When Is 7.99% At 1.5 Points An Awesome Mortgage?

The answer to the above subheading is easy – a 7.99% mortgage is awesome if the alternative is a 9% mortgage at a cost of 3 points.

And that is exactly what a savvy agent explained to a mutual client of ours this week.

We locked two “Non-QM” loans this week: One was a bank statement loan where we used bank statement deposits to verify income, and the other was a “CDFI” loan – or a special loan that requires no income verification at all as long as borrowers have decent credit, 20% down and a decent chunk of cash reserves.

BUT – HERE’S THE THING: Neither borrower would have agreed to lock if their savvy agents had not stepped in to give our mutual clients a reality check.

Even though we quoted with paper-thin margins to make the deals work, both clients balked at first because they were so wedded to much lower Fannie Mae rates.

The borrowers, however, did not come close to qualifying for Fannie Mae loans so the above non-QM loans were their only option (other than “hard money”).

We of course did our best to explain all that, but the borrowers were just not having it (believing we were just pushing an expensive loan for a big commission)… until the agents stepped in.

The agents of course backed up our explanation, explaining that: (1) other lenders would likely have charged more (one agent actually had just seen a much higher quote for a similar loan); (2) there are no other financing options, other than far more expensive “hard money” loans, for borrowers who can’t verify sufficient income via tax returns; and (3) these loans are just temporary financing in any case, as both buyers had plans to generate enough verifiable income to qualify for a conventional loan in the future – at which time they could refinance.

In other words, the agents reiterated our talking points, but the buyers considered the agents more objective or less biased at least, and both buyers agreed to lock and follow through with their purchases after speaking with the agents.

Most importantly though, if the agents had not stepped in with the reality checks, both deals would have died.

So, this is just a reminder that we lenders definitely need the help of our agent partners on occasion.

Rates Way Up!

Rates climbed significantly since yesterday morning for a few reasons: (1) Fed Chair Powell made comments implying that the Fed would raise rates a few more times; and (2) Continuing jobless claims declined, implying again that the economy is stronger than people realize and that more rate hikes may be on the horizon. Final Q1 GDP numbers were also relatively strong.

Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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