FHA loansIs your condo FHA approved?Tuesday, May 18th, 2010The market value of condos may be further depressed by new Homeowner Association (HOA) requirements set by FHA. FHA loans are the most popular mortgage product for condos because of the combination of low down payment and easier qualifying. Other mortgages may be available for HOAs that are not FHA approved, however, they have: 1) higher rates; 2) higher down payments; 3) more stringent qualifying guidelines. Implemented in February, the HRAP/DELRAP (HUD Review and Approval Process/ Direct Endorsement Lender Review and Approval Process) program sets out new guidelines for projects to be eligible for FHA financing. Among the requirements are: * the HOA may not have 15 percent of the homeowners delinquent on HOA dues Chip Allen
Buy Now Before FHA Loans Change…And Does Anyone Want $250,000 To Buy A New Home?Thursday, February 4th, 2010In this month’s news letter we’ll tell what new changes are coming to FHA loans and the details on our contest to win $250,000 dollars towards the purchase of your dream home. For more information about the contest read below. But first…what’s going on with FHA loans? If you are a first time home buyer or even a second time home buyer and you were thinking about getting an FHA loan from HUD you might want to BUY NOW before they make it harder to get a loan. You may have noticed last week that Housing and Urban Development (HUD) announced they will be making changes to their FHA loan program. Change # 1: HUD will increase the amount of mortgage insurance required on each loan. Right now it’s at 1.75% of the loan amount. This gets rolled into the loan and you pay for it each month over the life of the loan. HUD will most likely make the change this spring to 2.25%. HUD says this will help them rebuild their insurance reserves after massive losses with mortgage defaults. Change # 2: If you have a FICO score of 580 or less you will be required to put down 10% as a down payment instead of the usual 3.5%. This will prevent some people from getting a loan. HUD says the risk is too high to loan people with a credit score less than 580 so they want the home owner to put up more money and have more skin in the game. Change # 3: Going forward HUD will reduce the amount of seller contributions from 6% to 3%. This is probably the most significant change and impacts everyone getting a loan. For cash strapped home buyers having a seller contribute says $6000 dollars on a $100,000 purchase price is a big deal. Soon buyers will only be able to accept 3% (or $3000 dollars) towards closing costs or pre-paid items. Overall not a good thing so buyers should get under contract before this happens. Bottom line FHA is still the best deal in town for a large majority of the population. There isn’t anybody else right now willing to lend you money with only 3.5% down so for that reason and that reason alone it still a good option. Above all take advantage of the 6% seller contribution rule now and get under contract with a property before the rule changes. Finally go to http://www.firsttimehomebuyerdenverco.com or http://www.taxcreditforeveryone.com for a chance to win $250,000 toward your dream home. It’s easy to win and you’ll get great information about the new tax credits and how to get $6500 or $8000 in your pocket right away. Please feel free to contact me with questions or if there is any way I can be of help at 303-522-1161 or dpolimino@fullerproperties.com Sincerely, Dan Polimino
FHA Changes Are ComingFriday, January 29th, 2010HUD announced this week several major changes for FHA loans later this year. Some of this items will not go into effect for several months but are worth noting. Overall, HUD is doing the right thing to keep themselves in business and help consumers be able to purchase homes. 1. Up-front MIP will increase to 2.25%, to be announced in a Mortgagee Letter today; this will go into effect sometime in the spring (NOT effective immediately). How this effects you: Currently up-front MIP is at 1.75% of the base loan amount. Example, on a $100,000 base loan amount, the amount that is currently added to that amount is $1750.00. This makes the total loan amount that is financed as $101,750.00. The monthly payment (assuming a 5.50% rate) would be $577.73. Under the new change the new loan amount would be $102,250.00 ($500.00 more added to the loan balance) and the new monthly payment would increase to $580.56 ($2.83 per month more). Not a huge impact on the consumer but worth noting. The benefit is significant to HUD as it allows them to re-capitalize their insurance fund (which is low due to loan losses over the past several years) and continue to insure home loans will minimal down payments which is a good thing. 2. Borrowers with credit scores less than 580 will be required to put down at least 10%; effective early summer. How this effects you: Although HUD/FHA has never required a minimum credit score, most investors have required minimum credit scores for quite some time. Most have a minimum of 620 with a few down to 600 and even 580. This is not going to impact much currently as almost no investors/lenders are doing FHA loans with this low of a credit score. However this change might cause some investors/lenders to look at this market segment more seriously because of the significant down payment of 10% possibly opening more opportunities for more borrowers with lower scores and a down payment. 3. Seller contributions to be lowered from 6% to 3%. How this effects you: This is VERY significant especially lower priced homes. Currently on a $100,000 the seller is allowed to pay up to $6,000.00 (6.0%) in closing costs and pre-paid items (taxes/insurance). This change will reduce this amount to only $3000.00 (3.0%) in this example. If your closing costs and pre-paid items happen to be$4,000.00, then you the borrower would have to pay that difference yourself ($1,000.00) due to maximum being now 3.0 percent. This means that your “funds to close” would be $1,000.00 higher than under the prior guidelines. Not a good thing on a cash strapped buyer. 4. The waiver on anti-flipping requirements is effective 02/01/10, and a preliminary memo was sent out about that on Tuesday. How this effects you: This is very good news and means that there will be a better inventory of renovated property properties to chose from for buyers. Let’s face it, there are allot of properties out there for sale but many of them are in very rough condition or in short sale situations where it is difficult for a first time buyer to either have to deal with renovations or wait for banks to approve the short sale. This new rule removes the “90 Day hold requirement” by sellers so that properties can be resold more quickly after a purchase. This will help “fix and flip” investors by reducing their hold times on properties and provide more inventory to prospective buyers. One word of caution to buyers, “Beware of properties that were purchased and marked up with little or no renovation being done”. There are specific rules that must be followed in order for these properties to be financed. Contact your qualified real estate professional for specifics. As always, feel free to use me as a resource for your specific circumstances. Andy Jorgensen Sr. Loan Originator Guild Mortgage Company 7951 E. Maplewood Ave. Suite 290 Greeenwood Village, CO 80111 Mortgage Originator License #MB100011854 303-753-9135 or 888-333-6944 office 303-753-8747 or 888-999-3594 fax 303-810-1191 cell
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