What to know about today's mortgage market

Preserving the deal
Lenders advise Realtors to prep buyers for mortgage market
By Tom Ross (Contact) - Reporter Steamboat Pilot & TODAY
Sunday, April 20, 2008

Steamboat Springs — Steamboat Realtors who want to arrive at commission day without avoidable surprises need to prep their buyers thoroughly and give lenders extra space on the calendar, Holly Rogers said this week. Rogers works for Capital Mortgage Advisors in Steamboat Springs. She sat on a panel of a half-dozen mortgage lenders who spoke to an audience of about 70 Realtors, bankers and appraisers at Olympian Hall on Thursday. Land Title Guarantee Company sponsored the event.

Land Title’s Bruce Carta said his firm is aware, from working with lenders and the real estate community, that circumstances are changing daily and the need for preparedness is escalating.
Rogers said the usual three-week period in which Realtors wait for buyers to close on a mortgage is outdated. “Those days are over,” Rogers said. “When you write your contracts, give us a little extra time.” How much time? “Forty-five days,” Rogers said.
Lenders on the panel agreed that Realtors could take steps to help their clients qualify for mortgages and keep deals from slipping through their hands.

Lynn Reiff, a home mortgage consultant with Wells Fargo Home Mortgage, said borrowers’ credit scores are becoming increasingly important. The top credit score one can achieve is 850 and Reiff said she has never seen a score higher than 816. “A score of 780 to 850 is great and anything in the range between 720 and 780 is quite good,” Reiff said.
Understanding credit scores, Rogers said, is one step to pre-qualifying clients for successful purchases.
Save your returns - John McCollum of First National Bank of the Rockies said the more materials that borrowers bring to their initial meeting with a lender, the further along the path they are. Mortgage underwriters are beginning to ask for two years of tax returns with increasing frequency, he said. “Have buyers find their documents early and get them prepared,” he urged.

Reiff’s colleague at Wells Fargo Home Mortgage, Shauna Cagnoni, said at least through Dec. 31, the HUD loan limit for Routt County has been increased to $675,000 as part of the
federal economic stimulus package. The limit for Moffat County is $417,000. In the nearby Eagle/Vail and Aspen markets, the limit is $750,000.

Rogers said it behooves Realtors to understand the difference between pre-qualifying a client and preapproving them. Realtors typically ask clients to go to a mortgage lender who will pull credit with their approval, and supply a letter confirming they should be able to qualify for a target amount. But Realtors also can urge their clients to have their applications submitted to one of the automated underwriting systems provided by Fannie Mae and Freddie Mac.
“When you do that, you’ve gone past the first big approval,” Rogers said.

Balancing act
Reiff said mortgage borrowers also should pay close attention to their credit card balances. Cards carrying a balance of less than 50 percent of the credit limit are viewed positively, Reiff said.
“A maxed out balance lowers your score,” she said.

Kathryn Pedersen of First National Bank of Steamboat Springs said Realtors should be aware that the individual circumstances of borrowers could dictate varying strategies with credit card balances. It isn’t always helpful to reduce the number of credit cards one possesses. Credit agencies generate a ratio that is the function of the number of accounts and the aggregate balance, she said. So, she said, it would be unwise to cancel a credit card that reflects many years of longevity. The simple fact that a client has been faithfully paying off on a particular credit card over time improves the credit score, she said.

Jim Yannaccone, a licensed appraiser with ASI Appraisal Services in Steamboat said mistaken impressions about the Routt County real estate market are posing challenges in meeting appraisal requirements from underwriting companies. “Obviously, lenders are ner­vous, and we are being more scrutinized than ever,” Yannac­cone said. With Steamboat’s limited inventory of single-family homes for sale, it’s becoming more difficult to provide the comparable sales underwriters want to see to validate an appraisal. “They want to see more recent comps, within the last 90 days,” Yannaccone said. “Sometimes we don’t have two comps (within) 90 days and that causes them to ask, ‘Does that mean your market is declining?’ This has created some frustration for all of us trying to prove the market’s still strong.”
— To reach Tom Ross, call 871-4205
or e-mail tross@steamboatpilot.com

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