Posts Tagged ‘Federal Housing Administration’

United States Department of Housing and Urban ...

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Currently, FHA allows the seller to pay up to 6% in closing costs.  Yes, I have at least one conversation per day saying it is only 3%.  Guess what, it’s 6%, but that is getting ready to change.  FHA has proposed to lower it from 6% to 3% and is currently accepting public comment regarding this change.  What does this mean to you?  If a buyer has very little cash in the bank, this change may kill a few deals and it will definitely force homebuyers to save their money before applying for a mortgage.  The reason behind this change is FHA is cutting back on their risk.  The more money the borrower has in the deal, the more committed they will be.  As more information comes available, I will let you know.  If you are considering making an offer, now is the time to get approved and get the process started.

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076.  Bonus: Click to get a free, no obligation preapproval. I love to work with my readers!

 

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Beginning April 1, 2012, any buyer using FHA financing will be subject to higher mortgage insurance premiums. This will include first time buyers, repeat buyers, and anyone using the FHA Streamline Refinance program.  Click Here to get preapproved before the increase occurs.

FHA loans are very attractive to potential buyers looking to put very little money down.  Also, if the buyer has some credit issues, FHA is much more lenient.  FHA loans have two parts to the mortgage insurance premium.  First, there is an upfront mortgage insurance premium(UFMIP).  Currently, that is 1% of the loan size and will be increasing to 1.75% of your loan size.  This UFMIP is added into your loan so it is not actual cash brought to closing.  However, you will be paying interest on that money for the next 30 years.  The monthly mortgage insurance premium increase will not be as drastic and will be going from 1.15% to 1.25% for any 30 year term when a buyer chooses to put down 3.5%.

FHA will make the announcement very soon regarding the changes.  If you plan on using FHA for your next home purchase, please click here 

My Mortgage Docs to be Reviewed by an ExpertAbout the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076.  Bonus: Click to get a free, no obligation preapproval. I love to work with my readers!

As you might have heard, or read about, the Guaranty Fee for all Government Sponsored Entities (Fannie Mae and Freddie Mac for example) was increased in order to pay for the extension of unemployment benefits. This will affect all loans delivered to Fannie and Freddie beginning April 1, 2012.

While April 1st may seem far away, most loans that are closed after March 1st will be “pooled” and sold after April 1.  This increase can mean a rate increase by .125 – .250.  All lenders will be adding this increase to their rates. Some all at once and some a little at a time in order to protect themselves for any loans being pooled beginning 2nd quarter.

FHA loans will also be effected by this increase.  You should expect changes in the Upfront Mortgage Insurance Premium or Monthly Premium (or both).  As of today, HUD has not indicated when or how they will handle their side of the equation.

What does this mean for the buyer?  Get busy.  This small increase on a $150,000 loan can mean approx $9000 more over the life of the loan.  What if a customer barely qualifies

Freddie Mac

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and now we know for certain rates will increase.  Their preapproval may be null and void.  What does this mean to the agent?  Let your buyers know.  They need to make informed choices.  Spread the word and let’s make it happen.