FHA LOANS CONTINUED

The Ins & Outs of FHA Loans – Part III        

 

 Did you know that FHA does not fund loans directly?     

    

 

The Federal Housing Administration only guarantees the loan from default but does not provide the money to fund the loan, the lender does.  In order to help mitigate their losses, FHA charges two separate fees:

 

1. Up-front mortgage insurance premium (UFMIP)
2. Monthly mortgage insurance (monthly MI)   

 

             

               

The Difference Between the Two:

•         The up-front mortgage insurance premium (UFMIP)

• 1.75% of the base loan amount

-       Paid only once, at time of closing

-       Can be added to the loan amount or paid as a cost

•        The Monthly renewal mortgage insurance (monthly MI)

-       .55% of the loan amount

-       Paid monthly

-       Paid for the first 5 years of the loan

 

 

For example:  

 

The up-front mortgage insurance premium of 1.75%, for a loan amount of $300,000 would cost $5,250.  This charge can either be paid as a closing cost or financed back into the loan.     

    

With the same $300,000 loan at an interest rate of 5.00%, the monthly amortized payment would be $1,610.46. The additional .55% monthly MI premium would add $137.50 to the payment. 

FHA LOANS & REPAIR REQUIREMENTS

The Ins & Outs of FHA Loans – Part I I       

 

  What do you need to know about a property when doing an FHA transaction?       

 

 

FHA guidelines have recently changed.  Here are a few important  property requirements on FHA deals. 

 

                 

 Conditions That DO Require Repair  

 

 - Leaking or worn out roof

 - Evidence of structural problems

 - Lead-based paint

 - Poor exterior paint in homes  constructed after 1978 where the finish is otherwise unprotected

 - Inadequate access/egress from bedrooms to exterior of home  

  

 

Property Conditions that DO NOT Require Repair

 

 - Missing handrails

 - Cracked or damaged doors that are still operable

 - Cracked window glass

 - Minor plumbing leaks (i.e. leaky faucets)

 - Evidence of previous (non-active) Wood Destroying Insects (but no structural damage)   

 

 

 

MORTGAGE RATES DROP

Mortgage Interest Rates*

Rates as of Friday, 24th April, 2009:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 30-Year Fixed 4.625% 4.687% $5.14 4.875% 4.962% $5.29 15-Year Fixed 4.325% 4.432% $7.56 4.5% 4.649% $7.65 5 Year Fixed 4.875% 4.938% $4.06 5.875% 5.967% $4.90 FHA 5% 5.063% $5.37 5.5% 5.590% $5.68

*Rates are subject to change due to market fluctuations and borrower's eligibility.

 

BRIEF OUTLINE OF THE 2009 ECONOMIC STIMULUS PLAN TO BENEFIT HOME OWNERS AND BUYERS

Expansion of Home Improvement Tax Credit

---Tax credit for making energy efficient home improvements is 30% of costs of improvements to max of $1500.

 Higher Reverse Mortgage Loan Limits

---Loan limits for FHA-insured reverse mortgages increased to $625,500 for the entire country

 $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas

---Higher limit was in force for 2008 but reduced to $625,500 in 2009.  Stimulus plan restores the $729,750 limit

 First-Time Home Buyer Credit

Definitions:

Principal residence (not 2^nd home or investment)

1st Time Home-buyer:  Buyer, including buyer’s spouse,  have not owned a principal residence for last 3 years.

Income Limits: Full credits with adjusted gross income of $75,000 ($150,000 on joint return) or less.  Phased out over $95,000 and $170,000

                2008 purchases  (4-9-08 to 12-31-08)

$7500  tax credit repaid over 15 years, starting 2010

When sell, have to repay balance at sale

                2009 purchases (1-1-09 to 12-31-09)

$8,000 pure tax credit (no repayment as long as held for 3 years, if sold during 3 year term, entire amount repaid)

Tax Credit for New Construction Home Purchases

From 3/1/09-11/30/09, $10,000 State tax credit spread over 3 years for new home purchases from any Buyers.  Limited amount of funds available from CA so will probably end before expiration date

 The New Foreclosure Stability and Affordability Plan

---Mortgage remodification will help homeowners in danger of foreclosure by readjusting their interest rates down and lengthening the term of their loan by five years.  Principal remains the same.

Most homeowners in Bay Area will not be able to refinance existing loans because only applies to conforming loans ($417,000 or lower) AND the home can’t be underwater by more than 5%.  In Santa Clara County, this could help as many as 6.9%

Nationally, this can help 25% of people

 

FHA LOANS - EASE PATH TO HOME OWNERSHIP!

FHA Loans Facilitate Home Ownership The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase a home without income limitations. FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender's risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not credit-score driven, so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past. Alternatively, if a consumer does not have a traditional credit history, it is still possible to obtain financing by documenting payment histories on items such as rent and utilities. FHA loans also provide added flexibility when it comes to closing costs and the down payment. Many of the closing costs can be incorporated into the loan, and a down payment of less than 3.5% of the purchase price is required. The down payment may be obtained as a gift from a family member or through a down-payment assistance program. FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!

Mortgage Interest Rates*

Rates as of Tuesday, 31st March, 2009:

Conforming APR Payment per $1,000  Super/Conf  APR Payment per $1,000 30-Year Fixed 4.625% 4.812% $5.14 5.000% 5.213% $5.37 15-Year Fixed 4.375% 4.482% $7.59 4.625% 4.775% $7.71 5 Year Fixed 4.375% 4.436% $3.65 5.75% 5.465% $4.79 7 Year Fixed 4.75% 4.938% $3.96 6% 5.842% $5.00 FHA 5% 5.063% $5.37 5.5% 5.590% $5.68

*Rates are subject to change due to market fluctuations and borrower's eligibility.

 

MORTGAGE RATES UPDATE

STANDARD CONFORMING:          Up to $417k

SUPER CONFORMING:                   Up to $417-$625k

JUMBO CONFORMING:                  Up to $625-$729 k

TurnKey Mortgage Solutions Weekly Update

 

• Conforming Jumbo products from Fannie Mae and Freddie Mac are supposed to be delivered to the open market by April 15th.  This  means that your buyers could obtain a loan for up to $729,750 with  as little as 10% down.  Look for more  information including rates  and qualification guidelines in the coming week.
• Mortgage Insurance will become more difficult to acquire as of April 6th.   Many of the mortgage insurance companies will require a FICO  score of 720 or better in order to offer insurance for anyone putting  less than 20% down on a condo in “declining market” areas.
• Condos & townhomes are seeing an increase in restrictions when it comes to  lending.  Banks are placing “overlays” (added conditions) to existing  guidelines for Fannie Mae and Freddie Mac loans concerning owner  occupancy ratios of the complex and financial reserves/policies of  the HOA to name just a few changes.
• FHA spot approval requests are becoming more common.  Considering FHA  was not a viable financial option for much of Northern California  until recently, many condo and townhome complexes are not  currently FHA approved.  Therefore they need to receive spot  approval from FHA which can take several weeks due to a backlog  in the system.

•

Mortgage Rate Update*
Rates as of Tuesday, 31st March, 2009: 

                          Conforming       APR       Super/Conf         APR   
30-Year Fixed       4.63%          4.81%          5.00%          5.21%
15-Year Fixed       4.38%          4.48%          4.63%          4.78%
5 Year Fixed         4.38%          4.44%          5.75%          5.47%
FHA                      5%               5.06%          5.50%          5.59%
*Rates are subject to change due to market fluctuations and borrower's eligibility.

 

HOME SALES UP 2.1% IN FEB FROM JAN

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