Danny Salas

When May You Buy Again? Bankruptcy, Foreclosure, Shortsale Timeline

FHA Pending MIP Increase in April 2012…Act NOW

The Department of Housing and Urban Development Announces additional MIP increases scheduled for 2012.

As most of you already know President Obama has already initiated a 10 basis point increase on all loans administered by Fannie Mae, Freddie Mac and the FHA. As far as FHA loans are concerned this change will be implemented by an increase of 10 basis points to the annual MIP Premium. In addition to this increase, HUD will be adding an additional 25 basis points to FHA loans that exceed the 625k loan amount for a total of a 35 basis point increase. HUD also discussed the high likely hood of adding another, yet to be determined, sum top of all of this to help shore up the depleted FHA MIP fund.

What does this mean to you?

What this all means is there will be a material increase to FHA financing, especially for loan amounts that exceed $625k (do not worry, Butte County’s FHA Loan limits remain at $400,000) and will go into effect in April of 2012. There will be a mortgagee letter released within the next couple weeks to cover all of these details.

**If you have buyers that are planning to utilize FHA financing to acquire a new home, it would be a good idea to get these fence sitter’s to consider acting on their financing needs before these changes are implemented in April 2012.**

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FHA Reminder: MI Premiums to Increase

The News

This past Valentine’s Day, HUD announced a new change for the real estate market. For FHA Loan case numbers on or after April 18, 2011 there will be an annual Mortgage Insurance Premium increase of 25 basis points. The upfront MIP will remain the same at 1%. Any case number that is uninsured by this date will also be cancelled by FHA, with some exceptions.

What This Means

Mortgage Insurance is accumulated contingent upon loans defaulting causing loss. 15 and 30 year loans for single family mortgages will have an insurance increase of a quarter of a percent (.25).  The higher the monthly costs, the lower the loan amounts and offers for buyers. However, this means a higher income is needed for buyers and it also means less for sellers.  As of right now, FHA mortgages are low down payments and therefore a prime option for families of low income, this increase is a strategy for the economy due to the National Housing Act’s MMIF. Here is a reason for the increase given 4 days after:

 

“We determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster our capital reserves and to help private capital return to the housing market…Raising the annual premium will enable FHA to increase revenues and have a positive effect on the ongoing stability of the MMI fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010…This quarter point increase in the annual MIP is a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.” – David H. Stevens, Assistant Secretary for Housing/Federal Housing Commissioner

 

→ At the same time, this move is expected to help FHA and therefore keep it from having intervention, which in a market full of tight guidelines is a good thing.

Check Your Pre Approvals

• 1.15 - 0.9 – = .25 point
• Per $100,000 x .25% = $250 divided by 12 months = $20.83 per month
• $20.83 a month using a 5% interest rate equals 3,880.87  per $100,000 less buying power on your loan amount.

 Illustrations of the Increase

 

 

 

Information From HUD

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-10ml.pdf
http://portal.hud.gov/hudportal/documents/huddoc?id=fromthedeskof021811.pdf

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203(k) Loans – Turning Potential Dreams…Into Real Ones

Fix Your Home Into Your Dream

What Are 203(k) Loans?

The Federal Housing Administration (FHA) insures loans that enable home buyers to finance 96.5% of acquisition costs PLUS the cost to renovate the home.  So, if you’re interested in buying a foreclosed property that has had the carpets removed, that doesn’t have a front door, or needs some nice fixing up, than this loan will enable you to do so.  And the escrow can close before any of the work starts!

Writing An Offer

You definitely want to write your offer to include the verbage, “seller is aware that buyer is obtaining an FHA 203(k) loan.”  This is important, as the seller, and Listing Agent, need to know that you understand that the property needs some rehabilitation attention, if it’s not included, than the seller may not take your offer seriously; as they know the property is dilapidated.

FHA’s 203(k) Loan Attention To Detail

You’ll definitely will want to get your ducks in a row, on this loan.  It’s not only important for you to have your documentation ready, but you’ll be working with a general contractor that needs to pay specific attention to details, as well.  One example is a general contractor’s insurance needs to be updated…almost always.  The renovation must start within 2 weeks of the escrow closing.  All of the work must be completed within six months.  So, if the general contractor’s insurance is set to expire in seven months, from your loan application date, you can see that this could be an issue.  Simple answers to these types of dilemmas, are exactly why you want to use a knowledgeable Mortgage Banker, like Access Real Estate Lending.

You Will Want To Be Very Organized

What You’ll Need

Click on this link, and it will take you to a list of everything you’ll need to gather, including what your general contractor will need to provide.