Rates are down! FHA and Fannie Mae competes for low down payment borrower’s business
The new year opens with mortgage rate dipping into the 3% range again. With oil price down, and home equity up, it is great news for the consumers.
Even better news came yesterday as FHA announces that they are cutting their monthly mortgage insurance significantly effective January 26th 2015.
For Loan to value over 95%, MI changes from 1.35% to 0.85%
For Loan to value 95% or less, MI changes from 1.30% to .80.
The average consumer is expected to save more than $900/year due to this cut.
The cut will take effect by the end of January, and the mortgage industry largely cheered the move, pointing out that FHA will again be able to compete with new 97 percent loan-to-value programs rolled out by Fannie Mae and Freddie Mac in December.
“This brings the FHA loan back for purchases,” says CMG Financial Sales Manager Rodrigo Ballon, “Ever since Fannie Mae brought back the 3 percent [downpayment] conventional purchase, it was a more attractive loan than FHA … we will see a huge increase of FHA loans in the marketplace.”
The U.S. Department of Housing and Urban Development issued a statement Thursday saying that 800,000 FHA mortgage holders would see savings each year, and over the coming three years 250,000 would be able to buy new homes using the program.
If you current have a FHA loan that pays more than 0.85% MI monthly, please contact me right away to discuss how this new reduced rate can benefit you. If you are a home buyer, this bit of good news should help make your new home’s monthly payment more affordable.
FHA Loan will be More Expensive (Again) in April
As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration (FHA) Mutual Mortgage Insurance Fund, FHA just announced a new premium structure for FHA-insured single family mortgage loans.
Effective April 1st, 2012, FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount (effective June 2012). Upfront premiums (UFMIP) will also increase by 0.75 percent.
In Summary, the new mortgage insurance amount will be:
Upfront Mortgage Insurance Premium: increasing from 1 % to 1.75%;
The annual premium:
– Increasing from 1.15% to 1.25% for loans under $625,000;
– Increasing from 1.15% to 1.50% for loans over $625,000.
Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.
If you are thinking about taking out a FHA loan, or refinancing your existing FHA loan, you must pull the case number prior to the above effective date. Private Mortgage Insurance may also be an option for you.
How Long Do I have to keep my Mortgage Insurance
“How long do I have to pay the monthly mortgage insurance?” I am often asked this question by clients who are thinking of getting a loan with monthly mortgage insurance payment. Here is a overview of general guideline of the length of Mortgage Insurance:
– For Conventional Loan with Private Mortgage Insurance Company: Typically after 12 month of having the loan, if the loan amount had reduced to less than 78% of the original Value, a borrower can apply to have the mortgage insurance removed. Or, if the value had increased quite a bit, they they can just refinance to get the MI removed basing on new appraised value.
– For FHA Loans: Cancellation of the FHA monthly mortgage insurance premium (MIP) is based on factors including the loan term, loan-to-value (LTV) and regulations in place when the loan is closed. For Loan Terms Longer Than 15 Yrs, MIP must have been paid for at least 5 years before they can be considered eligible for removal.
For loans closed 01/01/2001 or later MIP will be canceled when the LTV (loan to value) reaches 78.00% as follows. FHA will determine when 78% LTV has been reached based on the lesser of the sales price or appraised value at loan origination.
For additional detail on MI removal, or to inquire about the rates and terms of Mortgage with Mortgage insurance, please contact me at anytime. Keep in mind that loan programs with One Time Upfront MI, lender paid MI, and Split Premium MI are also readily available.
Market Report for Jan. 26th, 2012
Initial Jobless claims increased by 21,000 to 377,000 last week, in line with expectations. The four-week moving average of new jobless claims, a closely watched number that smoothes out volatile weekly figures, decreased last week by 2,500 to 377,500. Continuing claims increased by 88,000 to 3,554,000 in the week ended Jan. 14.
New Home Sales unexpectedly declined by 2.2% in December, capping the worst year for builders in records going back to 1963. The median price of a new house declined 12.8%, the biggest drop since February 2009, from December 2010 to $210,300.
Durable Goods Orders Rose 3% in December, more than forecast and followed an upwardly revised 4.3% gain in November. Excluding transportation, new orders increased 2.1% and excluding defense, new orders increased 3.5%. Demand picked up for machinery, metals and communications equipment. Unfilled orders for durable goods increased 1.5%, the biggest rise since March 2008 and a sign production may stay strong in coming months.
