Category Archives: Loans

Significant FHA Loan Changes in April 2012

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Over the past few years FHA has increased their premiums to cope with mounting losses to their mortgage insurance fund; starting April 1st 2012 they’re at it again. If you go into contract on or after April 1st 2012 the upfront mortgage insurance premium will increase from the current 1% to 1.75%; on a $300,000 loan that’s additional $2250.

The monthly mortgage insurance will also increase 10 basis points.  On a $300,000 loan with a 30yr fixed FHA loan with a 3.5% down payment the monthly premium will jump from 115 basis points or $287.50/month to 125 basis points or $312.50/month; an increase of $25/month.

On loans over $625,500, for all case numbers assigned on or after June 1st 2012, the monthly premium will increase 25 basis points to 140; on a $700,000 loan that’s an increase of $145.84/month.

This change will encourage more potential homebuyers to look into traditional conventional financing with 5% down and lower overall costs.

16 Ways to Lose Your Lover & Only 8 Ways to Lose Your Loan Approval

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The mortgage process takes time.  Especially if you are a buyer who put in an offer on a short sale.   Unfortunately most of the waiting times are things our of our control.

While you are in this waiting period, it is important to keep in “good behavior”.  Here are eight things you should absolutely NOT do between your date of application and your date of funding:

  1. Don’t buy a new care or trade-up to a bigger lease
  2. Don’t quit your job to change industries or start a new company
  3. Don’t switch from a salaried job to a heavily commissioned job
  4. Don’t transfer large sums of money between bank accounts
  5. Don’t forget to pay your bills — even the ones in dispute
  6. Don’t open new credit cards — even if you are getting 20% off
  7. Don’t accept a cash gift without filing the proper “gift” paperwork
  8. Don’t make random, undocumented deposits into your bank account

Some of these may be a bit unpractical.  However, some of these things can help you continue to qualify for your loan based on credit score and loan to value numbers which are checked again right before final funding.

If there is any question, it is always good to consult your lender to ensure it will not impact funding your loan!  Sometimes it is not getting approved that is hard–it’s staying approved.

 

Conforming Loan Limits Change on Oct. 1

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The maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.  The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.   Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

Under the new GSE loan limits, Monterey County would see the greatest drop in the loan limit at $246,750, followed by San Diego ($151,250), Sonoma ($141,550), Solano ($140,500), and Napa ($137,500) counties.  Under the new FHA loan limits, Monterey County would see the greatest drop in the loan limit at $246,750, followed by Merced ($201,450), Riverside ($164,650), San Bernardino ($164,650), Solano ($157,300), and San Diego ($151,250) counties.

Regionally, Marin County would be impacted the most, with more than 12 percent of home sales rendered ineligible under the lower GSE loan limit, followed by Contra Costa (11.5%), San Mateo (10.7%), San Francisco (9.9%), Monterey (8.8%), San Diego (8.2%), Sonoma (7.9%), and Santa Clara (7.8%) counties.  Under the lower FHA loan limit, San Francisco County would be impacted the most, with more than 14 percent of home sales rendered ineligible, followed by Santa Cruz (13.9%), Orange County (13.3%), Marin (13.2%), San Mateo and Ventura (both at 12.7%), Santa Clara (12.2%), San Diego (11.9%), Alameda (11.8%), Riverside (11.5%), and Contra Costa (11%) counties.

What does this mean to you and why is it important?

As a result, your once “conforming mortgage” could soon become a jumbo loan, with mortgage rates on the latter pricing about half a percentage point or higher than the former.  So instead of enjoying an interest rate of 4.00% on your home loan, you may be stuck paying 4.50% or higher for the same mortgage next week.  Conforming mortgages are eligible for purchase by Fannie Mae and Freddie Mac, making them more marketable to investors and thus cheaper for consumers.

If possible, consider bringing more money to the table to keep your loan amount at or below the new loan limit.  You may also be able to break up your loan into a first and second mortgage, keeping the first below the new conforming limit.  This should make qualifying easier and will certainly result in a lower interest rate, which could save you a lot of money over the years.

Data Source for Statistics and Limits:  CAR

Upcoming Changes to FHA Loans

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Unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the home buying market.  FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments. Here are four things you should know to help your clients now.

1. LOWER LOAN LIMITS

The conforming loan limit determines the maximum mortgage amount that FHA, Fannie Mae and Freddie Mac can buy or guarantee. If your client wants to stay under the current loan limits, then encourage them to purchase now and close by September 30th.

2.DROPS BY COUNTY

Under the new FHA loan limits, some counties will see significant drops in their loan limits. San Diego County will experience a $151,250 drop, Sonoma
County a $141,550 reduction, while Orange and Los Angeles Counties will drop by $104,250.

3.JUMBO LOANS

The current FHA loan limit is $729,750. After October 1, that limit may drop to $625,500. Mortgage loans higher than that amount will be considered
non-conforming jumbo loans, which typically have rates that are 0.875% to 1.5% higher than conforming rates, depending on the loan product, and require higher down payments.

