After the problems we have seen over the past couple of years in the real estate, mortgage and banking industries it is not surprising we have seen massive legislative changes brought about which make it more challenging for a home-buyer to obtain a mortgage.  Some of the changes borrowers will see when they attempt to obtain a mortgage to buy a home or refinance their existing mortgage include:

• Documentation – Did you like that “no-doc” loan you did last time around?  Forget it!  This time around you may be asked to provide, in addition to items that have been standard for years such as paycheck stubs and bank statements, additional documents to prove residency, income, financial soundness or even identity.  Your employer will be impacted somewhat as well as in the past frequently a lender could get by with just a phone call to your employer to verify your employment and income.  Today however, many more verifications have to be in writing and the lender must also do a much more in-depth inquiry about your employment including asking your employer questions about your job stability and detailed income information.
• “Fresh” Documentation – If it takes longer than 30 days to close your loan then your Lender will likely ask you to provide updated bank statements on a monthly basis, as well as update other documentation as necessary so that all documentation is up to date and current at the time of closing.  The lender will also contact your employer a few days before closing to make sure your employment situation and compensation have not changed since the verification was complete.
• Whoa, Slow Down – Don’t wait until the last minute to apply for financing as the new legislation is slowing the process.  For example, it is now mandatory that no less than eight days must lapse between the time of your loan application and the closing of the loan.  Normally, this is not a problem as most loans take considerably longer, but it could be an issue if you are in a time crunch and waited too long to start the process.  In addition, even minor changes to the terms of your home purchase and/or loan could delay closings by at least three days due to requirements of the lender to update disclosures and give you a mandatory period of time to review them prior to closing.
• Tax Returns Don’t Lie – In the past lenders typically did not request a copy of your tax return unless you were self employed or had “other” income outside of employment that was necessary to count to qualify for the loan.  Today, for most loans, lenders are required not only to obtain a copy of your tax return for the past two years, but to get them directly from the IRS.  If your income and expenses on your tax return don’t match up with the information you provided on your loan application this will either delay your loan closing or get you a denial.
• Appraisal Issues – New regulations prevent your loan officer from speaking with appraisers directly in order to assure that there is no influence put on the appraiser with respect to his or her opinion of value of the home.  This has caused many lenders to turn to using national appraisal management companies (AMC’s) which sometimes hire non-local appraisers which may affect the accuracy of the appraisal.
• The silver lining – Sure, there are new regulations and it is more challenging, but interest rates are at near historic lows, so the extra effort you have to put forth will be handsomely rewarded for years to come!

If you are looking to buy a home or take advantage of the great rates and refinance you existing mortgage, you should not let the new rules scare you off.  Instead I would just suggest you be careful and prudent about selecting your lender, selecting one that has the experience, knowledge and resources to get you through the process as painlessly as possible…. I happen to know one such lender…Me  :)

St. Louis Mortgage Interest Rates – May 26, 2010 *

• 30-year fixed-rate mortgage 4.85% no points
• 15-year fixed-rate mortgage 4.25% no points
• 5/1 adjustable rate mortgage 3.75% no points
• FHA/VA 30-year fixed rate mortgage 5.75%
• Jumbo 5/1 ARM 4.125% no points
• Jumbo 15 year fixed rate mortgage 4.625%

For more information or if you have questions on mortgage rates in St. Louis you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

_{*Note- The above rates are based upon a typical sale price of $187,500 with a 20% percent down payment leaving a loan amount of $150,000 to a borrower with a 720 credit score for a loan with no discount points charged. Rates and terms will vary depending upon loan amount, home value, credit and income of borrower.}

_{This information is provided by this author and this site for informative purposes only and is not warranted or guarteed in any way.}

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