HUD has announced that as of January 27, 2017, all FHA loans will be subject to a reduced PMI rate, saving home buyers and home owners potentially thousands of dollars over current rates.
For those with FHA loans set to close prior to 1/27, it would be wise to hold off if possible to take advantage of the reduced rates, as the changes will be effective for all loans closed with funds disbursed on or after January 27, but loans closed in the interim are subject to current rates.
First off let me say that the information in this post is completely secondary to my thoughts & prayers for those in the path of this monstrous storm, but once it's over, those affected should know what to do next, what problems they may encounter, and what steps they may take.
For many people in the middle of a real estate transaction, potential for delays are inevitable anytime a storm of this magnitude comes through (or when any natural disaster occurs, for that matter). While we currently don't have any delays on … (8 comments)
FICO score? Doesn't matter. Debt to income ratio? Nope, doesn't matter, either. Have documents been analyzed? Has a thorough pre-approval complete with analysis of income, assets, and automated underwriting been completed? NOW we're on to something.
Real estate agents. You are not a lender. I repeat. YOU ARE NOT A LENDER. Working in a state where you can be a Realtor & a lender? Chances are you're not a very good lender, at least not for complicated scenarios that require extensive knowledge of guidelines. The inspiration for this post comes as I've … (61 comments)
FHA gets a bad rep. I've seen FHA offers turned away because a competing offer included conventional financing. I've seen communities decline to push for FHA approval because of some kind of stigma associated with the program. I've heard Realtors opine how unhappy they are that buyers want to purchase their listing using FHA financing. "Do you think we'll have any problems because they're using FHA?" is a question I frequently get from listing agents who receive an FHA offer from one of my borrowers. I've even heard "FHA appraisals always come in … (5 comments)
With FHA loans seeing a resurgence in the marketplace thanks to the recently reduced mortgage insurance premiums, it's once again important to keep up to date on the program changes, which happen pretty often as the program changes with the marketplace. Today I'll focus on 2 updates - one which is already in effect, and another that lenders (and borrowers, and real estate agents) need to be aware of when pre-approving buyers or submitting loan files.
Deferred Debts
In the updated FHA lending guide, there is … (10 comments)
About 5 months ago I wrote a blog about why FHA loans should become more affordable. It had nothing to do with my personal loan volume, my income, or enticing more borrowers in the market for mortgage products. I made the argument that since HUD has a statutory requirement of carrying 2% in capital reserves, lowering the costs of FHA loans would help them reach that goal sooner than later. I also made the argument that the fees associated with FHA loans in 2014 were in themselves predatory.
We all know the recent changes made to the FHA loan program are a good thing for business going forward, but are you taking advantage of the change in all ways possible? As a mortgage banker, it's my job (if I want my business to last) to keep my past clients in mind when programs change or rates drop, but as a real estate agent, title agent, or any other non-mortgage entity to a transaction, you probably don't give thought very often to your past client's mortgages. You should.
A couple of days ago news leaked that PMI would be reduced on FHA transactions going forward, which was truly welcome news after a long period of FHA transactions slumping due to exhorbitant costs. The day the news was revealed by President Obama not too many details came forward, but with much anticipation, HUD finally released the details of changes to PMI. Here's what you need to know.
FHA PMI changes
Up front PMI (the PMI that's usually financed into an FHA loan) will remain the same on all loans going … (15 comments)
If you've followed my blog for any length of time, you know my feelings about FHA and their PMI price gouging that has made the once-amazing program nearly useless to anyone but the most desperate home buyers. My suggestion has been pretty simple all along - make the program more affordable, and the program will become more profitable AND the economy will be stimulated by a larger pool of prospective home buyers - a true win-win-win.
Apparently President Obama follows my blog (sorry for some of those nasty things I may … (39 comments)
These numbers represent the amount of FHA endorsed purchase loans thru 10 months of the fiscal year 2010 (the 949,295 figure) and 2014 (the 480,650). The reason HUD increased the costs associated with FHA lending was to maintain (actually, replenish) their capital requirements set by law. This capital plummeted in the wake of the great recession, and HUD needed to get the fund back up. What's clear in the numbers, though, is that while insurance rates and profit on … (34 comments)
I once heard a story of a young congressman, recently elected, and incredibly nervous about starting his term. An elder stateman took him aside and told him "for the first few days, you'll wonder how you got there knowing so little, and after that, you'll spend the rest of your term wondering how in the hell everyone around you got there". The story went something like that. So it was when I entered the mortgage business. I believe the rule makers and gate keepers must have been the smartest folks in the … (18 comments)
HUD has proposed a new pilot program that is currently in the public discussion and comment phase, being referred to as the HAWK program (Homeowners Armed With Knowledge). If and when this program launches, it could be a huge help to first time home buyers, and would address what has become the biggest burden of the FHA loan program - the high cost of mortgage insurance.
The aim of the FHA HAWK program is to improve FHA loan performance & reduce claims against HUD's … (7 comments)
So it's been a day and the government is still shut down. What exactly does that mean? I'll spare the humor and all the things I'd like to say - basically it means that some services are available, and others aren't.
While many vital services are still in action and exempt from shutdown, many others have been frozen, and could inadvertently have a pretty poor effect on the housing market, especially if this shutdown lasts for more than a couple days.
Many people think of the FHA 203(b) fixed rate loan program as a pretty vanilla program, and in many ways it is. 1-4 units, minimum 3.5% down, fairly high thresholds for debt/income ratios, down payment can come from a gift, no required reserves.
While the program is pretty standard across the board for 1-2 unit properties, things change when it comes to purchasing a 3-4 unit property. Of note, the major differences are:
- 3 months PITI reserves required after closing. This means buyers must have … (5 comments)
fha: FHA - HUDs new piggy bank
- 12/21/12 01:43 AM
There has been a recent buzz about the governments latest money grab, a proposal to continue congress' and HUDs use of their new piggy bank, aka the mortgage market and housing industry Over the past few years FHA mortgage insurance premiums have more than doubled, along with a staggering up front PMI charge (1.75%, which most people don't fuss about because it's financed) - borrowers currently pay up to 1.25% PER YEAR to hold a 30 year FHA mortgage, and once an FHA loan is obtained these PMI payments must be paid for a minimum of 60 months. … (0 comments)
FHA Mortgage Insurance Reduced January 27
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