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Wednesday, October 17, 2007

Bernanke Sends Mixed Signals

Well ... the pundits disagree. Leaving the rest of us wondering, "will the Fed drop the rate again???" Some say yes, some say no. Bernanke was speaking in New York yesterday and noted that there is still turmoil in the Mortgage Markets and Credit Markets. To see his comments click here: Bernanke. So we will need to wait and see if there are any further discounts to the Fed rate.

But remember, this rate will not DIRECTLY set the Mortgage Rate for lenders. The mortgage rate is more a function of the lenders ability to borrow money at a rate lower than you or me, and the mark it up to lend to us. So ... generally speaking as money gets cheaper for the bigger banks and lending institutions, they lower rates to be competitive and bring in new business.

Finally it is important to remember NONE of this effects qualifying (which is still based on your FICO and credit history) which determines IF you can get the loan at whatever rate they are offering. Also, you will still need to meet the Loan to Value / Closed Loan to Value (LTV / CLTV) ratios of the institution. Depending on your FICO, this can be anywhere from 70% CLTV to 95% CLTV. This is particularly critical when looking to REFI out of a bad Adjustable.

Go to Pink Flamingo Mortgage for more info on rates and terms.


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