Category Archives: FIRST-TIME BUYER PROGRAMS

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How To Avoid “Double Interest” in a FHA Streamline

thCAYFKF2GWhen should you close your FHA Streamline Refinance? At the end of the month — no question about it.

Here is a monthly guide with optimal 2013 FHA Streamline Refinance closing dates. Use these closing dates to minimize your “double interest” paid.

The dates below assumes that your home is a primary residence such that the 3-day right of rescission applies.

  • March 2013 : A Monday, March 25 closing will fund on March 29, 2013
  • April 2013 : A Thursday, April 25 closing will fund April 30, 2013
  • May 2013 : A Friday, May 24 closing will fund May 30, 2013
  • June 2013 : A Monday, June 24 closing will fund June 28, 2013
  • July 2013 : A Friday, July 26 closing will fund July 31, 2013
  • August 2013 : A Monday, August 25 closing will fund August 29, 2013
  • September 2013 : A Wednesday, September 25 closing will fund September 30, 2013
  • October 2013 : A Friday, October 25 closing will fund October 30, 2013
  • November 2013 : A Monday, November 25 closing will fund November 29, 2013
  • December 2013 : A Thursday, December 26 closing will fund December

FHA Streamline Refinance Mortgage Rates

Like most other mortgage rates, FHA mortgage rates have dropped steadily since 2011 and are now near lifetime lows. Refinance activity is up and demand for the FHA Streamline Refinance program remains strong.

If your current mortgage is FHA-insured, see how an FHA Streamline Refinance can help your monthly budget. Qualification hurdles are low, and so are monthly payments. Get started with a presonalize quote now by calling me directly at 951-538-7435

 

 

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More FHA Borrowers Find Refinance Outlet

Barclays estimates that mortgages being refinanced from Federal Housing Administration-backing to private-insured loans currently account for about 20% of all FHA refinance activity, according to a recent report.However, improving home prices and increased PMoutletI availability could further open up a refinancing outlet for certain FHA borrowers over time.”This would erode the call protection afforded by mortgage insurance premium protected collateral. It would also provide a boost to discount Ginnie Mae speeds in a rates sell-off scenario,” said analysts Nicholas Strand, Wei-Ang Lee, Sandipan Deb and Rohan Joshi of Barclays

Rising FHA premiums sharply improved Ginnie Mae convexity [sensitivity to interest rate changes], but MIP protection is likely to deteriorate over time driven by a competitive private mortgage insurance market and an improving home price appreciation environment, Barclays noted.“The simple reason for this is: higher premiums increase the attractiveness of other mortgage options that have lower ancillary fees. Specifically, for FHA borrowers that qualify, we believe a conventional loan (with private MI if needed) will become an increasingly viable refinancing outlet over time,” the analysts said

Historic high in FHA mortgage premiums has significantly increased the MIP hurdle in a refinance transaction. As a result, this hurdle is one of the defining factors of the Ginnie Mae prepayment landscape over the past few years, according to Barclays.However, similar to Making Homes Affordable, some of this call protection will erode over time. Given the high costs of an FHA loan relative to a conventional loans with private mortgage insurance, “FHA borrowers have considerable incentive to refinance conventionally,” Barclays stated.There is evidence that FHA to conventional refinances beginning to grow, Barclays said.For instance, PMI originations are rapidly increasing market share relative to FHA. Additionally, the number of FHA loans that refinance is currently outpacing those endorsed, which is another sign of growing FHA-to-conventional refinances, according to the research firm.

 

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Borrowers Struggling to Make FHA Mortgage Payments

A recent article from The Niche Report indicates that during the vertiginous days of the American housing bubble, many borrowers who accepted mortgages on a whim found out the perils of their haphazard actions the hard way. The initial wave of mortgage delinquencies in the United States was felt in 2007, and it mostly involved risky subprime loans. Five years later, a group imagesof homeowners are having a hard time making their monthly mortgage payments -on residential loans insured by the U.S. Federal Housing Administration (FHA).

According to the first quarter report issued by the U.S. Office of the Comptroller of the Currency, the number of FHA-backed loans that were delinquent by more than 90 days increased by 27 percent from January 1 to March 31. This is clearly a cause for concern given the fact that as a government institution, taxpayers have a significant stake in FHA. Other reports indicate that the agency’s financials are far from solid; further deterioration and losses could even require a bailout from the federal government.

