Monday, October 1, 2007

Could the Writers For Money Magazine Catch a Clue?

Do they just let anyone write for Money Magazine? I have never seen more misinformation in one article than I saw in this one today. The gloom and doom days are over, it would be nice if the media would get with it. A few months ago, it was true that each day lenders were getting rid of programs and tightening their standards. But now, lenders are coming back with the same programs they've always had. There are a few changes, the most important (and one that I'm proud to say does not affect my company) is that lenders are making it more difficult for people to commit fraud.

Here's a short list of errors in this article:

1."What's happening: Several species of exotic mortgages are headed for extinction, including the 2/28, the 3/27 and those requiring no proof of income"

Wrong. There are still loans available (purchased by Fannie Mae and Freddie Mac) that do not require a borrower to even have income or verify where their down payment is coming from. The rate today is 7.125% and requires 20% down. Additionally, there are plenty of "Stated Income" loans still out there, but now they're mostly only available to self-employed people. Which is just as well, because there's no reason for a wage earner to be unable to prove their income unless they're lying or being paid under the table.

2."You'll find lenders stingier on appraisals, more persnickety on documentation and far less likely to finance 100 percent."

Wrong. There are still a lot of 100 percent loans available, and there are only added restrictions on appraisals for people in soft markets (which Oregon is not).

3."If it's [your adjustable rate] coming due and will end up above 7 percent, consider refinancing to a fixed rate. You'll need 10 percent equity and a credit score over 660."

On what planet? Because on Earth, you can do a conventional refinance with 5% equity. If you don't have a high credit score, you can do an FHA refinance with 3% equity.

4."Home-equity loans and lines of credit - What's happening: These are generally holding at about the prime rate, now 8.21 percent if your credit score is above 680 and you can prove income. But you can't tap 100 percent of equity anymore; you'll be lucky to get 80 percent."

Wrong. Actually, the rates on these keep going down. Today I can do a rate of Prime MINUS a half. Pretty good. Additionally, 100 percents are WIDELY available. It is true that you need really good credit for these.

Be careful when seeking information -- evidently even on CNN anyone can say anything on the internet.

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