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Get Your Ducks in a Row – Getting Ready to get Pre-Approved for a Loan or Refinance

Getting your Ducks in a Row to Get a LoanSorry for the “cut and paste” trick with this post. I received the below info in an email from Monica Di Perna of Guarantee Mortgage and figured it’s best if I just pass it on to you in its original form. It talks about the effect that higher limits on conforming loans will have on the mortgage process and how to prepare yourself to take advantage of those loans and the rates that go with them.
Here you go:

Lower Mortgage Rates Available Under New Economic Stimulus Law

The recently approved economic stimulus law allows people with mortgages over $417,000 and under $729,000 to take advantage of temporary lower interest rates.

Normally, a loan amount of $417,000 or under gets the lowest rates. However, as a way to stimulate the economy, the government is raising the limit to $729,000. This means that you may qualify for a better interest rate! However, in exchange for a lower rate, you are required to meet stricter reserves and FICO criteria.

Following is a more detailed overview, but please call me to discuss your personal situation so we can quickly determine if this is a good deal for you!

(415) 345-4372


If you feel like you can benefit from this window of opportunity, it is best to start now preparing your loan packet. It will be difficult to get these loans through to lenders because they will be swamped! But if we can prepare the package now, we wil be ready when the lenders start offering this. It is predicted they will start in 30 days – 60 days. Please read below and call with any questions!


Rates Comparison

30 Year Fixed Jumbo 6.875% vs. 30 Year Fixed Conforming 5.75%
10 Year Fixed Jumbo 6.25% vs. 5.625% for a Conforming 10 Year Fixed


****** There are Fixed and Adjustable Rate Mortgages. Jumbo rates are higher than Conforming in all categories. Most likely, this will only apply to Interest Only loans.

Costs of Refinancing

In order to refinance, it costs about $3,000-$3,400. You pay the Title/Escrow Company about $1500-$1800 and an appraiser $400-$450. The Loan Fees cost is about $1100.

No Closing Cost Refinancing Option:

You can get a no closing cost loan. The rate is always a little higher because this is where the lender charges you the cost. However, I suggest you pay a one time cost of $3,000 rather than pay a higher rate for 30 Years. For example, as of 2/8/08 a 30 Year Fixed Conforming loan amount where you pay the closing costs is at 5.75%. If you don’t pay the closing costs, it could be about 6% or slightly under.

Roll your Closing Costs into the loan amount:

Most people add $3,000 to their loan amount instead of paying out of pocket for the costs. There are many advantages to doing it this way, but we can discuss this over the phone.

New Criteria for Refinancing or Purchasing

· Lenders require us to show 6 times all of your monthly debt covered as reserves in the bank.
· Most lenders require 700 FICO scores, though some do allow 680.
· You must show consistent work and they will require proof of your income.
· Debt to income ratios are strictly adhered to now, so a lender requires that your debt not exceed 45% of your income.
· The lender requires full documentation of two months of savings, investments, and retirement accounts ALL PAGES, W’2s for 2006 and 2007 or 2 years of all pages of tax returns if you are self-employed.

If you qualify, you will need to provide me with all of the following information. (Unfortunately, a loan packet that is not complete will be returned by the lender and the loan file will lose its place in line for processing.)

Documents Required by Lender

· W’2s for 2006 and 2007
· Pay stubs to show an entire month of income
· Two months of savings, retirement, and investment accounts ALL PAGES FRONT AND BACK. Internet statements will work if they are truly statements with your name and account numbers. Please got to the section on the bank’s web site where it says Monthly Statements and print those out.
· A current mortgage statement.

Additional Information

· The name and phone number of your Fire Insurance Agent.
· A cell phone that I can give the appraiser so that he can call you to set up an appointment. The lender will require a full appraisal to verify your value. Appraisals cost around $400-$450 and the appraiser will ask for a check at the door.
· We can help you fill out the loan application. We will want to update your loan application very specifically. Lenders are far more cautious right now, and they want the most accurate and updated information. Email me if you want to fill out your own loan application. You are welcome to fill out and sign all pages of the loan application, or we can fill it out over the phone and I will email you the loan application so that you sign and date all pages. The loan application will also contain a US Patriot Act form that needs to be completed.


The process may take longer than usual refinances. Typically, it takes 3-4 weeks. If there are many people trying to take advantage of this temporary rate break, it will be back logged. The only way to get a file through is to have a complete loan application.

Again, please call with any questions, and together, let’s take advantage of these lower rates for loan amounts of $729,000 or higher.