Archive for FHA News
2012 FHA Loan Limits
Posted by: | CommentsToday, HUD is commencing with the new 2012 FHA loan limit changes. Many lending and housing executives are concerned that the reduced FHA mortgage limits will have an adverse effect for borrowers in high cost regions like California, Connecticut, Colorado, Florida, Maryland, Massachusetts New Jersey, New York and Virginia. There is now doubt this will have a negative effect on property values in this area, because there will be less affordable home financing opportunities with FHA loan programs. It does not appear that Congress will be granting an extension for 2012 FHA loan limits. FHA is popular finance program that is insured by the Federal Housing Administration. Other government inspired mortgage giants Freddie Mac and Fannie Mae will implement reduced loan limits as well.
Back in 2008, in an effort to make up for the lack of bank lending, Congress temporarily increased loan limits. Raising these loan limits lead to lower interest rates, better refinancing opportunities, and allowed people living in high cost areas to avoid higher cost loans that led to the economic downturn. A recent National Association of Home Builders study found that if the limits are allowed to return to 2008 levels, millions of house would have to be financed with home loans that required higher rates and more money for down payments.
FHA mortgage limits will now limit refinance loan activity in addition to first time buyers looking to finance houses with only a 3.5% down-payment in high cost areas. Many struggling homeowners do not have enough equity to qualify for conventional refinancing, so it will be a blow for this pool of borrowers not to have access to FHA refinancing. Many of these borrowers will need mortgage help or modifications if the refinance opportunities are gone. Just how long will lenders and banks be offering mortgage relief? Nobody knows for sure, but if you are being hurt by the lower 2012 FHA loan limits, then we recommend calling and writing your local congressman.
Effects of Higher FHA Mortgage Insurance Premiums
Posted by: | CommentsThe Federal Housing Administration announced last month that new FHA borrowers will see increased rates for the annual FHA mortgage insurance premium by a quarter of a percentage point . The FHA mortgage insurance premium will rise to 1.1 or 1.15% the FHA loan amount for fixed 30-year mortgage rates and 0.25 or 0.50 for 15-year or shorter mortgage terms.
The increased insurance premium applies to FHA loans that are originated on or after April 18th 2011.
FHA said the raise in insurance premiums is only modest increase that would not influence the borrower’s ability to afford the FHA mortgage. A spokesman for the agency said, “The new changes are only a marginal increase and would have little impact on the affordability factors for most home buyers who would qualify for a new home loan.” But many mortgage industry experts have a different take. According to Josh Slemmons of the Mortgage News Post, “Borrowers who have little equity in their home need a FHA refinance, because the program allows refinancing to 96.5%.” Slemmons continued, “Many of these borrowers don’t actually save money because the higher insurance premiums can offset the lower FHA mortgage rates. The New York Times pointed out that many borrowers with less than perfect credit, may not benefit from mortgage rate refinancing, because the mortgage insurance increases their monthly housing expenses too much.
Will FHA mortgage rates continue to rise or can we expect the Fed to lower interest rates like they have done in the past?
The annual premium for 30-year mortgage was just changed in November, to 0.85 percent or 0.9 percent. Whereas previously borrowers only 0.50 percent or 0.55 percent. iServe Lending’s Al Pereida said “The higher premiums equate to a quarter-point increase in interest.” FHA indicated that the new insurance premiums would raise the cost of the average $157,000 mortgage, by about $33 a month, or $396 a year. But borrowers residing in high cost regions like California, Florida, New Jersey New York, Virginia and Washington D.C. could be affected significantly. For example a $475,000 California mortgage would see a monthly increase exceeding $100. In a struggling economy, paying $1,200 more a year could prove to be difficult for many borrowers in California. The agency requires that all borrowers of loans it insures pay the premium.
What if I already have a FHA mortgage in process? The higher insurance premiums do not apply to FHA home loans that already in exist or that is in process and registered with a direct endorsed FHA underwriter. The other FHA mortgages that will not be affected are the reverse home loans or home equity conversion loans.
