New Lower FHA Premium

GREAT NEWS

for 1st Time Home Owners

and Investors

FHA has just announced new lower mortgage insurance premiums.   This is the best news for many 1st time home owners and investors that frequently seek low down payment loans.

The change may seem small to some but the simple change from 1.07% to .85% really saves a home buyer good money.

As so elegantly stated in the attached handout, a buyer can save almost $30,000 on a $200,000 mortgage over the life of the loan.  That's not chicken feed(unless your feeding one huge flock of chicken!).

Home buyers take a look at this handout.  Then call your Realtor!!!

New Lower FHA Mortgage Insurance Premium

FHA Loan Limits....Key Factor for Buyers

FHA MORTGAGES TO SHRINK IN 2014

Know Your Loan Limits For any home buyer seeking a loan down payment, the FHA Loan must be considered.  With the financial market changes, the FHA has  altered the size of loans permitted in numerous markets. Attempting to ensure home buyers, especially 1st Time Hom Buyers, the FHA establishes the maximum loan values by Market Area.  As you may know the home values in Las Vegas or California are much different the Des Moines, IA. Thus, the maximum loan value will be lower in Des Moines than in California. Though numerous areas(including Hampton Roads) saw no change in this maximum  loan value, a large number did change.   You will want to read this article from Al Clark's HomeAgain Newsletter.  It provids a quick overview of the issue. Most importantly, there is a link to the FHA site with loan limits for every market. So whether you read this blog and live outside of Hampton Roads or you will move into or out of this area, you will find the data very helpful. FHA Loan Size Cut By Half In Some Markets The size of the biggest mortgage the Federal Housing Administration (FHA) can guarantee is going to drop by as much as 50 percent in some areas of the U.S. in 2014. Homeowners living in the highest-cost areas of the country will find their FHA loans capped at $625,500, down from $729,750 in 2013. To get a larger mortgage, you'll have to turn to the jumbo mortgage market, where you'll likely pay a higher interest rate because your jumbo loan lacks a government guarantee. The National Association of Realtors? predicts the maximum FHA loan amount will fall 20 percent or more in 146 U.S. counties and 10 percent or more in 300 counties. In some counties, the maximum size FHA loan will fall by more than 50 percent. FHA's website lets you check the loan limits in your county. Be sure to select the 2014 limits if you visit the site. NAR recently wrote to HUD Secretary Shaun Donovan pleading with him to reverse FHA's decision. "While the housing market has improved in many areas of the country, the recovery remains fragile and uneven, especially in many of the areas where HUD has most severely reduced FHA loan limits," NAR's letter said. "Many borrowers in areas affected by the reductions rely on FHA-insured products and would not have qualified under the low loan-to-value and tight credit standards currently required by the private market," the letter continued. "These conditions leave the American dream of home ownership out of reach for many families. Without access to affordable low down payment financing, families are unable to purchase orrefinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis. As proposed, the turbulence these reductions will create runs the risk of reversing progress being made in the economic recovery."

FHA Loans....change coming????

                                FHA Mortgages

                 Is the Life Line for 1st Time Buyers History?

For many buyers, FHA mortgages are the least expensive way to finance a home.  The sole exception are military home buyers, past or present service people, who have the advantage of 0 down VA financing available.  Still the 3.5% down payment for FHA loans is much easier to save up than the 10% and very often 20% down payment required for Conventional financing.  Thus, there popularity with young and less well financed buyers.

I share the newsletter article from Al Clark as I know you will heare the news that FHA loan size are being cut.  You may not know this is important to you but it is.   If know that the loan limits set by FHA determines the maximum loan that FHA will insure, then you know a smaller loan value in a high price market could mean you can NOT QUALIFY for this low down payment load if your LOAN VALUE IS TOO HIGH.

But don't be alarmed!!!  In Hampton Roads, for example, there is no change to the loan limit from 2012/2013.  Thus, business as normal.  If you are reading this blog from outside Hampton Roads, you will want to contact your mortgage officer.  He or she will
know what the limit in your market is and whether there has been any change.

Knowing what your options are prior to starting the home search in Spring 2014, it a very smart move.  Should you be actively looking now, make the call today to see if you are impacted!

Happy New Year!!!

