Author Archive
HUD has issued Mortgagee Letter 2010-28 changing the Upfront and Annual Mortgage Insurance Premiums effective with case numbers assigned on or after October 4, 2010 as follows:
Upfront Premiums
| Loan Type | Upfront Premium Requirement |
| Purchase & Full Credit Qualifying Refinances | 100 BPS |
| Streamline Refinances (all types) | 100 BPS |
Annual Premiums
| LTV | Annual Premiums for Terms >15 Years |
| = or <95% | 85 BPS |
| >95% | 90 BPS |
| LTV | Annual Premiums for Terms =or <15 Years |
| = or <90% | None |
| >90% | 25 BPS |
These premiums are effective with case numbers assigned on or after October 4, 2010.
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
- Image via Wikipedia
The cause for celebration over Federal Housing Administration lowering the upfront mortgage insurance premium is short lived. Concurrent to lowering the upfront fee is the increase of the monthly insurance premium fee.
Lowering the UFMIP from 2.25% to 1% will certainly decrease the amount of repayment. However, increasing the MIP from .55% to .90% (on loans with a down payment of 5% or less) will increase the cost of repayment significantly. The end result will be the FHA having more operating capital if the result is not a significant decrease in the number of sales due to borrowers not being able to qualify on debt-to-income ratios.
Currently, if you are purchasing a home at $200,000 (for example) with the FHA minimum down payment of 3.5% your base loan amount, prior to the UFMIP add back, is $193,000. Adding back the UFMIP, at the current rate of 2.25%, brings the loan amount to $197,343. The MIP cost per month, at the current rate of .55%, is $90.45 per month.
After October 4th 2010 the UFMIP will be only 1% meaning the loan amount including UFMIP will be $194,930 – a savings of $2413 on the purchase price. However with the new MIP rate of .90% the monthly MIP addition to the payment will be $130 – resulting in a payment approximately $40 per month higher. At that rate the savings on UFMIP ($1900) will be lost in about 4 years.
One plus is that, at least currently, MIP does have a tax benefit and the buyer should consult their tax preparer for detailed information on the tax benefits of a monthly mortgage insurance premium.
Related articles by Zemanta
- UPDATE 1-US FHA set to increase borrowing costs next month (reuters.com)
- Senate approves higher government mortgage fees for new loans (usatoday.com)
- Higher Government Mortgage Fees Approved By Senate (huffingtonpost.com)
- US FHA set to increase borrowing costs next month (reuters.com)
- FHA Insured Mortgages: A Disaster In The Making (businessinsider.com)
— Ken Cook NMLS ID 208452
- Image via Wikipedia
Soon will come the day in the lives of most readers when purchasing a new home will be a desire realized or a necessity placed on them by the demands of life. Even those who already own a home may be faced with the decision or necessity to refinance a current home loan. Sadly most home buyers and owners plan more for their next vacation or even a family picnic than they do an upcoming mortgage.
Mortgage planning really is a science because it is based on numbers instead of emotions. While the buying process itself may be driven by more than numbers the actual financing of that property, or even the decision to purchase with cash, is primarily a series of numeric calculations. As such there are ways for anyone to plan for their next mortgage in order to receive the best possible rate and terms available.
The four sins
Negative impacts on the applicant’s ability to borrow loans are not always of their own doing yet some are. Clearing one’s history of these three sins, if they exist, will greatly improve their likelihood of not only being approved for a home mortgage but getting the best rate and terms. Read the rest of this entry »
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
- Image via Wikipedia
The Annual Percentage Rate (APR) is one of the most misunderstood numbers there is on the mortgage documentation. Additionally it is the most easily abused and even though it is supposed to exist to protect shoppers can be so misconstrued as to actually harm the shopper. Be that as it may here are fees that must be included in the calculations for APR in the state of Georgia.
| APR FEES | |
| Processing Fee | Allowed |
| Underwriting Fee | Allowed |
| Origination Fee to Lender | Allowed |
| Discount Points to Lender | Allowed |
| Broker Fees for Services Rendered | Allowed |
| Commitment Fee | Allowed |
| Lock Fee | Allowed |
| Closing/Escrow Fee to | Allowed |
| Attorney’s Fee to | Allowed |
| Disbursement/Funding Fee | Allowed |
| Wire Transfer Fee | Allowed |
| Warehouse Fee | Allowed |
| Assignment Fee | Allowed |
| Amortization Schedule Fee | Allowed |
| Copy Fee | Allowed |
| Fax Fee | Allowed |
| Document Review Fee to Lender | Allowed |
| Courier or Express Mail Fee to | Allowed |
The APR is the total cost of the loan over the life of the loan averaged with the base interest rate. For example if you have an interest rate or 4.5% and closing costs of $5000 on a $100,000 loan the .5% APR qualified closing costs would result in an APR of 4.923% while $10,000 in APR qualified closing costs on the same loan would result in an APR of 5.333%
The way this can be abused or manipulated is by charging a higher base rate and shifting the rate commission to cover some of the closing costs. Not that this is necessarily a bad thing but it gives a hint as to how this figure can be manipulated.
