Lower FHA Mortgage Insurance Premium

FHA has announced that it will lower its annual premium on the loans it insures from 1.35% to .85%. for loans with less than 5% down and for loans with more than 5% down, Mortgage Insurance Premium is lowered from 1.3% to .8%. With this new rule, the first-time home buyers can save about $900 a year on their mortgage payments. Same savings will be realized by existing home owners who refinanced into an FHA loan. That is significant savings over the life of the loan.

The annual Mortgage Insurance Premium is paid on top of principal, interest and insurance every month until the end of the loan. 

According to the White House, the lowered premiums will help more than 800,000 home owners save on their monthly mortgage costs and enable up to 250,000 new home buyers to purchase a home. (Source: www.zillow.blog)

Annual Savings After the Reduction in FHA Mortgage Insurance Premiums on a $175k 30-yr. Fixed Home Loan
Year	3.5% Down	5% Down
1 Year	$818	$805
5 Years	$3,932	$3,863
10 Years	$7,421	$7,276
20 Years	$12,669	$12,375
30 Years	$14,709	$14,338

Source: www.zillow.com

If you have any questions with the new FHA rule, do not hesitate to contact me.  

FHA Needs $1.7 Billion Bailout

FHA (Federal Housing Administration), provider of mortgage insurance of low down payment loans, is asking the Congress for $1.7 Billion from the Treasury to stabilize its long-term finances and cover potential losses from loans they insured from 2007 - 2009.  FHA is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

The amount is higher than the estimate since it is now insuring fewer loans than before. Additionally, Obama administration expected the bailout since April and has proposed $943 million budget for bailout fund by Sept 30, but the requested bailout was almost double the expected.

This is the first time since the agency's inception that it has required money from the government for its Mutual Mortgage Insurance Fund (MMIF). However, this bailout is so much less than the nearly $200 billion that the mortgage giants Fannie Mae and Freddie Mac required to stay in business during the housing bust.

Fannie Mae and Freddie Mac have recently posted record profits.

FHA Commissioner Carol Galante stressed that the agency does not need to pay claims at this point. It still has more than $30 billion in reserves. However, the law requires the agency to have enough reserves to pay off all claims over the next 30 years.

Big percentage of FHA losses (around $70 billion), were from loans originated from 2007 to 2009 and from its reverse programs.

For any question, please don't hesitate to contact me.

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.

Reasons Why You Should Refinance Your Mortgage Before 1st of April

If you're having thoughts of refinancing then NOW is the perfect time to apply for one! Improving housing market condition, increase in Premium Mortgage Insurance and potential mortgage rate increase are some of the factors why it would be more expensive to refinance your mortgage in the future.

1st Reason - Changes in Mortgage Insurance Premiums (MIP)

Effectve April 1, 2013, FHA will raise its annual Mortgage Insurance Premiums or MIP by 0.10% on all forward mortgages.  

The agency will 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 Mortgage Insurance Premiums or MIP once the principal has reached 78% of the original principal balance. However, FHA remains responsible for insuring 100% of the outstanding loan balance until the loan is fully paid.  Due to billions of dollars revenue loss, the automatic cancellation policy will no longer apply.

2nd Reason - Potential Mortgage Rate Increase

Mortgage Professionals say that refinancers and home buyers who have not taken advantage of the historically low rates shouldn't waste time! 

Mortgage interest rates have hit historical lows during the country's economic crisis and have remained so until the first few months of 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.

3rd Reason - Benefits of Refinancing Before Filing of Tax Deadline

One benefit of refinancing during tax season is that you can prepare the same documents for your taxes and your refinancing application.  

If you wait after April 15th, it will take about 4 to 6 weeks to get an IRS verification that you have filed your taxes because other people will also be filing their taxes on the due date.  

Home owners that refinance could see hundreds of dollars in savings each month.  They will have more disposable income to pay bills, more money to spend in shops and restaurants in their communities, or more money to save for their children's college tuition or new car.  Since there's a need to fill the jobs that will support the demand, there will be more employment opportunities that will contribute to the growh of the US economy. 

    If you are looking to list or sell your home, whether it is a condo, single family, or mutlifamily   
    home now is the time to go on the market with record low inventory levels and fewer buyer 
    concessions being offered.  It is a sellers market!!   