Mortgages backed by the FHA have always been a viable option in the American residential lending industry, but there was a time when major lenders and originators shunned FHA mortgages in favor of riskier and more profitable debt instruments. After the bursting of the housing bubble and the subsequent subprime mortgage meltdown, lenders significantly tightened down on their credit and lending guidelines and also looked for the safety net of government guarantees. Fannie Mae and Freddie Mac are two government-sponsored investors who provide guarantees to mortgage lenders; FHA provides similar guarantees that stimulate lending to some applicants who do not meet today’s stringent requirements.

FHA-backed mortgages are far from being a replacement for subprime home loans. There is a clear need for FHA loans these days, and while their lending standards may be lower in comparison to Fannie and Freddie mortgages, the agency has increased requirements since 2009. Not all applicants these days will qualify for FHA loans, and over the last couple of years the agency has increased its minimum credit scores, down payments, mortgage insurance premiums, and underwriting.

This rise in FHA mortgage delinquencies comes at a time when the American economy seems stuck in neutral. Job growth is still stagnant and while median incomes have risen to a certain extent, not everyone enjoys full time employment or job security. The FHA has been looking for ways to increase its reserves and avoid a bailout, but the agency might not survive a second recession

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Are you ready to be a Homeowner??!

Because buying a home is often the largest financial investment you will ever make, you should first determine if now is the right time for you to get into the housing market. There are a few basic questions you can answer that will help you decide. We’ll walk you through this assessment by supplying you with some information and tools to help you evaluate your situation. After you’ve
answered these questions and done a little personal number crunching, you should have a pretty good idea if you’re ready.

Am I better off renting?

Buying a home isn’t always the best decision, even if you think that you’re ready. There are benefits to being a homeowner such as tax deductions and building equity. But there are also potential disadvantages you should consider like managing the monthly mortgage payments and coming up with the money for a down payment.

How much can I borrow?

This is really a two-part question: how much can you borrow and how much should you borrow. The first part of this question can be answered by using a standard calculation called the debt-to-income ratio. Basically,
lenders don’t want your total debt to be more than 36% of your gross monthly income. This percentage includes your mortgage payment and any auto, credit card, student loans or other debt you currently have.

The second part of this question isn’t as easy to quantify with numbers, but instead asks how much debt you are willing to live with. An aggressive approach has you paying more each month for a more expensive home while a conservative approach gets you a less expensive home with more manageable mortgage payments and less overall debt. This decision is based on how you prefer to manage your money and debt.

How much will I save in taxes?

This is another question that helps you determine if you can afford to buy now. When buying a home, you may be devoting more of your monthly salary towards mortgage than you currently do towards rent, but you will get a tax break from owning that you wouldn’t from renting. The difference may offset the higher monthly payments, so it’s worth understanding how your taxes will be affected.
After answering these questions, you should be able to decide if now is a good time for you to buy a home. You should also have an idea of the amount you can afford to spend on a home. If you feel good about these numbers, let’s begin preparing for the home-buying process.

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Okay the Sky is falling… Again! or Is It????

Wonderful article posted by http://oscarcervantesblog.com/ . I wanted to share it will all of you….Enjoy!!!

So according to the news, newspapers and your friend’s cousin’s friend’s aunt  from his  father’s side the  news is grim, the sky is falling and NEW HOME sales have decreased . And we all need to start building bomb shelters ‘cuz armageddon is coming!!

Hey, even a recent article from CNNMONEY.com said that “New home sales unexpectedly fell in July to the lowest level on record as the housing market continued to suffer from the end of the homebuyer tax credit boost. New home sales dropped 12.4% to a seasonally adjusted annual rate of 276,000 last month, down from a downwardly revised 315,000 in June, the Commerce Department reported Wednesday. Sales year-over-year fell 32.4%.”

Now the key words is NEW HOME , and there is no surprise, there, if you take in consideration that you can buy a repo, or short sale for at 15-20% discount. Recently, I took a client to see homes. Since he wanted to see new , repo and short sale homes available,  I started showing him the NEW HOMES  in the area that he wanted to live in. The new model homes were perfectly decorated. The yard was beautifully done, every piece of furniture was strategically placed and the house even had a fragrant smell of lavender. The builder was so nice to include cheap stainless steel appliances if you bought his nicely decorated house. It was a beautiful  home with a ticket price $480,000 (without up grades of course). All up grades that made the house awesome were extras. The granite counter tops, the travertine floors, the colored cement patio, plantation shutters and the stunning custom crown molding was not included.