Related articles by Zemanta
- Friday’s Mortgage Rates…Trending Lower (raincityguide.com)
- How loan originators are compensated and why consumers should care. (raincityguide.com)
- 36% Annual Percentage Rate Is Not Enough Says Check ‘n Go (lockergnome.com)
— Ken Cook NMLS ID 208452
- Image via Wikipedia
I can’t say it any better than my friend Jennifer Fivelsdal “Just a few years ago it was not uncommon to see a house assessed at $200,000 selling for $400,000 and this made home sellers happy. That was a market called a Seller’s Market, in other words more buyers and fewer properties. The well known rule of supply and demand dictates that a higher demand with a limited supply will result in higher prices. Today the scenario is so different. Very high inventory and few buyers makes this a Buyer’s Market. In this case buyers want to spend less and get much more for their money.”
We are very much, for almost every market, in a buyer’s market. More now than ever before many sellers are having to short sell their home or bring cash to closing to pay the difference between the sales price and the mortgage pay off. To be sure a home seller may want to have their home appraised independently. While that appraisal cannot be used by the buyer’s lender due to all sorts of rules and regulations it should still be a standard, Uniform Appraisal and the result should be within a few percentage points. If you are in the Atlanta area I can give you the names of a few Atlanta area Georgia licensed appraisers.
Related articles by Zemanta
- Home listings jump 20%, (financialpost.com)
- Saratoga Housing Market Inventory Rises Seasonally as Sales Moderate (saratogavoice.com)
- Sellers outweighing buyers in housing market (newstatesman.com)
- 4 Keys to Selling In a Buyer’s Market (entrepreneur.com)
- Still a “Buyer’s Market” in Many Neighborhoods (seattlebubble.com)
— Ken Cook NMLS ID 208452
- Image via Wikipedia
“Anyone can qualify regardless of credit”. “No application refused”. “No minimum credit score required”. The ads are still out there and mostly on Craigslist. Generally those ads are not from mortgage lenders or banks but from mortgage lead generation companies. Unlike mortgage companies lead generators are not required to be licensed, don’t offer home loan services and are not held to the strict standards of mortgage companies in advertising so they make a lot of outrageous claims hoping to get as many people to give them their information as possible.
The truth is there just aren’t any conventional home loans for people with “bad credit”. Not even FHA as is often misconstrued. FHA home loans, just like conventional home loans, actually require a relatively clean credit history although they do allow some negative reporting – even that is limited to scope and history. Read the rest of this entry »
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
- Image via Wikipedia
June 14, 2010 04:37 PM
Representative Thomas Price
U.S. House of Representatives
424 Cannon House Office Building
Washington, DC 20515-0001
Subject: Renew Critical Housing Programs: NFIP and RHS
Dear Representative Price,
Congress left for the Memorial Day recess, leaving two critical housing programs unauthorized or unfunded. On May 31, authority for the National Flood Insurance Program (NFIP) expired. Lenders have stopped accepting applications for the Section 502 rural housing program, which has exhausted its funding. Read the rest of this entry »
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
- Image by futureatlas.com via Flickr
With the number of short sales, properties being sold for much less than payoff, the question becomes more and more popular and, unfortunately, more and more necessary.
“How long after a short sale can we qualify again?” It is a question often asked and until now the answer, with the exception of lender enhancements to Fannie Mae and Freddie Mac guidelines, has been much unchanged.
With the release of FNMA’s DU 8.1 comes some huge game changers.
“DU will be updated to incorporate the policy changes specified in Announcement SEL-2010-05, Underwriting Borrowers with a Prior Preforeclosure Sale or Deed-in-Lieu of Foreclosure, regarding prior deed-in-lieu of foreclosure actions. If a deed-in-lieu of foreclosure is reported within two years of the credit report date, the loan casefile will receive a Refer with Caution/IV recommendation.”