The bottom line for loan applicants is that they must look at the whole picture (mortgage rate, insurance premiums and total monthly payments) and assess the benefits of refinancing or home financing with FHA. Borrowers can’t just look at a lower FHA interest rate and assume the savings. Needless to say, the next month will likely see a huge spike in loan applications volumes because many consumers will be rushing to get their FHA loan in process before HUD imposes the higher insurance premiums. The higher insurance premiums will likely have an adverse effect on the FHA streamline program as well because lower FHA rates won’t necessarily translate to lower monthly payments. If you are considering buying or refinancing with FHA loan, we recommend you act fast getting your loan in process with an approved FHA lender before the deadline passes.
FHA Mortgage Refinance Solutions
Posted by: | CommentsMortgage interest rates have dropped to record lows for three weeks in a row. Unfortunately the benefits of low home loan rates are not able to be realized by a high percentage of homeowners because they do not meet the current mortgage refinance requirements. For the most part, today borrowers need higher credit scores and more home equity. For borrowers who have the credit but not enough equity, Mortgage Refinancing Buzz recommends considering a FHA refinance loan. Many borrowers are migrating from a conventional mortgage to an FHA mortgage, because the conventional guidelines restrict rate and term refinancing between 80 and 90%. FHA loans do have a small mortgage insurance payment in addition to the mortgage payment, but FHA mortgage rates are just as low as the conventional rates.
FHA Mortgage Rates Are Prime for Mortgage Refinancing
FHA loan programs remain more flexible than conforming home loans because the conventional guidelines have been tightened significantly more for borrowers seeking low rate mortgage refinancing solutions. FHA approves mortgage refinancing of up to 97.5% loan-to-value for qualified borrowers. With FHA refinancing, borrowers must always document their income, but these days’ conventional loan programs have eliminated stated income and no income refinancing programs any way.
Top 5 Mortgage Refinance Loans in 2010
Posted by: | Comments2010 has been an interesting year for mortgage refinancing for both homeowners and lending professionals. Qualifying for a refinance loan has certainly been an easier process in years past. Since the subprime mortgage crash of 2006, the mortgage industry has transformed mortgage refinance programs to reduce risk and decrease foreclosure rates.
Mortgage refinance rates are at record lows and homeowners that do qualify can benefit from a fixed rate mortgage that will reduce their monthly payment and eliminate years of compounding interest. There is also an opportunity for millions of homeowners to escape the fear of their adjustable rate home loans. Al Pereida, the branch manager for iServe Lending in Irvine, California said, “Homeowners should not pass up these opportunities to lock in fixed rate mortgages below 5%.”
Listed below are the Top 5 Mortgage Refinance Loans in 2010:
1. FHA Refinance Loan – This is the most common refinance loan for homeowners this year, because FHA doesn’t require much equity and the credit score requirements are not as stringent as conventional lending guidelines. Low credit scores and lack of equity are the biggest obstacles for homeowners in this market.
2. VA Streamline Refinance – This is the most cost effective refinance loan available this year, but you must have VA loan eligibility. The VA refinance overlooks the lack of equity because there is no appraisal needed for the VA streamline program.
3. No Cost Mortgage Refinance – Refinancing into a low rate mortgage with no points and no fees is a great option for borrowers with good credit scores and worthy income documentation.
4. Loan Modification – This is technically not a refinance loan, but it accomplishes the same goal of achieving a lower monthly payment. Millions of distressed homeowners find themselves being rejected by lenders because they do not meet the tighter mortgage refinance guidelines.
5. Cash Out Refinance – Home equity loans have nearly vanished so the cash out refinance has remained a popular choice for home improvement financing and debt consolidation. FHA refinance loans allow 85% cash out. VA refinancing guidelines allow 90% cash out and most conventional lenders limit cash out to 80%.
