HUD will be modifying their mortgage insurance for the second time this year. David H. Stevens, Assistant Secretary for the Housing/Federal Housing Commissioner, has announced new changes on FHA Upfront Mortgage Insurance Premium (UFMIP) and Annual Mortagage Insurance Premium (MIP) will be changing. These will begin with any FHA case numbers issued on or after October 4th, 2010. This change will decrease the upfront cost of a FHA loan but increase it’s long term cost.
Here’s the scoop:
UFMIP – Currently at 2.25%, the Upfront Mortgage Insurance Premium will be decreasing to 1.0%. This is a one time fee that is charged to the borrower and usually rolled into the loan amount.
MIP – The Annual Mortgage Insurance Premium is currently .55%. This premium is expected to increase to .9% in September.
What does it mean to new home buyers?
The new MIP is neither good or bad. FHA home loans will cost more to carry each month but will be less expensive to get. Let’s call it a trade-off.
If you’re thinking of buying and FHA loan is what you qualify for, I’d highly suggest that you make your move sooner than later.
If you’re looking for a mortgage in the greater Sacramento area and have questions, please contact me.
Happy Buying!
What Papers To Keep From Your Real Estate Transaction?
By · CommentsCongratulations! Your escrow has closed and you’re now in your new home. With you, a pile of paperwork from your real estate agent and from your mortgage transaction. What should you keep in a safe place?
Here’s a nice short video from Realty Times that should help you…
FHA Annual Mortage Insurance Premium May Go Up
By · CommentsFHA Annual Mortgage Insurance Premium may go up and the program that has been helping thousand of new home buyers may become more expensive if approved by the Senate.
In order to “heal” the finances of the Federal Housing Administration, FHA, the House of Representatives has just given the entity authority to increase the cap for the annual mortgage insurance premium charged to borrowers to guarantee the loan. Earlier this year, the new Upfront Mortgage Insurance Premium was raised from 1.75% to 2.25% (first of the two step chage and effective on April 9, 2010) but FHA wasn’t able to get the approval from Congress for a raise of the annual premium along with it at that time.
The intent is to increase FHA’s capital reserves without much impact on the borrower’s monthly payment since it’s paid over the live of the loan instead of at time of closing.
Again, the bill still needs to gain passage in the Senate.
Just a suggestion…get in contract if possible before it’s approved and effective. It may not be much but it could be a deal “maker or breaker” in lieu of current tight lending guidelines.
Hiring A Realtor – It Could Get Scary
By · CommentsTHIS IS ACTUALLY FUNNY…Well, not so if you’re the buyer…
I wasn’t always a Mortgage Advisor but have been in this business long enough to know how a Realtor needs to work with their clients. I really wish I knew what I know now. Most likely I would have made better decisions when choosing an agent to represent me when bought my first home. I have to say it wasn’t my best experience. But again. I didn’t know better.
I hope you enjoy this example of who NOT TO hire and laugh some in the meantime. Buying a house is one of the largest investments you’ll every make. So make sure you work with someone who will have your best interest in mind. That way you won’t “get stuck” with a house because someone was thinking about their own pockets first.
The “Loan Quality Initiative”…It’s On!
By · CommentsLending Guides and The “Loan Quality Initiative”
It’s on. Fannie Mae has put into effect their Loan Quality Initiative in order to prevent bad loans to happen. For home buyers and refinancing owners this will mean tougher times to secure a new loan. Does it sound familiar?
Fannie’s Loan Qualify Initiative took effect on July 1st of 2010 and lenders are now scanning files with even bigger and better lenses. The focus this time is on new, non-disclosed debt and lender most likely will be pulling your credit just before closing. The bank’s underwriter will be looking at 3 main things in particular, even after you get a loan approval.
- A new updated credit report will be pulled and the new numbers will be replacing the original ones from your loan application. If new debt exceeds a determined threshold, you loan could be denied
- Any changes on your FICO scores could prevent you for securing the loan. If your qualifying score (mid of three scores) has dropped below lending minimum standards, you could be subjected to a rate adjustment or your loan could be denied.
- Your credit inquiries will be checked in order to determine if you’ve been applying for more credit elsewhere. They will use this information at their discretion.
It’s important that you take care of your credit. Make sure you don’t make any changes on your credit between the time you applied for a loan and the time you hold the keys to your home or close your new loan on a refinance. In these days, a loan can be revoked right before closing and I’m sure you wouldn’t like to be the one to experience that.
Understanding Credit Scoring
By · CommentsI’m not going to tell you that good credit is vital to your financial health because most likely you already know that. Lending guidelines are currently changing and we’ve seen credit history and FICO scores requirements get tighter by the hour. It’s never too late to start working on your credit and if you’re planning on purchasing a home, the sooner the better.