Translated into common language that means regardless of the amount of down-payment, debt-to-income ratio or credit scores the loan application will not receive the all cherished “Approve/Eligible” from the Fannie Mae automated Desktop Underwriter. Instead these files will all be subjected to manual underwriting and will result in longer underwriting times and closer examination. Read the rest of this entry »
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
- Image via Wikipedia
Blog posts are generally best when timeless but this one should serve as a reminder to those who waited … and waited too long. For several months it has been told, reported and spread that interest rates would approach or hit another all time low while housing prices continued to be low and inventory continued to be high.
That time is now.
The truth is it is always a “good time to buy” especially when you are moving to a new city, upsizing, downsizing, or simply upgrading. The deeper truth is some times are better times to buy than others. Take the strawberry for example.
A few days ago I stopped in the local market to pick up some bread and meat and in the entrance there was a large display of bright red strawberries. It looked to be quite literally millions of them. They were loose and prepackaged in containers of various sizes all the way up to a “banana box” carton. This is the first time I have ever seen that many strawberries in that particular market.
Not only were there so many strawberries but the people were all over them. It was like a fire sale at the dollar store with bags and buggies and moms, dads and others looking over the display and taking them away swiftly. In fact there was a stock cart also filled with them sitting just a few feet away presumably to restock as needed. It looked as if it would be needed soon!
Most interesting was the price – 3 pints for $4. Now I’m not sure if that is a good price in your area but in our area it’s normally $5 for 1 pint. Obviously, even if you are really bad with the math, this is a tremendous bargain. In fact so tremendous one would imagine a lot of those packages going home will not be consumed in time and some will even go to waste.
The housing market right now is like those strawberries.
There is a huge amount of inventory and many professionals speak regularly of “shadow inventory”. It is said there are as many as a million or more homes which are simply not on the market right now because it may be more profitable to wait until the market recovers to list and sell. Maybe so. If that is accurate it only means the inventory levels will be high a little longer.
Top the overstock inventory with the very real fact that interest rates are the lowest they have been and you have a win win situation for any buyer.
I can say this about every commodity: the best time to buy is when others are having a difficult time selling. Overstocks (harvest time) and cheap money could absolutely make this the best time to buy in our lifetimes.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=b50cf6d7-7448-4b38-8707-97119cef5fe7)
— Ken Cook NMLS ID 208452
Actually this should be title “How to kill your chance of closing on time” or “How to sabotage your own home purchase or refinance”. Then again this is the short, short list of a long list of things you can do to bring your loan process to a screeching halt.
Be reminded of the number of people who put a lot of effort in your loan to get it to the closing table. In fact from my office door right now I can see four full-time people who work behind the scenes on every loan. I can see the set-up person, the processor, the compliance officer and the underwriting department supervisor. That doesn’t include your insurance company and the people who touch the policy there, the agents and all the people in their employment who work on your file, the appraiser, inspector, title office and all the people who are involved in working on your file and others. When you do not close all of the work of all of those people is for nothing. That time could have been invested in someone who doesn’t do the things we are talking about today.
Over the years I have seen a lot of reasons for people to be denied a loan after then have been pre-qualified and before they close. Everything from quitting their job to buying a new boat to something as simple as applying for a student loan and being approved. Here is the rule of thumb:
From the time you are pre-approved to the time you have your keys and paperwork in your hands plus about 90 days do not apply for any credit, quit your job, spend your saving, cash out your 401K, co-sign with someone on a loan, or anything else with your money or your credit. Think I’m kidding? I’ve seen it happen no less than two dozen times in the last few years.
Hopefully you are working with a loan officer who knows how to properly instruct you at the time of application or pre-approval and who knows how to accurately answer your questions about changes in employment, income, savings, or credit. If not call me and I’ll find one for you. I know loan officers in almost every state. Now get some popcorn and enjoy this brief video 
Related articles by Zemanta
- Mortgage Loan Rates Fall Below 5% (online.wsj.com)
- Mortgages: Blame the Building if the Mortgage Falls Through (nytimes.com)
- 9 accused in Obama loan records breach case face arraignment (seattletimes.nwsource.com)
- Home mortgages -- approved vs. cleared (zillow.com)
- June 1 Fannie Mae has lenders pull a NEW credit report prior to ordering loan documents and/or closing. (visionaryrealtynews.com)
- Loan demand to buy U.S. homes sinks post tax credit (financialpost.com)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=75a08de4-00ca-4c4b-a37e-a0f6eee5f268)
— Ken Cook NMLS ID 208452