'Mortgage News' Category
Brookside Escondido – Lower Rates Mean Increased Purchasing Power
May 21st, 2010 Categories: Brookside Escondido, Escondido, Mortgage News
Great news going into the weekend. We have seen a nice drop in rates over the last week, about 0.50% across the board. This drop equates to an increase in buying power and an increase in buying options.
Increased buying power, four examples with a 30 year fixed:
- A payment of $1,565 at 5.25% equated to a loan amount of $283,400. Same payment but at 4.75% equates to a loan amount of $300,000. Loan amount increase of $16,600.
- A payment of $2,175 at 5.25% equated to a loan amount of $393,875. Same payment but at 4.75% equates to a loan amount of $417,000. Loan amount increase of $23,125.
- A payment of $3,440 at 5.375% equated to a loan amount of $614,300. Same payment but at 4.875% equates to a loan amount of $650,000. Loan amount increase of $35,700.
- A payment of $5,577 at 6.00% equated to a loan amount of $947,000. Same payment but at 5.50% equates to a loan amount of $1mil. Loan amount increase of $53,000.
Increased buying options:
Let’s say the buyer was already going to borrow $417,000 or $650,000. The reduction in interest rates would lower their payments by $127 at $417,000 and almost $200 at $650,000. This loan payment reduction might now allow buyers to look at communities with amenities such as a community pool, tot lot/playground, and common ground landscaping; amenities that many families are looking for but were unable to afford due to the $50 to $200 additional HOA fee. The lower mortgage payment now leaves room to absorb that HOA fee. This gives the buyer more properties from which to choose.
I wrote a very similar email in July of 2008. In that email, the rate decrease for conforming loans was from 6.25% to 5.875%. We are still a full percentage point lower! Please have your buyers contact me as soon as possible to see how much more they can afford at today’s rates.
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Home Affordable Mortgage & Home Affordable Foreclosure Alternative Program Facts and Stats
April 17th, 2010 Categories: Find Your Home, Homebuyer Tax Credit, Market Trends, Mortgage News, Real Estate News
HAMP program – Home Affordable Mortgage Program for loan modification. This is where the home owner must start. 80% of loan modifications fail.
HAFA program – Home Affordable Foreclosure Alternative Program refers to the short sale process expedited.
HAMP starts with a phone call from the seller/borrower requesting the loan mod through HAMP. Only 20% of these requests actually get approved.
More Interesting Stats:
3 million Hamp program packages that have been sent to clients.
1 million loan mods in process. Which leaves 800,000 short sales coming up that are currently in the pipeline.
How much does the borrower’s credit get dinged by a short sale?
There is no benefit to your credit score in doing the HAFA Program.
“Vantage Score” – a new credit bureau reporting agency that a lot of lenders are now moving toward for scoring on loans. They did a survey on 400.000 clients and they broke them down into four groups of 100,000 borrowers each.
- group one – borrowers have perfect credit, then did a short sale.
- group two – borrowers are behind on their mortgage, but all the rest of their credit was good.
- group three borrowers – are behind on all credit, but the mortgage is great
- group four borrowers – trashed every part of their credit.
• On average, those in group one had their credit score drop between 110-140 points.
• Those in category number two had their credit score drop by an average of 75 points.
• Those in category number three had their credit score drop by an average of 40 points.
• Those in category four had their credit score drop by an average of 0-20 points and in some cases their credit score went up because it made their credit better.
A Foreclosure can drop a credit score by 200-300 points.
A Borrower could possibly qualify for a new loan in 2 years with a short sale Or 4 years with a foreclosure.
Currently 3.2 million homes are in foreclosure.
10 % of all loans are currently 60 days late.
30% of all homes are upside down and the number is expected to rise to 42% by end of 2010.
HAFA is not for Freddie Mac or Fannie Mae. They will, however, have a very similar program out soon.
Purpose of the HAFA program is to standardize the process
Forms.
Requirements.
There are some more requirements coming that you may not have seen yet, where the borrower could be required to make payment through the process to qualify.
SSA 7 page agreement.
RASS is the form you use to submit your offer and the service provider will need to respond to you within 10 days. If they turn your offer down, they must provide a reason as to why they turned it down.
There are ways that they can opt out of HAFA as well if it is not in their best interest.
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A Few FHA Financing Questions and Answers
April 8th, 2010 Categories: FHA, Mortgage News
I was asked the following questions regarding FHA insured financing this past week and thought that the answers were worth sharing:
Q: Are modular homes treated in the same manner as manufactured homes?
A: Fortunately, no. Modular construction is also a factory-built home, but is treated the same as stick-built housing.
Q: Can the Upfront Mortgage Insurance Premium (UFMIP) be paid in cash or must it be financed into the loan?
A: The UFMIP must be either entirely financed into the mortgage or paid entirely in cash. Along those same lines, a seller concession may be used to pay for the UFMIP, but the concession must cover the full amount. As of 4/5/2010, the UFMIP is 2.25% of the base loan amount (purchase price minus down payment).
Speaking of seller concessions, currently there is a maximum of 6%. At some point this summer, it will be lowered to 3%.
Q: Is it acceptable to get a loan for the down payment?
A: Yes. Funds can be borrowed for the total required investment as long as satisfactory evidence is provided that the funds are fully secured by investment accounts or real property. This includes stocks, bonds, real estate (other than the property being purchased).
In addition, certain types of loans secured against deposited funds (401k, cash value of life insurance, etc) do not require consideration of repayment for qualifying purposes.
Q: Can gift funds come from an employer?
A: Yes, gift funds may come from the borrower’s employer. However, the gift donor may not be a person or entity with an interest in the sale transaction. Salary advances are considered unsecured loans and are therefore not an acceptable source of funds for closing.
Q: Are the debts of a non-purchasing spouse required to be included in the debt-to-income ratios?
A: Yes, in community property states such as California. However, the non-purchasing spouse’s credit scores are not factored into the loan decision.
Gone are the days when you could remove an unemployed spouse from the loan because they had a large car payment, but no income. Keep in mind that if the non-purchasing spouse refuses to give consent for the credit report then the loan will not be eligible for FHA insured financing.
Q: Is a borrower eligible if they have delinquent Federal debt?
A: If the borrower is presently delinquent on any Federal debt (VA-guaranteed mortgage, Title I loan, Federal student loan, SBA loan, delinquent Federal taxes), then they are not eligible for FHA insured financing until the debt is brought current, paid or otherwise satisfied.
Q: Can an FHA appraisal be transferred between lenders?
A: Yes. When a borrower has switched lenders, the first lender must transfer the FHA case number and appraisal to the second lender upon borrower request. FHA does not require that the lender name on the appraisal be changed when it is transferred to another lender.
Sometimes, a deal will fall out of escrow due to a particular lender’s overlays, i.e., tighter guidelines than actually required by FHA. This way, the buyer can switch lenders and not be forced to pay for a 2nd appraisal.
For More Information Contact Kevin Kueneke below:
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