Conference Board Leading indicators rose 0.4% in December, slightly weaker than forecast. An economist at The Conference Board said “The improvement is especially pronounced before and during the 2008-2009 recession, and during the current expansion. In December, the LEI for the U.S. increased again. The gain was widespread among the leading indicators, suggesting economic conditions should improve in early 2012. However, the LEI gain in December was held back by negative contributions from the new Leading Credit Index — which indicates weak credit and financial conditions — and from consumer expectations for business and economic conditions.”
Treasuries Extend Biggest Gain in Two Weeks Amid Expected Fed Purchases Treasuries rose, extending yesterday’s rally that pushed 10-year note yields down the most in two weeks, as the Federal Reserve said it is considering increasing its bond purchases.
Fed: Benchmark Rate Will Stay Low Until ’14 in Release of Policy Forecasts, and Targets 2% Inflation, and signaled they could restart a controversial bond buying program. Eleven of 17 officials said they didn’t see rate increases until 2014 or later, while six said rate increases should come this year or next. Eleven see the federal-funds rate at 1% or less by the end of 2014. The FOMC have become a bit more pessimistic about economic growth, estimating that gross domestic product will expand between 2.2% and 2.7% this year, down from a previous forecast of 2.5% to 2.9%. Bernanke emphasizes the Fed is pursing a “highly accommodative stance.” and said “There has certainly been some encouraging news recently. At the same time we’ve had mixed results in other areas such as retail sales, and we’re seeing headwinds from Europe.” Furthermore, “Strains to the global financial system” still pose downside risks to those projections. Bernanke says that the Fed expects 6.7%-7.6% unemployment by the fourth quarter of 2014, which Governing Board members still think is too high.
Housing Help Will Run Up Against Lending Standards Both monetary and fiscal policymakers share one mutual problem: housing’s drag on the economy.
SBA Loan Changes offers Big Benefits to Small Businesses
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New Changes to SBA Loan offers Big Benefits and Refinance Options for Small Businesses |
Recently enacted changes to the SBA loan programs are putting more capital in the hands of small business owners. The 2010 Small Business Jobs Act authorizes the SBA 504 program to Temporarily allow qualifed commercial real estate and equipment refinancing without business expansion.
The Key revision to the SBA 504 program include:
- Many more small business owners now qualify to receive SBA 504 loans. With certain “tests” now eliminated, nursing or assisted-living facilities, companies that lease equipment and office suites are, amoung other business-types, now eligible for SBA 504 financing.
- Maximum SBA 504 loan size has been permanently increased from $2 million to $5 million
- The net worth for companies to be eligible for an SBA 504 loan has been increased
- The SBA now allows Refinancing of owner-occupied commercail real estate mortgages and equipment loan. Priorities are given to small business that have a loan coming due for renewal on or before December 31, 2012.
SBA 504 loan will allow financing and refinancing up to 90% of the appraised value. If you or a business you know who may benefit from these changes, please call me right away. With rates being historical low, these temporary changes can benefit many small businesses’ bottom line.
Commercial Capital Ltd., our source for commercial lending, is a direct lender for SBA loans.We process and fund SBA loans in house, in less time than most banks. Call me for detail.
Choosing the Right Lender | Local vs. National
When you are considering purchase or refinance your home, you must decide on a lending source before proceeding forward. As you begin to research lender options, knowing how to choose can be difficult. What is the difference between a local lender, mortgage lender, mortgage banker or credit union? And what do those variations mean to you as the consumer?
Working with a local lender that comes recommended from your real estate agent, friend or next door neighbor carries a lot more weight than one you randomly find online. In fact, a recent study shows that 90% of consumers trust recommendations from people they know, like and trust.
Why Work with a Local Lender:
You can look them in the eye – Sitting across from your lender while they explain the loan process is very different than trying to track someone down that’s across the country. How uneasy does it make you feel when you call to ask a question only to find out that the person you’re talking to isn’t even qualified in your state to answer that question?
They are more accessible. As your mortgage professional, It’s my duty to make sure you’re taken care of from beginning to end. I have personally attended many clients closing signing. How can a National Lender answer last-minute questions or handle any final needs of your closer when they’re half way across the country?
They are need to be licensed. A loan originator from a mortgage bank or broker now has to go through 20 hours of training, and be licensed nationally and by the state. Each originator are assigned their own unique NMLS #. Loan originator works for banks or credit union (depository institution) are not required to be licensed. Would you rather put the decision on the largest debt of your life in the hand of an untrained order taker, or a licenses professional.
Contrary to what national lenders may tell you, a local mortgage lender will be able to offer you the lowest interest rate; lowest fee’s and best customer service available. Just because they’re smaller doesn’t make them less effective.