FHA MORTGAGES TO SHRINK IN 2014 FHA Loan Size Cut By Half In Some Markets The size of the biggest mortgage the Federal Housing Administration (FHA) can guarantee is going to drop by as much as 50 percent in some areas of the U.S. in 2014. Homeowners living in the highest-cost areas of the country will find their FHA loans capped at $625,500, down from $729,750 in 2013. To get a larger mortgage, you'll have to turn to the jumbo mortgage market, where you'll likely pay a higher interest rate because your jumbo loan lacks a government guarantee. The National Association of Realtors? predicts the maximum FHA loan amount will fall 20 percent or more in 146 U.S. counties and 10 percent or more in 300 counties. In some counties, the maximum size FHA loan will fall by more than 50 percent. FHA's website lets you check the loan limits in your county. Be sure to select the 2014 limits if you visit the site. NAR recently wrote to HUD Secretary Shaun Donovan pleading with him to reverse FHA's decision. "While the housing market has improved in many areas of the country, the recovery remains fragile and uneven, especially in many of the areas where HUD has most severely reduced FHA loan limits," NAR's letter said. "Many borrowers in areas affected by the reductions rely on FHA-insured products and would not have qualified under the low loan-to-value and tight credit standards currently required by the private market," the letter continued. "These conditions leave the American dream of home ownership out of reach for many families. Without access to affordable low down payment financing, families are unable to purchase orrefinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis. As proposed, the turbulence these reductions will create runs the risk of reversing progress being made in the economic recovery."

How To Find a Mortgage

HOW TO PICK OUT A MORTGAGE???

 Make a note to self:    Concentrate on the Mortgage Officer!!!

After hitting record lows of 3.94% with 0.8 points the week of October 3, rates rose and have been hovering .25% to .375% higher than that.

A primary reason rates rose is market optimism about Eurozone leaders acting more forcefully to contain problems with insolvent member nations like Greece. Eurozone issues are also a big reason rates got so low. Here's why:

If one or more Eurozone nations defaulted on their debts, European and U.S. banks would both suffer and it could lead to market turmoil on the level we saw in 2008. These concerns have driven global investors into safer bets like U.S. mortgage bonds, and rates fall when bond prices rise on this buying. This extreme volatility won’t stop as the Eurozone crisis plays out in the coming weeks and months. Rates trade in realtime and react to each little development. This is why it's rates will likely touch early-October lows again. But these lows come and go in minutes during specific trading intervals each trading day. And this kind of volatility drastically changes the way consumers should shop for a mortgage. Because markets move up and down so fast right now, the rates you see in mainstream media* headlines are long gone by the time you can do anything about it.

So here’s how to shop for a mortgage in this new world.

Shop For Loan Agents, Not Rates

Every consumer shops for mortgages and they should. But this is the critical distinction: you should be shopping for the best mortgage advisor. If you have that, you’ll get the best rate.

Here’s what happens when shoppers focused only on rate get quoted by a good loan agent: Loan agent quotes a rate only after they've analyzed the client's entire financial profile and analyzed their home’s value and condition—also known as pre-approving them. The client will either tire of the pre-approval analytics or be unhappy with the rate and go somewhere else. Then 80% of those cases come back to that loan agent because the competing rate quote was revealed to be incorrect when the other lender actually completed the client’s profile, or the home’s value/condition made the loan ineligible.

Mortgages are extremely competitive so rates and fees are generally the same with most (established, credible) lending firms. What’s not the same lender to lender is the loan agent’s ability to: (1) advise properly, (2) analyze borrower and property profiles, and (3) close with no surprises. So shop to find the lender and loan agent you feel most confident can perform on these three things. Then work with that loan agent to pick a rate target you can’t or won’t go above, and give them a standing order to lock when they see it.

These guidelines are for refinancers. For homebuyers, you can’t lock a rate until you’re in contract to buy a home, but once you’re in contract, the same approach applies.

Rate TargetingTheir are two reasons for the pre-approval and rate targeting tactics discussed above:

(1) A rate quote that flies through the air means nothing. If a loan agent doesn’t issue you written terms after obtaining a full profile on you and your home, then you haven’t received a quote you can count on.

(2) Rate lows are here and gone in minutes each trading day as mortgage bonds rise and fall on economic and technical trading signals. So if you don't first get pre-approved then set a rate target with a standing lock order, it's nearly impossible to hit the lows AND close with no surprises.

Your loan agent also must be able to brief you daily or weekly on the market outlook, so if you're not sensing market competence from your agent, then keep shopping. A loan agent must have a strong read on what's impacting the rate market ups and downs to deliver you the best terms. And for further reference about the loan process, here's another must-read: Refi Roadmap: A Locked Rate Isn't A Closed Loan


*Mainstream media is almost always off the mark on rate data and commentary. Conversely, Mortgage News Daily strives to provide accurate and realistic rate data and commentary daily. Still, the premise of this piece is to explain what a mortgage consumer must do to manage extreme rate volatility.

Julian Hebron is San Francisco branch manager and a top producer for RPM Mortgage and also runs mortgage and housing blog The Basis Point.

2012 is Here...Will the Real Estate Market Recover?

HAPPY NEW YEAR!!!!


2012 opens with lots of optimism.  As you read, Jim Belote's "Mortgage Matters", you will note varied view from different banks as to the health/potential recovery of the housing market in 2012.   


You should not be surprise that Bank of America provides a negative assessment due to their heavy inventory of foreclosed homes.  If you or I owned "widgets" that were not selling and look to be worth less in the coming year, we both would be a bit negative when asked.  The other banks noted are less impacted by foreclosed/short sales and see a rosier picture.


