Posts Tagged ‘Mortgage Insurance’

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.

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Happy Halloween

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Is now a scary time to sell your home? (Excuse the pun and Happy Halloween).  No it’s not and let me tell you why.  Now is the time that you will get the most face time with potential buyers.  I held 18 open houses during the month of October and the number of open house attendees has dramatically improved over this time last year.  Also, as you know, the number of potential buyers searching for homes online is increasing every day.  What if we were in an increasing interest rate environment?  Would fewer people qualify?  Would more people be looking to buy before rates get too high?  We are….yes….and YES.   Due to the daily changing environment of the mortgage world, now is the best time to sell.  With increasing interest rates, fewer people qualify and the ones that can afford it may get “scared” away with a much higher payment.

It’s almost impossible to time the market.  All you can do is deal with the facts.  Whether you are looking to buy or sell, I would say that now is the time.  There are too many market indicators pointing us in that direction.

HomePath properties are held by Fannie Mae.  When purchasing one of their properties, you can apply for a HomePath mortgage.

The Benefits:

1)  These loans allow you to put down as little as 3% if the home is going to be used as a primary residence.  The ability to put down as little as 3% on the purchase of a new home is amazing.  As you know, when you move into a new home, there will be costs for a lot of “little” things and the ability to keep more money in your pocket is very beneficial. 

2)  No appraisal is required. Many home buyers don’t understand the value of not having an appraisal done on a property.  For example, if you are using FHA financing, the appraisal process is very thorough and if the appraisal notes items on his report such as replace damaged siding, repair rotten wood near windows,or replace smoke detectors, then these items will need to be repaired and a reinspection must be ordered to verify these repairs have been completed.  A typical cost of a FHA appraisal is $445 plus the cost of the reinspection can add up when considering your closing costs.  Not to mention the extra time involved have these tasks accomplished.

3)  Mo mortgage insurance.  I really don’t like mortgage insurance.  I understand it’s value and what it accomplishes but it is money vanishing into thin air.  Personally, I would rather know that every payment I make is going towards paying down the balance on my home.  Typically, rates on HomePath mortgages are higher than a traditional FHA loan.  However, if you take into account the mortgage insurance on a FHA loan, the payments are often very close.

HomePath financing is also available for investors looking for deals on investment properties.  Often, an investor knows that he or she will need to put down 20% when purchasing an investment property.  HomePath Financing allows you to put down only 10%.  As investors know, cash is king.

You can search for HomePath properties at www.HomePath.com .  You can search by zip code,county,etc.  I encourage you to use this website as a tool for your next home purchase.  It will help you narrow down your choices and make your life a lot easier considering all of the tools available on the web today.  Call me or email me with questions anytime.

I cannot even begin to tell you how many times I have heard the phrase “I didn’t have to do that the last time”.  The market has changed.  The economy has changed.  Laws of changed.  Verifications have changed.  TILA has changed. Documentation has changed, and so on.  If you are purchasing a home in today’s climate you need to be organized and prepared.  It is in no way a reflection on you, it is a reflection on the market.  This is not only the case for a Georgia mortgage, it is the case nationwide.  You need to be prepared to provide your loan officer with requested documentation as soon as possible.  Do not delay!  Every second counts these days.  The efficiency of closing will depend on both parties.

You can be better prepared by understanding what will be required.   An underwriter will be responsible for approving or denying your loan.  He or she will verify all of the personal and financial information that you provide in order to issue a confident decision.  The more precise your information is, the easier the process will go.  For example, where is the down payment for the purchase of your home coming from?  Is it in a bank account?  A retirement account?  A gift?  Each of these items requires different documentation. 

1)  It is always a good idea to provide three months of your bank statements to your loan officer.  These statements need to be the three most recent and all pages even if blank. 

2)  You will need to provide two years of personal tax returns.  These days, all lenders are verifying tax returns with the IRS in order to insure they are accurate and have been filed.

3)  A copy of your driver’s license. 

4)  Two years W-2’s.  Yes, you have to provide W-2’s even though your are supplying tax returns.  If you are self employed, then corporate information will be required, such as company tax returns and year to date financials.

5)  Pay stubs covering the last three months.

6)  The sales contract which is fully executed by all parties.

7)  Divorce decree, if applicable

8)  Lease on other property owned

Yes, this is a lot of information.  However, I would highly suggest using someone who you trust to walk you through the process.  It can be as easy or as hard as you and your loan officer make it.  The process requires asking the right questions at the start so it will be smooth sailing at the end.

Buying a new home can be a very stressful time.  Please do your homework, ask your friends and family for referrals, and use a qualified loan officer that will hold your hand. 

If you have any questions or concerns please don’t hesitate to call.  I will gladly walk you through the process.

FHA is Changing

Posted: January 22, 2010 in Uncategorized
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Beginning April 15, 2010, FHA loans will have a completely different complexion.  The Up Front Mortgage Insurance Premium is rising from 1.75% to 2.25%.  So, on a $150,000 loan, the borrower will need to qualify and finance another $750 into their loan amount.  Also, FHA loans will now only allow 3% seller paid closing costs and not 6%. 

I don’t like it and neither should you.  In an effort to provide a better option to the future homeowner, we are going to make an FHA loan less attractive and at the same time, the only option.