After seeing the NEW HOMES, he got to see some bank repo homes. The first house had no furniture, no lavender smell, yard was dead  and the walls had this orange green color everywhere. But low and behold, granite counter tops, the travertine floors, the colored cement patio with cover, plantation shutters and the stunning custom crown molding everything was part of the package because the previous owner paid for it!!! Oh, and did I mention the incredible pool? Over $70,000 in upgrades and more was part of this house. Oh, and the price you ask? $430,000.   A $50,000 reduction if you can get pass the dead grass and the orange green color walls….

What the news, newspapers and cousin’s friend’s aunt  from his father’s side fails to understand is that you are willing to water the grass, paint the walls and even replace carpet if you are saving $40k, 50k and sometimes even $100k on the price of your new home. At least, new to you, right? But in my opinion and those who have been submitting offers, new home sales dropping are the least of our concerns. If you’ve talked to anybody that is trying to buy a house these days, especially in Southern California, they will tell you that the competition is fierce and there are more buyers than homes!! Their frustration continues to be the many offers they find  that they have to compete against to get the house they want.

I wonder if builders are getting a clue and realizing that if they want to sell their over priced new homes, they need to start being less greedy and realize that if they want the NEW HOMES SOLD, they need to start including all the up-grades that are so attractive because you are not afraid of getting your hands dirty as long as you are saving. Wouldn’t it be nice to buy one of those new houses and actually move into a model home? Hey, there’s an idea!

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Want a Move-up Home ??… Well use FHA !!!

There is a misconception that FHA is exclusively for First-time homebuyers. In reality, an FHA loan can be use for your move-up  home as well, let me explain. Let’s say that your primary residence is a 3 bedroom/2 bath home, your family has grown and you want to buy a larger home.

FHA could be the perfect mortgage option for you. You get a fixed rate, come up with a FHA’s low down payment of 3.5% and you can even finance repairs(this is another topic). Now before you jump up and down, there are a couple of thing you need to make sure you have in place, according to FHA Underwritting Guideline Hanbook 4155.1

  1. The new house needs to be a move-up home. For example, I recently helped a client that had a 3 bedroom 2 bath, 1200 sqft home and her family had grown. The new house was 3,500 sqft and 5 bedrooms 3 bath home. She got FHA financing.
  2. You need to provide evidence that your current home will be rented. What kind of evidence you asked??? Well, you will need to provide  rental or lease  agreement, security deposit check and show proof that the check was deposited into your bank account(You can take care of all that once you are in escrow).
  3. You need to have 25% equity in your current home (primary residence). In other words, if  you owe 100,000 on your current home and it is worth 125,000 or up, then you meet the 25% equity requirenment. Once you are in escrow, the lender will order an appraisal for your curent home.

If you don’t have 25% equity, then the current  mortgage payment and the new mortgage payment  will be used to qualify.  So your current full mortage payment is $1,350, the new mortgage payment is $2,400 and $400 in credit debt.  The debt being use  to qualify will be $1,350+$2,400+$400= $4,150. FHA might also asked you to have 6 months of your current mortgage payment saved. This could be done through regular savings or 401k earnings.

It is very important that you pay close attention to the above information because knowing the facts will save you thousand of dollars and prepareyou to buy your move-up home.

If you have  questions or a scenario, give me a call at 951-538-7435

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New FHA Refinance Program To The Rescue!!!!

Okay, so starting September 07, 2010, a new refinance program comes in effect.  The program is designed to help  homeowners that make their mortgage payments on time ,but have no equity in their homes.  According to FHA ‘s  six page Mortgage Letter 2010-23, which updates lenders and mortgage brokers on FHA guidelines. Now since sometimes, these guidelines are written in a way that are too confusing , I have  added my interpretation in red letters. So here we go:

  • The homeowner must be in a negative equity position. In plain english. you must be upside down on your house.
  • The homeowner must be current on the existing mortgage to be refinanced. No late payments ALLOWED!
  • The homeowner must occupy the subject property (1-4 units) as their primary residence. It must be the property you live in.
  • The homeowner must qualify for the new loan under standard FHA underwriting requirements and possess a “FICO based” decision credit score greater than or equal to 500. According to this guideline, your FICO can be a minimum of 500. This guideline gets trickier since a lot of financial institutions will not accept FHA borrowers with FICO less then 620 regarless of FHA guidelines.
  • The existing loan to be refinanced must not be a FHA-insured loan. Okay so your current loan needs to be a conventional  or subprime loan.
  • The existing first lien holder must write off at least 10 percent of the unpaid principal. Your current lender needs to agree to lower the balance of your current loan by at least 10%.
  • The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Let’s say that you owe $300,000 but your property is worth $150,000, so your new loan can not exceed $146,625.00, which sounds wonderful. Right?..remember your current lender has to voluntarily lower your balance. Hmmm!!! I don’t think your lender will like that very much.
  • Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent.  In other words, if you have a second loan, the second loan can not be added to the new FHA loan, but the combine total of the 1st and 2nd lien CANNOT EXCEED 115% of the current value.
  • FHA mortgagees are not permitted to make mortgage payments on behalf of the borrowers or otherwise bring the existing loan current to make it eligible for FHA insurance. Once again, your need to be current on your mortgage.
  • The existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification. So if your mortage has been currently modified, you don’t qualify for this program.

