Adults – 23% of Them to Buy New Homes
Polls and surveys can be very skewed or deceiving – especially when conducted online without filters. In other words 1 in 5 people who fill out an online survey who say they intend to buy a new home within the next 6 to 12 months does not science make. A recent survey conducted by Move.com did, according to reports, yield just such results. While we find this bit of news exciting we’re not getting too carried away with the validity thereof.
However, having typed that entire paragraph, let me add that this may just very well be the best time in recent history to buy a new home. There are more homes on the market which creates more suppy than demand. You only needed to go to the first day of high school economics to learn that makes prices lower. Interest rates are at an all time low and dancing in and out of the upper fours for fixed thirty loans. Additionally the first time home buyer’s tax credit has been extended to cover homes purchased through the end of November 2009. It was also raised to $8000 from the former $7500.
Sources: Huliq
The Ever Changing World of Appraisals
Appraisers have it easy. All they have to do is look at some numbers on the computer and take a few photos.
Oh, really?
Mortgage lenders rely on everything the appraiser does. Not only the originating lender but every investor who buys that loan throughout its life.
Fannie Mae has some very strict guidelines which change regularly and the appraisers are required to keep up with them just as the lender is. A few real estate agents keep up with Fannie Mae issues and all those who read my blog(s) do for sure. In fact it probably is not a bad idea to ask your agent if they read my blogs or attend any of my training – that way you’ll know they keep up with cutting edge information that can make or break your deal. (Self-serving? No, but a good point!)
Fannie Mae now requires comparable data not only on your subject property (the home you are buying) and the immediate comparables but the complete pool of available inventory. Fortunately they do not mean each individual sold home or home for sale but even just requiring this aggregated information can make a huge difference.
From the Fannie Mae Letter Announcement 08-30
(The 30th Announcement in 2008)
Can I Add a Borrower on an FHA Streamline Refinance?
As you can imagine I get all types of questions about the FHA streamline refinance. One of the most frequently asked questions is, “can I add my _________ to the refinance loan?” The answer is generally yes unless _________ the mortgage note investor has FHA overlays to prevent this.
Perhaps a more important question would be “do I want to add _______ to my FHA streamline refinance and why?”
The short answer is “yes” it is permissible to add a borrower.
If you have recently married and the other person was not on credit when you originally applied for the loan this certainly may be a reason to add the other party to your FHA streamline refinance loan liability.
The note buyer (Fannie Mae, Freddie Mac, Ginnie Mae or other huge investor) may have an overlay which requires credit to be examined even on an FHA streamline refinance even though FHA does not require it. In this case it would be dependent on the new borrower being added to also qualify on credit.
If you are in Georgia, Florida or indeed the southeast don’t hesitate to email me at ken_@_novationmortgage.com (remove the _ underscores) or telephone me or one of my team at 678-946-0100 or 866-946-0120
Does the FHA Streamline Refinance Require a Minimum Credit Score?
FHA Streamline Refinance
Most likely you have already read or heard that most lenders are requiring a minimum middle credit score of 620 or higher for *all* FHA loans. What you may not know is that FHA itself does not have a credit score requirement. What you may also not know is that FHA is not the lender – FHA is an insurance policy issued to lenders who actually loan the money.
Most FHA loans are funded by pass-through investors which could be large banks and eventually end up at one of the Government Sponsored Enterprises like Fannie Mae, Freddie Mac or Ginnie Mae. Qualifications for FHA loans now have what are referred to as “investor overlays” which require the applicant and the property to meet minimum funding guidelines. This is true for almost all FHA home loans but not necessarily the FHA streamline refinance. (Not to be confused with the FHA 203[k] streamline – call me or email me for details if necessary.)
Novation Mortgage is still able to fund FHA streamline refinance loans in Georgia and Florida with no minimum credit score requirements. To qualify for the FHA streamline refinance the home owner needs to have an existing FHA home loan, be current with their FHA mortgage payments at the time of application and be gainfully employed.