Mortgage Loan Applications Surge
Posted by: | CommentsAccording to the Mortgage Bankers Association, the demand for mortgage loans increased to a seven-month high last week as consumers rushed to get federal homebuyer tax credits that ended April 30th. Home loan applications jumped 13% in the week ended April 30th to the highest level since early October, overshadowing a 2.1% drop in home refinancing demand. Total mortgage loan applications rose by a seasonally adjusted 4 %, the trade group reported. It was the third straight weekly increase in purchase applications, rising almost 24% in the month. MBA said the share of mortgage refinancing fell to 51.9% of all applications, the lowest since early July 2009.
The thirty-year mortgage rates dropped 0.06 percentage point to 5.02 %, the lowest rate since mid-March. Eligible borrowers seeking to take advantage of federal tax credits of $8,000 for first-time buyers and $6,500 for existing homeowners were required to sign contracts by last Friday and to close on their mortgage loans by June 30th. The big question now is whether the U.S. housing market has enough traction to continue recovering without government help.
In addition to the tax credit, the Federal Reserve bought more than $1.4 trillion mortgage-backed securities intended to keep home loan rates down to revive the housing market. That program ended on March 31. “All the data that we’ve seen recently point to the fact that consumers are in a better place today than they were six months ago, and because of that they will likely be more active in the housing market,” Schenk said. The difficult labor market, however, will keep the housing recovery slow, he added.
Housing demand will likely falter after the recent influx of home sales ahead of the tax credit expiration, but then mount a slow upturn, many industry experts expect. New home sales rose almost 27% in March, and sales of existing home increased by 6.8%. According to UBS economists, “The pending home sales index, based on initial contracts, will likely be boosted again in April, with some payback thereafter. “However, we believe the combination of low prices, still relatively low mortgage refinance rates and the nascent recovery in employment will support home sales later in the year.”
The latest unemployment figures will be reported on Friday. April’s rate is seen holding at 9.7% for a fourth straight month, based on a Reuters poll, after touching a more than 26-year peak over 10% last year. Homeowners have increasingly turned to the government for home financing with programs like FHA home loans. These FHA loan programs including low down-payment home loan products from FHA. The MBA said that more than one-half of all purchase applications last week were for government mortgage loans, the highest share in two decades.
Prime credit borrowers are really taking advantage of their leverage in this market as no cost mortgage refinancing has become very popular with people who have ficos that exceed the 720 range. It is important that you do the math on these no cost loans, because the interest rate is typically higher so you need to make sure it makes sense financially to payt a higher rate in an effort to eliminate closing costs.
FHA Mortgage Loan Programs Expand
Posted by: | CommentsConsumers and mortgage lenders continue to reap the benefits of FHA home loans that boast low FHA rates. The Association of Mortgage Investors announced their support for the second mortgage program announced by the Obama administration to provide a path for reduced principal through a mortgage refinancing program for homeowners who owe more on their mortgage than their house is valued at. Micah Green, an attorney who represents the Association of Mortgage Investors said, “Investors have long felt that the only way to provide homeowners further mortgage relief is to address the affordability and loss of equity issues.” Many home finance executives believe that this step is crucial for the housing market to mend itself long-term.
A few days ago, FHA announced a variety of new home purchase and refinance programs intended to help reduce the number of new home foreclosures. The FHA loan initiatives range from a forbearance plan for unemployed borrowers, to new incentives that encourage principal reductions, to a new FHA refinance option, for which lender participation is voluntary. “Importantly, there are many details of the FHA guidelines that need to be clarified from the latest FHA announcement like, how second mortgages are treated, to ensure that the homeowner’s total debt burden is not excessive,” Green said. 1st and 2nd mortgage investors must be committed to sharing the burden of providing principal reduction in order for troubled homeowners to achieve sustainable relief that will be provided by a properly sized refinanced FHA mortgage, Green says. “This program should also respect the priority of liens. Therefore, principal reductions of senior and junior liens should be carried out accordingly,” he says. FHA mortgage refinancing remains popular with lenders and brokers across the coountry, so chances are HUD will keep FHA lending around.
