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New Changes to FHA Loan Programs Start of October 4

September 7th, 2010 1:52 PM

FHA home loan programs are changing. Beginning with FHA mortgage applications initiated with case numbers issued on or after October 4, 2010, the FHA is changing its upfront and annual mortgage insurance premium structure.

Under the new terms, assuming a 30-year fixed rate FHA mortgage with at least 5 percent equity:

Upfront MIP drops to 1.000% of the amount borrowed from 2.250%
Annual MIP increases to 0.850% of the amount borrowed from 0.500%

For homeowners everywhere, this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan’s long-term costs.

Using a $100,000 mortgage as an example, upfront MIP falls to $1,000 from $2,250; monthly MIP jumps to $70.83 from $41.67. The FHA expects the change will yield an additional $300 million in premiums monthly.

The update is a huge win for the FHA whose reserve funds are self-proclaimed to be “perilously low”. The extra monies should help recapitalize and stabilize the government group.

The FHA is on pace to back 1.7 million loans this year.

For the majority of refinancing FHA homeowners and home buyers, the MIP change is neither good nor bad — the borrowing landscape will just looks a bit different. Yes, loans will cost more to carry each month, but also they’ll be less expensive to procure. It’s a trade-off and you can apply math formulas to solve for the best time to apply FHA.

It may be wise to get your FHA case number before October 4, for example, depending on your time frame in the home and the expected life of the mortgage. Or, it may be better to wait until after October 4 to apply.

If you’re unsure of how the new FHA mortgage premiums will impact your mortgage, be sure to call or email your loan officer for help.

NOTE : The FHA originally announced an implementation date of September 7. It was subsequently amended to October 4, 2010.

Posted by Jose Lopez on September 7th, 2010 1:52 PMPost a Comment (0)

Actions to Take Before Buying a Home Today

August 26th, 2010 10:16 AM

Actions to Take Before Buying a Home Today

As the housing downturn has shown, homeownership is about more than buying a home – you have to make sure you can keep the home over the long term. If you’re thinking about buying a home, these five steps can help ensure you get the right house for you and the affordable financing that helps make homeownership a long-term success:

Get Educated. A little mortgage know-how goes a long way toward ensuring you get an affordable mortgage

Before you hire an agent or find a lender, get educated on the loan process and key factors that make a loan affordable. You’ll want to know about loan types – fixed-rate mortgages, adjustable-rate mortgages, FHA and VA loans – and the full range of line items that contribute to the total cost of securing the loan, including discount points, appraisals, and real estate agent commissions.

If you would like more in-depth information, the Department of Housing and Urban Development (HUD) can put you in touch with the nearest housing counseling professional in your area. Visit www.HUD.gov for more information. You can also check with local government, neighborhood associations and neighborhood bank branch offices for information sessions on home buying as well as homebuyer-education programs.

Get Your Finances in Order. Given today’s stronger lending guidelines, it’s more important than ever to get your finances in order

First, get a copy of your credit report, which usually includes your credit score. If your credit score is low (anything below 620), take the time to improve it. If you find errors on the report, take the time to correct them. This may put your home buying plans on hold (creditors typically look for a two-year history of consistent, on-time bill payment to establish good credit), but it could result in a better loan and more affordable rates.

Establish a Budget. Before you start searching for your home, make sure you know how much home you can afford

Lenders will evaluate all your debts and take into account your full financial situation when qualifying you for a mortgage. A key factor is how much income you bring in versus how much you will pay out each month. Here’s a good guideline to check where you are:

Your housing expense (the mortgage payments on the house you are buying) should generally not exceed 28 to 33 percent of your total monthly gross income.
All revolving debt (including car payments, credit cards payments, and your mortgage payment) should not exceed 36 to 40 percent of your total monthly gross income.

It’s always helpful to create a monthly budget, itemizing all your recurring expenses, including estimated maintenance costs, taxes, utility bills, and condo or homeowners’ association dues. Then, test your budget. If you can pay all these debts and continue to add to savings, you may be ready to buy a home. If not, you may have to revise your plans.

Start Saving. Having savings in reserve helps ensure you can afford the upfront costs of homeownership

Upfront costs of homeownership include:

Down Payment – Five to twenty percent of the purchase price. Keep in mind, a lower down payment means you’ll have to qualify for a higher loan amount and pay for mortgage insurance – adding to your monthly mortgage payment.
Deposit – Two percent of the purchase price, typically. Sometimes called earnest money, a deposit shows the seller you’re serious about buying the home. If your offer is accepted, the deposit or earnest money will be applied towards the down payment. If your offer is rejected, the down payment will be returned to you.
Closing Costs – Three to five percent of the purchase price, on average. These costs include all fees required to execute the sale, including attorney fees, title insurance, appraisals, and points.

Get Pre-Approved. In today’s competitive market, home buyers should get pre-approved for a mortgage before they begin their house hunt

To be pre-approved for a loan, your lender will gather information about your job, assets, income, and debts and then determine how much financing you’re qualified to receive. If you are pre-approved, you will receive a pre-approval letter from the lender. When you’re ready to make an offer on a home, this pre-approval letter will tell the seller you’re a serious and qualified buyer. It will also give you an edge over competing buyers who are not pre-approved.

Keep in mind, pre-qualification doesn’t mean you have an approved loan. You’ll still need to apply for a loan if your offer is accepted.