If you think you may qualify for an FHA streamline refinance or you want to know if you qualify for an FHA streamline refinance feel free to contact me directly at 678-946-0101. I can help you in Georgia and my wife can help you in Florida.
FHA Streamline 203k and Energy Efficient Combination
Many people have never heard of the FHA 203k or the Energy Efficient Mortgage. Now you are going to hear about both of them at the same time plus we are going to add streamline to FHA 203k which really puzzles most lenders and almost all loan officers.
The FHA Streamline 203k is a sized down version of the FHA 203k rehab loan. It still allows the home buyer/home owner to rehabilitate the home yet it limits the total restoration and upgrades to a total of $35,000 in costs. While most carpet/paint restorations can be done out of pocket after the home owner purchases the property the FHA 203k streamline loan is designed for repairs and upgrades to a property which keep it from being eligible for an FHA loan – such as plumbing or electrical work.
The one thing the FHA streamline 203k does not allow is a room addition. Almost everything else that will fit in the $35,000 limitation is allowable.
Now add another little known piece of the equation – the Energy Efficient upgrade loan. Now you can add up to $8000 more in upgrades and rehab! This includes energey efficient heat and air units, hot water heaters and even doors and windows. The best thing to do is to call an experienced FHA lender in your area – don’t be calling New York if you live in Alabamab or Washington if you live in Florida.
From the HUD guidelines:
Energy Efficient Mortgage may be used in conjunction with Streamline (K) ? refer to 4155.5 for EEM allowance. The cost of EEM improvements not to exceed the greater of $4,000 or 5% of the property value (not to exceed $8,000). The cost of weatherization items, not to exceed $2,000.
In Georgia and Florida call Ken and Myra Cook at 678-946-0101 or 866-946-0120 ext 101.
Waiting on a Lower Mortgage Rate?
I heard it again today after quoting a mortgage interest rate in the lowest 5′s with no discount points “We heard the government is going to offer rates at 4% and we think we’ll just wait”. (Okay, at your own peril.)
* A. The government does not set mortgage rates – at least not until the country is completely Socialized and made into an absolute Welfare State. Mortgage rates are set by supply and demand just like any other commodity, good or service.
* B. Rates are at almost the lowest point in history and hundreds of thousands of people have already taken advantage of these rates and lowered their payments by thousands of dollars per year. Meanwhile you, your friend, or your customer continue to wait on a pipe dream.
* C. Rates are holding low but it won’t last forever. Eventually the demand and supply will become imbalanced again and the rates will either slowly increase or rocket almost overnight like they did in the early eighties.
* D. Underwriting guidelines are steadily tightening. Minimum credit scores for FHA used to be non-existent and now almost every lender requires a middle score of 620 or higher.
* E. Loan to value numbers are being cut meaning even with FHA you will have to have a minimum of 15% equity to do a cash out refinance instead of the 5% it has been. Forget about Fannie Mae because even if you can get the required mortgage insurance it costs big time.
THE BOTTOM LINE IS THIS: If you need to lower your rate, purchase a new home, get some cash out for college, bills or other and you are waiting for any reason you are very likely letting your chances slip by. This is not some concocted scare tactic like you may be used to but actual facts from the daily news. I encourage you to call me directly today with no obligation and no pressure from me at all.
A Final Lender Moves FHA Minimum Score to 620
True – FHA has not had minimum score requirements. The trouble, if you call it that, is in the fact that FHA is not the lender but the insurer. All lenders have always had some sort of over-lay on FHA guidelines to make sure they are purchasing a solid security. The rare exception to this was during “the boom” which, as we all now know, resulted in massive numbers of defaults even on FHA insured mortgages.
Until today there was still at least one major mortgage buyer who would fund FHA purchases, refinances or even streamline refinances to borrowers with a middle credit score of as low as 580. This is not longer the case. Effective immediately any loan for any borrower with a middle credit score of 620 or lower must be locked by March 20th. If you have or know of anyone who fits into this category (middle credit score between 580 and 620) the must not wait and must call me today – this is not a joke or a scare tactic but a truth -at 678-946-0101 and ask for Ken Cook. I handle Georgia and my wife handles Florida.