4.MORE STRINGENT REQUIREMENTS

FHA loan requirements may allow for lower credit scores. So an applicant with a lower FICO score can still qualify for an FHA loan, even if they can’t for a conventional loan. Your clients may be able to obtain an FHA loan three years after defaulting or having a loan foreclosed.

Article by:  Sheri Negri, Realtor
www.loveforhomessac.com
Information Source:  CAR

The Right Mortgage

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If you’re considering buying a home, securing a mortgage loan is a key part of the process.  However, you’re probably wondering: how do I find the best mortgage loan for my financial needs? Generally speaking, there are two types of mortgage loans:

  • A fixed-rate mortgage offers a rate that stays the same over the life of the loan. This type of loan generally has a longer term and may be good if you plan to own your home for a long time.
  • An adjustable-rate mortgage offers an interest rate that adjusts based on market conditions (it goes higher or lower) after a specified time period. This type of loan may be good for people who need an initial lower monthly payment.

Consider the following factors to help you gain insight into the kind of home you can afford, and the type of mortgage that will best fit your financial situation:

How long do you plan to own the home?

  • Some loans have longer terms (from 15 to 40 years) that typically work well when you plan to stay in the home for a long time. Other loans have lower interest rates for a shorter term, and may be attractive if you plan to move in five to seven years.
  • CONSIDER: How many years do you plan to stay in the home? Will you move within seven years, or is this the place to “settle down?”

How much can you afford as a down payment?

  • 20% of the cost of the home is standard for the down payment on a conventional loan, but there are loans that allow you to put down as little as 5 or 10%.
  • The higher your down payment, the lower your monthly mortgage payment will be.
  • CONSIDER: How much can you realistically afford as the down payment?

What is the general price range for other homes in your neighborhood?

  • How many homes are for sale in the area? How are they priced? Do you have a list of comparable properties?
  • Are there other neighborhoods that catch your eye? How are the homes in these other areas priced?
  • CONSIDER: Which area/home features the best combination of location, quality, and cost for you.

Which of the following is more important to you?

  • To have low monthly payments?
  • To pay less over the life of the loan, even if monthly payments are high?
  • Some loans offer lower monthly mortgage payments over a long period of time. Other loans are designed to be paid in a shorter time frame, but have higher monthly payments.
  • CONSIDER: Which situation would work best for you? It helps to be clear about your financial goals and resources.

Your credit history

  • Mortgage lenders will look at your credit history and credit score to determine your track record for paying off debt.
  • CONSIDER: Do you have a good credit score? Review your credit report to find out.

Posted by:  Sheri Negri
www.loveforhomessac.com

 

Homebuyers Assistance Program

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Many direct lenders are offering down payment assistance to aid in the purchase of a new home.  Where are they getting this money you ask?  They are getting this money through grant programs via the good old federal government.

With the combination of remarkable housing prices and record low-interest rates, now is the time to buy.  If you do not have the cash for a down payment, then the Home Buyers Assistance Program may be your way to home ownership!

 

CHF Platinum Program Specifics:

  • Down payment assistance
  • For the purchase of primary residence in CA
  • New or existing properties are eligible
  • Program is NOT limited to first-time homebuyers

The program is available for the purchase of an owner-occupied single-family residence, approved condo or planned unit development located in the state of California.

This program can be used towards the homebuyers down payment and/or closing costs on a 30-year fixed-rate fully amortized FHA, VA or USDA mortgage loan.

Posted by:  Sheri Negri
www.loveforhomessac.com

Keep Your Home Program

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CalHAFA expanded eligibility criteria of $2 billion for the Keep Your Home California Program to allow more homeowners to qualify this year to avoid additional foreclosures.

This program was designed for low or moderate income levels.  The income limits for Sacramento, Placer and El Dorado Counties are $87,700.  For other counties, check the Keep Your Home California website.

The following are brief summaries of the programs available under Keep Your Home California.   To see full program descriptions, click on the program name below.

Unemployment Mortgage Assistance Program (UMA) – Intended to assist homeowners who have experienced involuntary job loss. UMA will provide temporary financial assistance in the form of a mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds can provide up to six months of benefits with a monthly benefit of up to $3,000 or 100% of the existing total monthly mortgage, whichever is less.

Mortgage Reinstatement Assistance Program (MRAP) – Intended to assist homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. MRAP will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures. These funds can provide benefits of up to $15,000 per household.

Principal Reduction Program (PRP) – Intended to assist homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value. PRP will provide capital to reduce outstanding principal balances of qualifying borrowers with negative equity. Principal balances will be reduced in an effort to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program will most likely be a prelude to loan modification. (Servicers that contribute through matching funds increase the benefit for homeowners).

Transition Assistance Program (TAP) – Intended to promote community stabilization by providing homeowners with relocation assistance when it is determined that they can no longer afford their home. TAP will be used in conjunction with a servicer-approved short sale or deed-in-lieu of foreclosure program in order to help homeowners transition into stable and affordable housing. Homeowners will be responsible to occupy and maintain the property until the home is sold or returned to the servicer as negotiated. Funds will be available on a one-time only basis.

For more information, go to the Keep Your Home California website:

http://www.keepyourhomecalifornia.org

Posted by:  Sheri Negri
www.loveforhomessac.com