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I understand that from a sub-prime loan a broker can make more of a commission from a "yield spread". Is it possible for a "conventional" loan to have a yield spread as well?
I think that brokers were motivated to sell sub-prime loan since they made more money on their commission from a "yield spread". Is it possible for a "conventional" loan to have a yield spread as well?

I think they make the same amount either way. I do hope they have or will stop giving out those sub-prime loans.

The fed is poised to drop prime today by 25bp and possibly the discount rate as well. I am curious if anyone knows how it will affect the interest rates on conventional 30 mortgages. Thanks,

There is no direct correlation between rates on 30 year mortgages and how the Fed manipulates the prime rate. A better indicator to watch is the 10 year Treasury notes.

a day in the life of a mortgage broker/loan officer trying to close FHA Deals and short sale purchase.
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I am buying a home that appraised much higher than I am actually paying. Is there a way to use the difference in the appraised value versus the selling price to lower the monthly payments? (Example: House appraised at 200K I am buying it for 150K. Can I use that 50K difference to lower my monthly mortgage payment?) I will be in a 30 yr conventional mortgage at 5.85%. I am looking to live in the home for a while, this is not investment property(buy/fix/flip). Any suggestions are most appreciated.

Probably not. if you're already a Prime borrower (meaning you have good credit), and it sounds like you are with a 5.85% 30yr fixed, the mortgage lender is not going to offer you a lower rate based on the extra equity in your home.

Borrowing against that equity with a home equity line of credit (HELOC) will also not lower your monthly payment, both because by definition it means INCREASING your debt it you take out a HELOC, as well as because HELOCs are always at a higher rate than conventional 30yr mortgages.

HELOCs do have their advantages, however, in terms of flexibility, so its worth looking into getting one for that extra $50K or so that you have in your home. You may never need to draw on it, so simply having a line does not increase your monthly debt, but it allows you to pay quickly, for example, for opportunistic situations. For when that investment property does come along!

A jumbo loan is a loan that exceeds the maximum limits set by Fannie Mae and Freddie Mac. These limits are what this two organizations are willing to spend to buy a mortgage from the mortgage originators. They usually have a higher interest rate because they are not as marketable.

i donot look good with my credit report but because of being in the paycheck to check guy so if you have nothing left you cannot make payment.

Well at http://www.justgetaloan.net we have been able to help our clients find loans to fit their particular needs despite their credit history. Feel free to contact me at 866 530 7300 ext 7305 or by email at jfreeman@justgetaloan.net for further assistance

direct result of the policies of Bill Clinton?

In 94, Clinton lowered the requirements for conventional mortgages for minorities, including, the common down payment and such trivial ideals such as being able to show the ability to repay the loan?

Why do you think this is not being reported?

http://www.ekodialog.com/Articles/mortgage_metamorphosis_secondary_market.html

Because the MSM is biased toward Liberals and people don’t really want to hear about what happened 15 years ago, they want someone to blame that is in Office NOW!

my husband and i are (hopefully) going to be first-time homeowners, so we've never done anything like this before. we have perfect credit and decent income, but it's going to take about 3 weeks for our mortgage to be approved through sunny mae, which as stricter policies than conventional mortgages. we recently saw an ad for another bank which had a really good interest rate, although not as good as the sunny mae. but it would be a decent second choice. can we apply for two loans, one that's our first choice and one that's a backup? is this crazy? or just wrong? or smart? i don't know?

I'm a Realtor with the NAR and the local Board in Syracuse (GSAR).
You can "shop" around for a mortgage. Most mortgage people won't work as hard for you if they know you're shopping around. Stick with a mortgage broker over a mortgage banker - mortgage brokers deal with more than one lending institution and can shop around to find you better rates. See what your rates are for FHA or conventional or whatever other way you might go.
Also, keep your mortgage search to a two week period, not 30 days, so it doesn't adversley affect your credit ratings (just to be safe).
First and foremost, find a good agent to work with because that's our job to lead you in the right direction.
Please email me if you have any other questions or if you need help finding a good Realtor in your area..

Let me see if I can ask this right-
If I want to buy a foreclosed property for 237K and the county tax value is at 244K, and other comparables in 2 mile radius are selling for 247k to 345K, what is an appraisal going to be based on??

could I have some 'equity' upfront based on an appraisal taking those better numbers in consideration, or will the appraisal just be to get it 'at or just over' the sales price?

I would like to lower my downpayment, and/or interest rate based on this possible 'instant' equity. ( I know that somehow this equity could help for a home equity loan or LOC, at a later time )
Does this question make sense to any
mortgage lending folks?
Thanks for you help.
am comparing the costs between conventional and VA loans (gotta save those pennies, they add up:), also the house was only vacated this last month so is habitable and appears to be in pretty good condition except for minor cosmetics and grounds cleanup.

Conventional and government loans are based on the lesser of purchase price or appraisal. If you are buying under market - great. You have instant equity. But only hard money lenders look at the higher appraisal for their loan to value calculations. So your down payment requirements will be based on your 237K purchase price.

If you have a VA option, this might be a good time to use it. Ask the lender to pay your costs and limit your out of pocket expenses. VA loans have no mortgage insurance also. And you can come back later with a HELOC if you want to cash-out the equity. Congratulations on your good buy!

I have a question. All conventional mortgage loans where the buyer has put down less then 20% as a downpayment are required to purchase PMI (Private Mortgage Insurance) which is supposed to “protect” the lender against any losses should the borrower default. In the case of an FHA loan, these are insured by the Federal Government. Given this why aren’t the lending instituitions collecting their losses from the insurance companies? Is the government not backing the FHA loans? Please help me understand why buyers must have the PMI but now the lenders are asking us for help???

Well, they ARE collecting, when PMI is in place. The PROBLEM is, with these substandard loans, the mortgage brokers were convincing people to “avoid” pmi costs, by taking TWO mortgages - the second would be for 20%, the first for 80%. So many, many of these loans, have no PMI coverage!

Plus, before the lending institutions can collect, they have to foreclose and auction off the property - and that costs money, for EACH property.

The lenders are asking for help, because of Sarbanes/Oxley - SOX. The LAW says, the lenders have to report the “value” of the loans. Well, when no one wants to buy the loan, the “value” is zero!! So that makes it look, on paper, like their assets have dropped dramatically. They can’t convert that zero into the property value, until after they foreclose and auction off the property

It’s not TRUE, in reality, that the loan has dropped to a zero value, because the PROPERTY is still worth something - it’s just no one wants to buy the mortgage on the property.

SO, the PMI doesn’t apply. The mortgage doesn’t even have to be in default! It just has to go to “not sellable”, for the lender to not be able to use it as an asset. And with all the subprime market fallout, well, no one is buying mortgages, especially the higher risk ones.

Hope that helps.