Posted by Jose Lopez on August 26th, 2010 10:16 AMPost a Comment (0)

Application Fees

August 16th, 2010 3:32 PM

Why pay an application fee to get Pre-Qualified for the purchase of a house? At Great Florida Lending there is NO application Fee. Call now, all it takes is 15 minutes of your time Call 305-646-0402.

Posted by Jose Lopez on August 16th, 2010 3:32 PMPost a Comment (0)

New FHA Fees To Start In September

August 13th, 2010 4:00 PM

Todays National Avarage Rates

30 Year Loan 4.44% Rate 4.59% APR ( National Avarage )

New FHA Fees To Start In September

by Peter G. Miller
August 5th, 2010

The HUD will shortly announce new FHA mortgage requirements that will start as of September 7th for FHA loans made on or after that date.

With the passage of H.R. 5981 by both the House and the Senate, a measure expected to be quickly signed by the President, the FHA will have the authority to change both the up-front mortgage insurance premium and the annual mortgage insurance premium

The changes for most borrowers will look like this:

___ The up-front mortgage insurance premium will be REDUCED from 2.25 percent to 1.00 percent. For a $200,000 FHA loan the upfront MIP will drop from $4,500 to $2,000.

___ The annual mortgage insurance premium will be INCREASED from .55 percent to .85 to .90 basis points. For an FHA loan with a balance of $200,000 the monthly fee will change from $1,100 divided by 12 ($91.67) to as much as $1,800 divided by 12 ($150).

“A Mortgagee Letter will be forthcoming once President Obama signs the bill into law,” says FHA Commissioner David H. Stevens, ” but with today’s passage of H.R. 5981 and our expedited implementation schedule, I wanted to immediately inform the industry of our plans so the lending community can begin preparing for the operational and system changes required to implement FHA’s new mortgage insurance premium structure on all new case numbers by September 7, 2010.”

HUD has the authority under FHA Reform Act of 2010 to raise up-front premiums to as much as 2.25 percent and annual premiums to a high of 1.55 percent. These changes were made to assure that the FHA would have the authority in hand if higher premiums were needed but there was no inclination to raise fees to such levels.

Posted by Jose Lopez on August 13th, 2010 4:00 PMPost a Comment (0)

Will You Benefit From The New FHA Insurance Premiums?

August 11th, 2010 11:05 PM

As we reported last week, beginning September 7th there will be a new schedule for FHA mortgage insurance premiums made after that date. In basic terms, the upfront premium will decline from 2.25 percent to 1.0 percent and the annual fee will increase from .55 to as much as .90 percent.

All of this raises a question: If the FHA expects to raise an additional $300 million per month with the new program — and it does — are borrower costs rising by $300 million? The answer has to be yes, but the increase may be a lot less per loan than most people anticipate.

Here’s why:

To understand what’s going on let’s imagine that you get a $200,000 fixed-rate FHA loan. Let’s also say that the loan lasts seven years — which, as it happens, is a typical loan term before an FHA mortgage is paid off, refinanced or erased as part of a home sale. The loan is a 30-year mortgage at 5 percent.

Under the old schedule there would be a 2.25% fee up front — that’s $4,500 that must be paid in cash or added to the loan amount. Over a period of seven years the loan balance goes from $200,000 to $179,871. In other words, the average amount outstanding over seven years is $189,935. With a mortgage insurance premium of .55 percent per year, it means the total cost for the annual mortgage insurance premium, the MIP, is $7,312. Add the up-front fee and the annual fee over seven years and the total cost for FHA loan insurance under the current system will be $11,812.

Under the schedule for loans made on September 7th and thereafter, the up-front fee for the same loan will be $2,000. The annual MIP, .90 percent, will be $11,966 or a total for FHA financing of $13,966.

Timing

There’s no doubt that $13,966 is bigger than $11,812. The difference is $2,154 — that’s $307.71 annually for seven years or an effective additional cost of $25.64 per month.

However, one must also consider several additional matters when comparing the old premium schedule with the new one.

First, under today’s plan the big money is due up front — that’s precisely the time when buyers, especially first-time buyers, are least likely to have wads of cash and least likely to afford a loan made larger by the addition of the up-front MIP. By lowering the up-front insurance cost HUD has made the FHA home loan a lot more practical for many marginal borrowers.

Second, the insurance requirement might not last for seven years. The FHA allows borrowers to end their insurance payments after five years if the value of their loan is less than 78 percent of the property’s value.

“For mortgages with terms more than 15 years,” says HUD, “the MIP will be terminated when the Loan to Value (LTV) ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the LTV reaches 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. ”

That means monthly MIP payments for two years — about $3,400 in this example — can be lopped off borrower costs if property values rise and loan balances fall. That’s not going to happen everywhere, but where values begin to turn around you can expect a number of future FHA borrowers to enjoy lower insurance costs when compared with those who have financed under today’s formula.

Posted by Jose Lopez on August 11th, 2010 11:05 PMPost a Comment (0)

A NEW DAY!

April 10th, 2008 10:30 PM

In an industry where positive outlooks are hard to come by, Great Florida Lending continues to grow and is proud to welcome 15 new rising stars to its already strong family of Mortgage Brokers.

Great Florida Lending feels privileged to be a home and an oasis of prosperity for so many in the industry that still love financing and recognize the wealth of opportunities that lie in the midst of adversity.

Great Florida Lending continues to look towards the future with brave optimism and welcomes all those that share in this feeling.

Jose F. Lopez, CRB, CRS

Broker-President

Great Florida Lending

Posted by Jose Lopez on April 10th, 2008 10:30 PMPost a Comment (0)