I've been researching this extensively of late, and there is an epidemic of criminal (if not, will be made so after the fact) predatory lending practices out there, see below. I have a question of you, or Tom (loantech) or anybody who knows? What is the time lag between when a house enters an P&S agreement, a mortgage loan is approved, interest rate set, and a sale is recorded, so that it shows up in data like this?
dqnews.com
I'm wondering what the lag is given the fairly steady uptick in rates since November. For the January time frame on the three counties above, sales are down 2.0% yoy. I'm betting it will steadily get worse now, as house sales that were recorded probably reflect now ancient Dec. or even Nov mortgage terms?
John Walsh, branch manager at subprime lender First Franklin Financial in Sacramento, shows how a couple earning $46,500 - below Sacramento County's median income of $51,300 for a family of two - could qualify to buy the county's median-priced home of about $320,000.
The subprime loan Walsh has in mind requires no money down but has $10,000 in closing costs. It has a fixed interest rate of about 6.625 percent for two years. After that it adjusts every six months based on the commonly used "LIBOR" index (*) plus 4.25 percentage points.
The loan also has interest-only payments for five years, after which the loan is reamortized over the remaining 25 years and the borrower begins paying on the principal, too.
Walsh assumes the couple has a decent FICO credit score of about 660, no other monthly debt and is willing to devote 55 percent of their income toward housing, the maximum under subprime.
The couple also would face a prepayment penalty amounting to $8,300 if they ditched the loan during the first two years.
Message 21054456
(*) about 3.40% as of today, plus 4.25= 7.65%. See what their new payment will be here:
mortgage-calc.com
Answer:$ 2,270.45 a Month |