Jim's note on the math of home availability is good but he fails to note it applies to resale homes(previously owned).
When you add constrained demand for three years, we have the formula for a significant trend change in 2012.


So with rates now below 4%(3.75% FHA and VA loans!!) and plenty of great home values, why are you waiting around if you need a home.  


     YES!  I AM PART OF THE CHORUS OF REALTORS, MORTGAGE OFFICERS, FINANCIAL ADVISORS, ECT THAT KEEP SAYING:

            LOW HOME PRICES WITH LOW INTEREST
                 RATES IN AN ANOMOLY 


Historically, home prices are high with low interest rates
                   home prices depressed with high interest rates


WE HAVE LOW RATES AND SHARP HOME PRICING!!


              Do read all of Jim's notes below!!!

Keeping you updated on the market! For the week of  January 2 , 2012 MARKET RECAP The news is understandably slow the week between Christmas and New Year's Day. The most notable release was last Friday's news on new home sales, which rose to an annualized rate of 315,000 units in November, a 1.6-percent gain over October. To be sure, we have a long way to go until we reach the normalized construction rate of 1.5-million units per year. Nevertheless, we expect the new-home market to gain pace in 2012. After all, there are only 158,000 units in inventory. Even at the current slow sales pace, this equates to a record low six-month supply Over the past three years, new-home construction has fallen far below historical norms and also below the level needed to keep pace with population growth. The fact is our country gains roughly 2.7 million people and one million new households annually. You might not see supply as a problem. We are all familiar with the glut of distressed properties. Indeed, Bank of America expects eight million distressed homes to come to market over the next four years. These homes, we've so often heard, will continue to depress new home construction. We view B-of-A's outlook with a skeptical eye. There is a likely prospect that many of these distressed properties will simply go away. Destruction is too frequently overlooked in many supply projections. A house is not a permanent structure. Many are destroyed by fire, wind and flood each year. Many more are lost through simple decay and abandonment. Based on U.S. Census data, 300,000 homes are lost annually. That number will surely rise in years to come. In short, the math – low inventory plus more households minus more home destruction – suggests to us a rebound in new-home construction. We are not alone in this contention, either. Wells Fargo projects that housing starts will continue to rise each year for the next five years before reaching once again the normalized construction rate of 1.5-million units annually by 2017. Of course, projections are one thing, betting on those projections is another. Here, we see an encouraging trend. Big money is starting to wager on housing. The Wall Street Journalreports that many large hedge funds are investing billions in housing-related investments. Other investors have followed suit. Shares of homebuilders are up 30 percent over the past three months, making them one of the best performing investments in the market. Economic Indicator Release Date and Time Consensus Estimate Analysis Construction Spending (November) Tues., Jan. 3, 10:00 am, et No Change Important. Residential spending is accelerating and contributing more to economic growth. Mortgage Applications Wed., Jan. 4, 7:00 am, et None Important. Markets are anticipating increased purchase activity to start 2012. Factory Orders (November) Wed., Jan. 4, 10:00 am, et 2.5% (Increase) Important. Growing order momentum is indicative of increased economic activity. Employment Situation (December) Fri., Jan. 6, 8:30 am , et Unemployment Rate: 8.7% Payrolls: 150,000 (Increase) Very Important. Job growth is accelerating, which is encouraging for housing, but less so for low interest rates Up For A New Year As we approach the end of the old year nearly all of us stop to ask, “How will the new year unfold?” Of course, none of us know with any certainty the answer to that question, but it can be insightful (and fun) to ponder. So, how will 2012 unfold, at least as it pertains to the housing and mortgage markets? Both markets will obviously be influenced by economic growth, which, in turn, will spur job growth. We see a pick up in economic growth and job growth in 2012. The economy has been growing at a sluggish rate for too long now. The United States is unique in that Americans tire of pessimism quicker than most other cultures, and then we do something about it. In our opinion, rising consumer confidence points to a lot of pent-up demand that is waiting to bust loose, and will bust loose in 2012. A pick up in demand, in turn, necessitates new hires. In fact, a recent survey by CareerBuilder.com found that nearly one in four employers is keen to add new permanent full-time employees. These employers are simply waiting for a clear sign the coast is clear. We think they will get that sign in the first quarter of 2012. Greater economic activity will obviously impact the housing market. We see accelerated sales volume in both the new and existing home markets. We also expect to see prices stabilize in the first half of the year, and then appreciate perceptibly in the second half. As for the mortgage market? This is much more difficult to call. The Federal Reserve has stated it intends to hold rates low through 2012. However, all it takes are a few persuasive signs that the economy is back on track, and the Fed could easily backtrack from its stated goals. All we can say is that we would be much less surprised to see mortgage rates 50 basis points higher six months from today than 50 basis points lower.