FHA Mortgages Are About To Get More Expensive

Federal Housing Administration will raise its annual Mortgage Insurance Premium by 10 basis points or 0.1%  on most of the mortgage it insures.  To understand it easier, let's say a borrower opting for a 30-year, fixed rate mortgage who pays 5% or more down payment will pay an annual insurance premium of 1.3% of their outstanding loan balance. While a borrower who paid less than 5% down will pay a premium of 1.35%.

FHA will also increase the premiums on jumbo mortgages ($625,000 or more) by 5 basis points or 0.05% up to the maximum allowed annual mortgage insurance premium. 

The premium increases does not include some streamline refinance transactions.

FHA will 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% of the original principal balance. However, FHA remains responsible for insuring 100% of the outstanding loan balance until the loan is fully paid. FHA estimated loss of billions of dollars in premium revenue because of the automatic cancellation policy.

FHA will also propose an increase in down payment for loans above $625,500. The agency will require a minimum down payment from 3.5 to 5 percent.  

By reinstating the old procedure of collecting premiums based on the unpaid principal balance will permit FHA to keep a significant portion of the forfeited revenue due to the automatic cancellation policy. Raising the premiums for borrowers with jumbo loans will encourage the private investors to participate in the housing finance market.

According to FHA, the changes Will further contribute to the efforts made throughout the Obama Administration’s tenure to improve risk management at FHA and protect the Mutual Mortgage Insurance Fund.  Because of these commitments, the changes made at FHA over the past four years have already added more than $20 billion in value to the  Mutual Mortgage Insurance Fund or MMI Fund. (Source:www.fha.gov)

In addition to the increase in Mortgage Insurance Premium and down payment for jumbo loans, there will be qualifying limits for each type of loan. See table below:

New Loan Limits 2013	Single-Family	Duplex	Tri-plex	Four-plex
FHA
Anchorage/Mat-su	$355,350	$454,900	$549,850	$683,350
Kenai Peninsula	$271,050	$347,000	$419,425	$521,250
HUD 184
Anchorage/Mat-su	$405,353	$518,936	$627,247	$779,525
Kenai Peninsula	$307,900	$394,176	$476,447	$592,116
Conventional
Alaska	$625,500	$800,775	$967,950	$1,202,925

*FHA Loan Limits Source: https://entp.hud.gov/idapp/html/hicost1.cfm

*HUD 184 Loan Limits Source: http://portal.hud.gov/hudportal/documents/huddoc?id=sect184maxloanlimits.pdf

* Conventional Loan Limits Source: https://www.fanniemae.com/content/announcement/ll1211.pdf;jsessionid=C1554E487D821CDEBCB135A9529EB64B.cportal-cl04

The National Association of Realtors (NAR) believes that the reinstatement of loan limits will help make mortgages more affordable and accessible to middle-class potential home buyers. NAR predicts that the new loan limits provision will help home buyers with incomes below $100,000.

For more information about the new rules of FHA, please refer to 

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2013/HUDNo.13-010.  Or if you have any questions, you may contact me.

FHA to Decrease Refinance Fees

FHA (Federal Housing Administration) will lower the mortgage insurance premiums and annual fees for borrowers who refinance their loans as part of President Obama's plan to improve the housing market.

Borrowers who refinance their existing FHA loans will pay an upfront insurance premium equal to 0.01%, the lowest allowable rate, of the mortgage amount. For example, $100 for a $100,000 loan - plus an annual fee of 0.55% (down from 1.15%).  This is effective June 11, 2012.

Qualifying borrowers must be current on an existing FHA-insured mortgage signed on or before May 31, 2009.  An estimated of 2 to 3 million borrowers will benefit from this new program.  The program doesn't require verification of income and employment, and it doesn't mandate a new appraisal of the property.  A typical borrower would save about $1,000 a year in premiums and $3,000 a year including savings from lower rates, the FHA said.

The new plan is in contrast with the new increase in upfront fee and annual fee for the new borrowers.  A borrower making a 3.5% down payment on a home purchase as of April 1 will pay a 1.75% upfront fee and a 1.25% annual fee. 

If you have any questions, don't hesitate to contact me. For more fantastic housing deals, please visit www.anchoragehomedeals.com.