Bobbing on the Subprime Ripples
For many months that seem like many years, I have been informing you about how the "contained" subprime mortgage finance collapse was fiction.
Get ready to brace yourself for yet another ripple effect.
Once upon a time, you thought you were prime!
Coming this January, Fannie Mae is imposing a new pricing schedule in which your FICO score becomes more important than ever before. Where is the strike zone? If you are looking at a mortgage finance need at greater than 70% of the property value you get hit with higher fees if your score is anywhere in between 620 and 679.
Gone are the days when a score of 640-679 is A credit for mortgages. The pricing adjustmens are steep! Depending upon your exact credit score, should you fall in the strike zone, the extra costs can range anywhere between 0.75 to 1.75 in discount points to up to 0.5 higher interest rate. Someone say it for us all; OUCH!
Yes, this really sucks. Even though you might pay your bills and have no intention to move anytime soon, the current value of your home and the possible financing options available continue to dwindle and evaporate.
That is the froth on top of these subprime shockwave ripples. Unfortunately, the froth equates to less consumer choice.
In my business, the norm of the day is a jump back in time. My competition continues to leave the business they thought was a piece of cake, lenders disappear, underwriting guidelines get back to sanity, and people realize that they should buy homes based on need, not greed.
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