New Year Mortgage Update!

From time to time, we receive great content from our partners in the industry.  This is a guest post from Andrew Siddon, Arlington Branch Manager at George Mason Mortgage.  We thought this was very timely and hope you think so too.

Here’s Andrew’s take on the mortgage market pricing.  Enjoy!

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Happy New Year,

If there’s one thing that’s constant in the real estate industry…it’s that change is constant!

Story Time

If you remember, last year Fannie/Freddie implemented a higher interest rate on refinances, second homes, and investment properties.  The head of the FHFA, Mark Calabria, did this in an effort to raise capital and get Fannie/Freddie out of conservatorship.

The Biden administration worked hard to remove Calabria from his post and remove the pricing add-ons.  They were able to achieve this goal and for the past 6+ months…there have been no additional pricing add-ons.

The new head of FHFA, Sandra Thompson, is laser focused on expanding minority and low/moderate income home ownership.  With this goal in mind, the pricing add-ons are back for second homes and high balance conforming loans.  The high balance conforming loan pricing add-on will most affect the DC Metro real estate market.

Buyers who are looking at homes under a million with 5% or 10% down are going to be shocked when they find out that rates are 1% higher vs. one month ago.  Not only is there a pricing add-on to their loan program, but mortgage rates have surged in the New Year!  The pricing add-on is roughly 0.250% in rate!

You will see this advertised and discussed as LLPA changes.  LLPA = Loan Level Price Adjustments

How to avoid the pricing add-ons:

1. Jumbo loan programs will have lower rates for high balance loan sizes, but the guidelines are tight and the loan will not be eligible for an appraisal waiver.
2. If the qualifying income is below 100% of the Area Median Income “AMI” than the pricing add-ons do not apply to the loan.
3. AMI for the DC Metro is $127,800
4. Area Median Income Lookup Tool (fanniemae.com)

Rate Protection

George Mason Mortgage does offer a Lock While you Shop option!  A client can lock their rate for up to 45 days before they identify the property they want to purchase.  Then there’s an additional 45 days on the rate lock before they have to close on the purchase!  See attached for more details.

As always, I’m here to help!  Please feel free to call or email me anytime.  Andrew Siddon, George Mason Mortgage, Cell:  703-980-9815, email: ASiddon@gmmllc.com, NMLS: 483523.

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If you have questions for Andrew, please reach out to him.  He’s been a great resource for us. Thanks Andrew!

Thanks for visiting!