Also keep this in mind when considering a national lender. Many mortgage companies are filled with loan sales representatives that will sell you a loan product regardless of whether or not it’s in your best interest. They are only interested in the numbers game and it has nothing to do with what numbers work best for you. They worry about their bottom line, not which loan program is right for your family. Working with a local lender ensures that they have an established reputation within the community. And if it’s not a positive one, well – you’ll find this out through word of mouth research.
Wells Fargo Exists Reverse Mortgage Market
Wells Fargo decided to exit the product “because of the unpredictable nature of today’s housing market”, stated a national sales manager in the Wells mortgage unit during interview. “It’s been hard for us to gauge home values,” he added. The reverse mortgage loan will be funded through September 30th, 2011. The bank will continue to service existing customers and those with questions can call 800-472-3209.
Peter Bell, president of the National Reverse Mortgage Lenders Association, issued a statement, saying reverse mortgages remain readily available to seniors and an “important tool to help them stay in their homes.” “The decision by Wells Fargo that it will no longer originate new reverse mortgage loans does nothing to change this,” Bell said. “The…program remains a relevant tool and the vast need for it continues.”
AND YOU CAN still point someone in the right direction when they need a Reverse Mortgage from a residential mortgage banker that you know. Call me, Lily Falzone aka Lender Lily for a full line of reverse mortgage products, insured by HUD, offered at most competitive price, and lowest closing cost. (661) 803-5594
NEW PROGRAM ALERT – Buy a home for only 0.5% Down Payment !
A special 3% down payment and/or closing cost assistance grant program is currently offered to all California home buyers.
And It’s not a second mortgage, it’s a GRANT. It’s FREE MONEY THAT NEVER NEEDS TO BE PAID BACK.
This grant is offer to home buyers who can qualify for a FHA, VA or USDA loan. It is for owner occupied property purchase, and there is an income limit for borrowers on the loan.
For example as of June 11th, 2011, the combined maximum gross income for all borrowers on the loan:
Los Angeles Cunty: $84,480
Orange Cunty:$101,40
Ventura County:$105,720
Riverside County: $84,480
The grant gives buyer 3% of the loan amount as down payment. With FHA required 3.5% down payment, the buyer would only need about 0.5% down from their own money.
Other Highlights of the program
– NOT limited to first time home buyers
– 3% grant money NEVER needs to be REPAID – free money
– 3% grant is not a second loan or lien
– Works with FHA, VA & USDA Loan program
– Owner occupied primary residence only
– No borrower reserves or assets required
– Single Family, condo and new and existing properties eligible
– No tricky equity sharing or re-capture feature like other assistance programs
Contact me for more information or to see if you can qualify for this special program.
Lily Falzone
Effective 4/11/2011, Fannie Mae Adds New Incentive to their REO Buyers
Fannie Mae is once again offering closing-cost assistance for buyers who close on a home in the mortgage giant’s real-estate owned (REO) inventory.
Buyers who put in initial offers on or after April 11, and close on the sale of a Fannie Mae HomePath property by June 30, will be eligible to receive up to 3.5 percent in closing-cost assistance. In addition, it announced that it will offer a $1,000 bonus to buyers’ agents in California and Washington whose clients close on a HomePath property by June 30.
The offer is only good for buyers who intend to occupy the home they are purchasing as their primary residence — second homes and investor properties are not eligible.
Offers submitted before May 15 have the best chance of qualifying, Fannie Mae said, as offers submitted after that “are particularly questionable for closing” by the June 30 deadline.
It’s essentially the same deal Fannie Mae offered to buyers last year. In the last three months of the year, Fannie Mae was also offering a $1,500 cash bonus to buyer’s agents on each sale of a HomePath property.
Fannie Mae pays listing agents representing its REO properties a standard commission of 2.5 percent, with a guaranteed minimum of $1,000. Buyer’s agents are paid commissions equal to 3 percent of the sales price.
In its most recent annual report to investors, Fannie Mae said it acquired 262,078 homes in 2010, up 80 percent from 2009. REO sales picked up 51 percent, to 185,744, leaving Fannie Mae with REO inventory of 162,489 homes valued at $14.9 billion at the end of the year. The company also said $212.8 billion in mortgages guaranteed by the company were delinquent by 60 days or more.
“Given the large number of seriously delinquent loans in our single-family guaranty book of business and the large current and anticipated supply of single-family homes in the market, we expect it will take years before our REO inventory approaches pre-2008 levels,” Fannie Mae warned.
A buyer who is intersted in a HomePath property must obtain a Homepath loan. We at Pacific Funding Mortgage offer Homepath loans as one of our in-house products. We process, underwrite and fund the Homepath loans in our office here in California. Contact me right away to see if you, or your buyer can take advantage of this great opportunity.
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