I hope this video helps you understand how credit works and give you some tips on how to make the most of your scores. After all, good scores can save you thousand of dollars on your mortgage payment.
I was so happy to listen to this interview. Rates have been so low…it’s ridiculous!
What I really like is that it is very “matter-of-fact” and helpful. It talks about the amazing opportunity home owners and future home owners have to save thousand of dollars on the life of their loan and at the same time mentions how important it is to be cautious. Buying just because everyone else is buying could be a bad thing.
Enjoy!
Let’s face it. It’s getting more and more important for real estate agents to fully understand their clients’ mortgage approvals in order to save time, headache and help the purchase process go as smooth as possible. I know…this is the Mortgage Consultant job but I can assure you that if your real estate agent understands some very important basics, you’ll be much happier at the end.
With the ongoing changes on underwriting guidelines and everything that goes right along with it, such as disclosure procedures, lenders overlays and new appraisal regulations, just to mention a few, lack of understanding could translate on a dead transaction.
Here are just three that I consider important…
Appraisal Procedures
Many new consumer protection laws are now in place to prevent future problems, including appraisal regulations. Guidelines to order appraisals have changed tremendously and those guidelines have slowed down the home buying process.
Different loan programs have different appraisal ordering and policies. A real estate agent who knows those differences will be able to anticipate delays in the purchase contract.
Property Flip
A “90 day flip” happens when an investor purchases a piece of property and quickly sells for a profit (30 -90 days). The idea is to do a little work on the property and turn it around for a good chunk of cash.
Sounds good, doesn’t it? Well, many lenders will have problems lending on properties that were sold within less than 90 days. This rule is frequently changing and can very between lenders, so it’s important that your real estate agent has full knowledge about the property.
Property Type
There are so many different ones…Condos, single family residences, town homes, etc….Each one will have specific lending guidelines that can affect the credit score, down payment, mortgage insurance requirements, to name a few.
When showing property, it’s important that your real estate agent is aware of the fact that changing a property type could trigger a change on your loan approval.
The best way to avoid problems is to hire a Realtor and a Mortgage Advisor who understand the importance of great (and I don’t mean good…GREAT) communication during the process, from start to finish. Often the right hand doesn’t know what the left hand is doing and disaster happens. The process will go smoother and unwanted last minute surprises will most likely be avoided if both parties communicate and fully understand it all.
$10,000 California Tax Credit Extension
By · CommentsThe $10,000 California First Time Home Buyer Tax Credit may be extended starting May 1, 2010 until December 31, 2010.
The “Governator” proposed the adoption of a new version of the tax credit that will now apply to purchases of new AND existing homes. The California Legislature has passed the proposal and Schwarzenegger is expected to sign the bill soon.
The previous CA tax credit was limited to a total of $100 million for new home purchases and was gone in only 8 months. This time around, the credit will be limited to $200 million.
Here are the highlights:
1. The credit will apply to both new and existing homes
2. Like the previous credit, the proposed new one would be up to $10,000 to the qualifying buyer
3. $200 million in funds available…first come, first serve
4. Buyer must not be a dependent and must be purchasing a home that does not belong to a relative
What do YOU think? Do you believe extending this credit will help the housing market? I’d love to hear your opinion.
Beating Stress When Buying A Home
By · Comments
Who doesn’t get stressed when buying a home? We all do, don’t we? Because this is most likely the largest “purchase” you’ll ever make, it’s very normal to get nervous and stresses about it.
With that in mind, here are some tips on how to beat the stress when buying a home. Definitely worth trying!
- Start With The End – Imagine how it will feel when you move in…Why will it be better than where you are now? It’s very important to have your goal in front of you at all times and think about being in that home. This will help you stay focused. Having a goal in front of you at all times will give you the energy needed to achieve it and ease the frustrations.
- Trust Your Team And The Process- Most likely you’ll be often asking yourself: “Is it ever going to work out?” There’s a feeling that you’re taking a big chance when the truth is you’re giving yourself a big chance. It’s easy to panic when there’s so much to be done. It seems cloudy now but, as you move towards your goals, the path to your home will open up. Trust your team!
- Learn To Be Flexible – This is a big transaction and in the current market anything can happen. As your real estate team we strive to tie up the loose ends as quickly as possible but remember there’s not a perfect world. One perfect example is a home inspection going sideways and the need to have renegotiations at some points. So be prepared to endure some turbulences assured that your team is working hard to take you to your final destination.
- Knowledge is Power – Do you feel out of control during this important transition? The seller, your lender, the appraiser, the inspectors, they all have the power to say yes or no to your moving plans. Did they take over your life? Ask questions, communicate.. Getting educated on the entire home buying process and knowing what’s going on behind the scenes will help you ease the stress.