Regardless of whether or not you are looking for an FHA refinance, an FHA purchase or even an FHA 203(k) rehab loan you will have to have a middle credit score of at least 620 beginning March 21, 2009 until the guidelines are changed again. You can always call for an update to 678-946-0101
What Is The Purpose of an FHA Streamline Refinance?
By: Ken Cook, FHA Streamline Refinance Expert (Georgia, Florida and the Southeast)
Back in the early 1980′s there were many people who owned homes with mortgages insured by FHA. If you are as old as I or older you will remember the real estate industry tanked – bad – almost as bad as we see today and in some areas it was actually worse. Interest rates shot up. We whine and complain today that interest rates are in the 5′s and 6′s yet in the 1980′s they were way up into the teens and even hit 20+ a couple of times.
During the times when the rates were very high people still bought homes. In fact my sister sat in a builder’s model and sold homes just like she did at any other time because people still had to have a place to live. So here are all of these hundreds of thousands or even millions of people with mortgage rates approaching 20% as rates for new loans began to drop. Enter the FHA Streamline Refinance.
The sole purpose of the FHA streamline refinance is to lower monthly principal and interest payments as was the need in the 1980′s and today alike.
If you have an existing FHA home loan and your rate is about .5% or higher than today’s rate you may very well be able to save a hundred or more dollars per month on your payments. In fact I am doing one right now and lowering the home owner’s rate by 1.5% and saving her literally hundreds of dollars per month on her principal and interest payments.
If you are in Georgia or Florida or one of the surrounding states and you have an existing FHA loan the streamline may be right for you. With a short phone call and a few simple calculations I can make that determination in a matter of minutes. Call me directly at 678-946-0101. My name is Ken and I will be happy to give you the truth.
Do FHA Loans Have Credit Score Requirements?
No. Yes.
FHA does not, at this time, have any credit score requirements. What most borrowers either do not realize or do know know is FHA is not the lender on FHA insured home loans. It does not matter if it is an FHA streamline refinance or an FHA home purchase or even an FHA 203(k) rehab loan. FHA is an insurance program and the funds are provided by regular lenders and sold to Fannie Mae or Freddie Mac or even Ginnie Mae.
FHA does not have credit score requirements to insure the loans but lenders have “guideline overlays” or additional underwriting stipulations on the money they lend even if it is an FHA insured loan. Since January 2009 most lenders have gone to a minimum credit score of 620 (middle of the three tri-merge scores) to issue the loan. There are just a couple of lenders who will go down to a 580 score so make sure you contact an FHA expert and FHA home loan professional for full details. In the Southeast you can contact me, especially in Georgia and Florida, at 678-946-0101.
Buy and Bail – What is it?
Until recently if you wanted to buy a new home and keep your existing home as a rental property it was fairly simple just to show a lease or rental agreement on your existing home. Unfortunately, believe it or not, people are moving from one home to another saying they are renting their existing home with absolutely no intention of ever making another payment on that home.
This practice is referred to as “Buy and Bail”. Fannie Mae, and other GSE’s, are fighting this with a simple step of saying the home buyer (buying the new home) must either qualify for both homes in their debt-to-income ratio or have a minimum of 30% equity in the residence they are leaving as a rental. Even if they do have 30% equity only 75% of the rental income can be counted towards income for the debt-to-income calculation.
There are a couple of other points that have to do with seasoning and location of property but the best thing to do, as always, is contact a true mortgage professional in your area. In Georgia I have closed over 3000 loans and either have the answer or can get it quickly. Feel free to contact me at any time at 678-946-0101 – thanks, Ken.
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Daily Rates for Qualified Buyers
Today |
Last Week |
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| 30 Year Fixed | 3.50% | 3.65% |
| 15 Year Fixed | 2.87% | 2.89% |
| 5/1 ARM | 2.66% | 2.57% |
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