jumbo mortgage loan adjusting after 10 years from 2.25% with 2 points.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or [email protected] Its website is www.mortgagegrader.com.


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