First Time Home Buyer » FHA loans

FHA Mortgage Insurance Changes

chipallen — Tue, 17 Aug 2010 14:00:06 +0000

Effective 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

Loanchip@hotmail.com

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret.

Click here to Get started searching for YOUR Colorado Dream Home.

Is your condo FHA approved?

admin — Tue, 18 May 2010 14:00:01 +0000

The 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
* one investor or entity may not own more than 10 percent of the project
* at least 50% of the project must be owner occupied
* More requirements apply. Call 1- Chip Allen below for more information.

Chip Allen
Crestline Mortgage Bankers
A Division of Universal Lending Corp
Direct: 303.947.2109
Fax: 303.987.0676
Loanchip@hotmail.com
Your Lender for Life!

Buy Now Before FHA Loans Change…And Does Anyone Want $250,000 To Buy A New Home?

admin — Thu, 04 Feb 2010 14:00:24 +0000

In 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