Now after reading the guidelines, it looks like FHA might be heading in the right direction! …Well not so fast!  We all need to remember that at the end of the day, the Lien Holder (current lender) is ONLY encouraged to participate. The Lien Holder has to agree to lower that mortgage balance and that might represent a challenge. Experience will tell us that banks are not willing to lose money. If  the current mortgage loan has to be current with no late payments reported, a Lien Holder might not see the need to lower a balance since the current mortage is in good standing and there is NO financial hardship.  

Now if you ask me, it never hurts to try……. so I will be calling my clients, friends and family to see if this program delivers what it promises!  

 
 
 

 

 
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How does a FHA loan looks at a non-purchasing spouse in CA

Many times, when I am consulting couples, an spouse might request NOT to be added in the loan because his or her credit is shot.  In response, I have to inform them that Ca is a community property state. In other words, even though the spouse will not be in the loan, FHA will  require to look at the spouse’s credit and consider his or her debt in order for you to qualify .

According  to FHA underwriting guideline manual 4155.1

  • The debts of nonpurchasing spouses must be included in the borrower’s qualifying ratios. If the borrower resides in a community property state (such as CA), or  property being insured is located in a community property state.
  • The non-purchasing spouse’s credit history is not considered a reason to deny credit. However, the non-purchasing spouse’s credit report that complies with the requirements of HUD 4155.1 4.C.2 must be provided in order to determine the total debt and qualifying ratio. For example, let say that your credit debt is $300.00 per month and your non-purchasing spouse’s debt is $900.00 per month. Under FHA guidelines, the total debt that will be consider is $ 1,200.00. This could mean the differnce between qualifying  for $100,000 or $300,000 house.

If you want to use FHA due to all the advantages that it offers such as low down payment, fixed rates and lower credit score requirements, but you do not want to add a spouse to the loan due to his or her credit issues, you need to consult a mortgage professional that knows FHA guidelines.  In this day and age, couples are being told that they qualify for an FHA loan but the ” individual doing the qualfication” does not known FHA guidelines.  A mistake, such as not knowing that FHA will require a non-purchasing spouse’s credit to be examined, can cost you thousands of dollars and leave you without the dream of owning a home.

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Four reason to ask for an FHA Loan

FHa gives prospective home buyers the ability of becoming homeowners. There are lots of reasons to ask for an FHA loan instead of taking a conventional or an expensive and risky sub-prime mortgage loan. Why not take advantage of the many benefits and protections that only come with FHA:

Qualify is easier – FHa does not provide financing. Their job is to insure your mortgage loan, so a lender is more willing to give you a loan with lower qualifying requirements so its easier for you to buy.

Less than Perfect Credit Ok – Even if you have had credit problems, such as medical collections or bankruptcy, its easier for you to qualify for an FHA loan than a conventional loan. For example. FHA might not require , for you, to pay off medical collections in order to qualify.

Low Downpayment – FHA have a low 3.5% downpayment, and that money can come from a family member, employer or charitable organization. Other loans don’t allow this. A conventional loan requires 5%, 10% etc for down payment.

Costs Less – Many times, FHA loans have competitive interest rates because the loans are insured by the Federal Government. Always compare an FHA loan with other loan types.

If you are buying your first home or move-up home, you owe it to yourself to look at FHA.

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Less-than-perfect credit is OK

The FHA doesn’t mandate a minimum credit score, according to Vicki Bott, HUD deputy assistant secretary for

single-family housing. Instead, each borrower’s creditworthiness is considered in context. Some leeway is allowed, even for borrowers who’ve filed for bankruptcy.

That said, however, lenders can overlay their own requirements on top of the FHA’s guidelines. Some lenders might require a minimum credit score. Ask prospective lenders about such a requirement if your credit is less than perfect.

“Lenders underwrite FHA loans to ensure that the customer has the willingness and capability to repay the loan, but we do have flexibility beyond pure credit score to look at the borrower’s financial situation,” Bott says.

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