CreditFHA Mortgage Insurance ChangesTuesday, August 17th, 2010Effective October 4th, 2010, FHA will lower the upfront mortgage insurance premium (MIP) and raise the annual mortgage premium. Upfront MIP will decrease from 2.25% of the loan amount to 1 percent. The annual mortgage insurance premium, paid monthly on FHA loans over 15 years, will change from 55 basis points to 85 or 90 basis points. The reason for the change is to prop up the FHA Mutual Mortgage Insurance Fund which is “running on fumes” and needs to be gassed up. Under the current rules a $200,000 loan has a $4,500 upfront MIP and a monthly premium of $91.67. Currently the monthly MIP is computed by taking the loan balance of $200,000 multiplying by 0.0055 and dividing by 12. The good news under the new rules is that the upfront MIP will decrease by $2,500, however the monthly MIP will increase by $60 or $70; an annual increase of $720-$840 per year. It is not known at this point if borrower’s who wish to refinance an existing FHA mortgage will receive a credit towards the upfront MIP on a new mortgage. Is it better to wait or go forward now? As always, have your mortgage consultant do the math to see what best suits you. The logic of reducing upfront fees and increasing monthly fees, when there is a pressing need to increase a reserve fund, escapes me. It must be because I did not go to Harvard and have spent most of my life in the private sector. Feel free to call or email with any questions or comments. Next Week: New FHA program for borrowers with negative equity. Best, Chip Chip Allen Crestline Mortgage Bankers A Division of Universal Lending Corp Direct: 303.947.2109 Fax: 303.987.0676 Your Lender for Life! When people you care about need a mortgage, for purchase or refinance, please do not keep me a secret.
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Reverse Mortgage for Purchase?Thursday, July 8th, 2010We usually think of a reverse mortgage as a way to help people over 62 use the equity in their homes to upgrade their quality of life. But what if they want to buy a new home? Last week I spoke with a retired couple who want to downsize to a ranch style home because their tri-level home is too big and has too many stairs. The current house payment is almost $1,500 a month with over 20 years before it is paid off. Even with excellent credit and ample cash reserves, their income is not sufficient to qualify them for the loan they needed. The solution is a reverse mortgage for a purchase. Equity in their present home is estimated to be over $100,000. This will be used for the down payment and closing costs on the new home. The down payment is calculated based upon the age of the borrowers. On the new home they only need to pay property taxes and insurance. Quite a drop from the $1,500 they were paying! Many of the guidelines for a purchase reverse mortgage are the same as if a homeowner is doing a reverse mortgage on their existing residence. Reverse mortgages are only for a primary residence, as long as the borrower lives in it. The property may not be a second home or rental. Credit and income ARE NOT considered. The borrower(s) must take an approved counseling class. With the current mortgage market madness it is refreshing to provide borrowers with a mortgage that is better for them than what they originally wanted. If you have any questions or know anyone who might benefit from this, let me know. No cost or obligation to see if I can help. NEXT WEEK: Credit Card Limit cut? Chip Allen Crestline Mortgage Bankers A Division of Universal Lending Corp Direct: 303.947.2109 Fax: 303.987.0676 Your Lender for Life!
When people you care about need a mortgage, for purchase or refinance, please do not keep me a secret.
Down Payment Assistance (DPA) (Part 3 of 3)Tuesday, March 23rd, 2010In my previous 2 Blogs on DPA, I discussed and tried to dispel some of the myths surrounding down payment assistance. In addition, I highlighted some of the key factors in determining what it takes to qualify for DPA. Today, I will address who are the agencies out there who offer DPA and how doing a little research can help in deciding which program you should consider and how to find out if your lender works with that agency. If you go to HUD’s website and search for down payment assistance, you will find that there are over 30 different state, county, and city agencies out there offering DPA programs out there for first time home buyers (http://www.hud.gov/local/co/homeownership/buyingprgms.cfm). Most of them are geographic specific (city and county) with a few of them being statewide. So understanding where you believe you want to live is absolutely critical determining what agency and program you should use. Let’s say for example you want to purchase a home in Denver that happens to be in Adams County. In this scenario, you could potentially use the following three different agencies/programs (CHFA, CHAC, and Adams County). Working with a lender that knows the subtle differences between the programs is paramount and will save you a small fortune in interest payments over the life of the loan. Once of the best ALL AROUND programs is Colorado Housing and Finance Authority (CHFA). It is a statewide program that offers a multiple programs and options for first time home buyers. It serves the entire State of Colorado and never runs out of money. It has the highest income limits for first time buyers and some very accommodating credit requirements (FICO scores down to 580). They offer home buyer education (both online and class room) and the administrators to the Mortgage Credit Certificate Program (MCC) where first time buyers can “super charge” their federal tax savings by taking a 20% “interest tax credit” on their tax return. Check out CHFA’s website at www.chfainfo.com. Great programs offer by CHFA and you can find a list of approved CHFA lenders on the website as well.
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