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Friday, August 6, 2010

FHA set to increase borrowing costs next month!

The Federal Housing Administration plans on September 7th to raise the cost of loans backed by the agency in an effort to strengthen its cash-strapped balance sheet.

Under the law, the FHA would have the authority to raise annual mortgage insurance premiums -- paid by the borrower over the life of the loan -- to a maximum of 1.5 percent. That is up from the current 0.55 percent maximum (which is currently being charged), although FHA Commissioner David Stevens has said the premium would rise gradually -- first to 0.85 percent (more than 5% down payment) or 0.9 percent (less than 5% down).

While raising the annual premium, the FHA has said it also plans to lower a separate upfront premium from the current 2.25 percent to about 1 percent to offset the cost of the annual premium. The upfront premium is paid at the time a loan is issued.

When I calculated costs per month under the new fee structure, new borrowers would pay $45 per month more on a sales price of $200,000. The upfront savings would be $13 per month (with the lower up front premium of 1%) and $58 higher on the monthly premium for a net of $45 more (I used .90 as the new monthly premium amount for a down payment of 3.50% which is the minimum down-the minimum down payment has not been changed).

Great Move! FHA MIP changes are approved!

Almost two weeks before the closing of the public comment period on proposed FHA changes, Commissioner Stevens announced yesterday, August 5, 2010 the Congressional passage of HR5981 which allows FHA to increase the monthly insurance premiums on standard FHA programs up to 1.5%. 

In applauding the congressional action, Mr. Stevens announced that effective with case numbers assigned beginning September 7, 2010 the front end MIP will be reduced to 1.0%, while the monthly premiums will increase to 0.85% for borrowers with LTV  <= 95% and to 0.90% for borrowers with loan amounts  > 95%.

Thursday, August 5, 2010

Ben Bernanke: FINALLY a voice of reason!

Yesterday, Ben Bernanke said that Lending Underwriting standards are too strict.  Finally. 

Declining home values are causing 780 credit score borrowers to walk away from their homes.  It's not stricter credit guidelines that are preventing foreclosures, it's because the guidelines are stricter that we have fewer qualified home buyer's who are NOT mopping up the excess supply of homes in the marketplace, causing decreasing home values and high credit score borrowers to dump their homes.  It's a never ending circle of misery that will not correct itself until we get more qualified buyer's to buy homes. 

Thank you Ben Bernanke!  MAYBE now we will begin some movement the other way, AWAY from stricter guidelines. 

Wednesday, August 4, 2010

It's that time again. The Fed is meeting

The Fed is meeting August 10th, and its actions 
could impact home loan rates! Don't Wait. 
Call me before the Fed acts so we can review 
your situation and determine if there's anything 
you need to do.

Tuesday, August 3, 2010

Why are rates staying low?

It's no coincidence that rates are saying low?  Why?  Comments like yesterday are helping:

One point that stuck out in yesterday's speech from Fed Chairman Ben Bernanke was that the Fed must avoid raising interest rates too soon and urged the government to proceed cautiously in cutting spending and raising taxes.  Treasury Secretary Timothy Geithner also spoke yesterday, saying that it is still a "tough economy" for most Americans and that the unemployment rate will most likely tick up before moving lower.

Monday, August 2, 2010

New Reality of Weber County Home Values

I received two calls from Weber County clients of mine today. One client wants to list his home for sale and the other would like to refinance to take advantage of these crazy great rates we have right now.

Each received their annual real property valuation notices in the mail today. Each of the notices confirmed their suspicions: their homes values are lower today than they were a year ago. One by $20,000 and the other by $14,000.

For my future purchase of home client: They called me to discuss what to do if they can't get enough equity from the sale of their present home to buy their next home. I suggested a lower down payment on their next home and with the lower interest rates today as compared to 2 months ago, their future payment really was not such a huge shock after all. Panic averted. Plans move forward. Whew.

My refinance customer? Order an appraisal and see what happens with the value. That is the best and only option to consider. A $400 risk by ordering an appraisal through the current HVCC system to find out what the value of their home is. Again, I discussed additional options with them and we can find financing for them if their credit scores are good enough. I again reminded them that in the present mortgage world, it REALLY is all about credit scores! $400 investment to find out options to shave almost $200 per month in interest off of their payment? It was determined that the investment vs. risk of lost of the appraisal money was worth it. Potential interest savings is a huge motivating factor. And worth taking the chance on an appraised value.

It is that time of year again when real property valuation notices are mailed to property owners in Weber County. The question is often asked, "How does my assessed value affect my property tax?" The answer is, not in the way most people think.

At Home in Layton Grant Program


From July 1st, 2010 through June 30th, 2011, or until funds have all been expended, Layton City will be offering the “At Home in Layton” program. 

The At Home in Layton program will offer Homeownership assistance to qualifying homebuyers.  Qualifying buyers must have certain household income levels (call or e-mail me for the income limits); household income limits vary with the number of persons in the household. 

The assistance will be offered as a grant that can be used for the up to 50% of the required down payment, closing costs or principal reduction. The grant will be offered in $5,000 increments and will be provided to the buyer's title company at the time of closing.