FHA, Bailout is Still a Possibility

As a result of the housing crash, private investors pulled out of the housing market.  FHA, the government mortgage insurer, helped stabilize the housing market.  Its market share increased to 25% from 3% market share during the boom. A lot of first time home buyers have turned to FHA to make home buying a possibility during the housing bust.  However, FHA's delinquency rate is still high at 8.22%, while the delinquency rate for all loans is at 5.88%.

It is hard for the low down payment market to get a loan without the help of the government.  The government helps make the availability of the capital on a large scale.  However, with mortgages getting more expensive, even with the help of FHA, home buyers may still have a difficult time afford a home of their own. And if the delinquency rate still goes up, then FHA might also need a bailout in the future.

If you're thinking of getting your new home, NOW is the time to act - before the rules get stricter and mortgage rates increase again. 

For more information on how to take advantage of the current market situation, please feel free to contact me.

SPECIAL MARKET REPORT

April 1 will not just be April Fool’s day but it will also mark the beginning of more expensive housing for new home buyers.  New home buyers will NOW only have few more days to take advantage of the cheaper housing programs set up by the government designed to assist people in fulfilling their AMERICAN DREAM of purchasing their OWN home.

Effective April 1, 2013, FHA or Federal Housing Administration will raise its annual Mortgage Insurance Premium by 10 basis points or 0.1% - on most of the mortgage it insures.  For example, a borrower has a $200,000 FHA mortgage, pays about $2,500 per year or $208 a month for mortgage insurance, after the increase, the borrower would have to pay $2,700 a year or $225 per month in mortgage insurance.

FHA will also increase the premiums on jumbo mortgages ($625,000 or more) by 5 basis points or .05% up to the maximum allowed annual mortgage insurance premium.

The premium increase does not include some streamline refinance transactions.

FHA will also once again require borrowers to continue paying the annual Mortgage Insurance Premiums for the remaining balance of their loan.  In 2001, FHA has cancelled the required MIP once the principal has reached 78% payment of the original principal balance.  However, FHA remains responsible for insuring 100% of the outstanding loan balance until the loan is fully paid.  

FHA is also set to propose an increase in down payment for loans above $625,000.  The agency will require a minimum down payment from the old 3.5 to 5 percent. 

MORTGAGE INTEREST RATES

Mortgage interest rates have hit historical lows during the country’s economic crisis and have remained so until the first few months of the year 2013, but experts believe that this may change SOON! National Association of Realtors economist Lawrence Yun predicts the rates will reach 4% during the summer and 4.5% by 2014’s first half as the US economy continues to improve. 

HURRY! If you are thinking about buying a home with FHA financing then YOU need to MOVE quickly or YOU will PAY higher down payment and an increase in monthly payment over the terms of the loan.

MORTGAGE OPTIONS

Some mortgage companies offer flexibility in mortgage rates.  You can lock a rate without submitting a property address.  This will give you more time to search for the perfect home while locking in that best rate possible.  The lock in rate is valid for 60 days.  Take note that experts predicted that interest rates are about increase.  So it’s best to lock down the current low interest rates! (You can contact me for details)

3% DOWN PAYMENT CONVENTIONAL LOAN PROGRAM

Another mortgage company is offering conventional 3% down payment program.  Mortgage insurance is less than FHA, however if the borrower wants to enjoy lower pricing then he/she must have at least a 680 credit score.  Here are the highlights of 3% Down Payment Conventional Loan Program:

·         Minimum credit score of 680 or better (Mortgage Insurance Requirement)

·         DU “Approve/Eligible”

·         Conforming Fixed Rate loan only

·         One Unit Primary Residence, includes PUD and Condo

·         3% contribution from borrowers own funds required

·         Max seller contribution = 3%

·         Gift allowed for closing costs, prepaids, only after borrower has made 3% contribution

·         Full appraisal required – no drive by, no AVM

·         Multi-family homes are not eligible for the 3% down payment conventional loan program.

HUD 184 UPDATE

On March 8, 2013, the Housing and Urban Development (HUD) released a memorandum about the suspension of Section 184 Indian Housing Loan Guarantee Program effective March 28, 2013 due to lack of availability of fund resources.  Section 184 program is a home loan product offered by HUD specifically catered to native Americans and Alaska Natives.  The program allows consumers to take on a loan with low down payment of at least 1.25% for loans under $50,000) at competitive interest rates, while cancelling the monthly mortgage insurance (no MIP).  Due to the suspension of HUD 184, former eligible borrowers and lenders will now need to look for other financing option which is going to be more expensive.

From a selling perspective, these changes can greatly impact the buyers that can afford to purchase the home and it can impact the selling price.

NOW is the best time to close that deal! Starting April 1, 2013, purchasing a new home will be more expensive! Have a chat with me if you’re planning to buy or sell your home, and I assure you I will save your hard earned money and your valuable time.