It Really Is The Economy and We're Not So Stupid.

Great post Lenn ... there are those in the KNOW and then there ar the NO's.

Hoping you had a Blessed Easter!

The big change in FHA is actually pretty straightforward. The monthly premium has been reduced from 1.35% to .85%.

The up front premium is still the same at 1.75% of the loan amount.

Though the 3% down conforming is now available, the interest rate and monthly PMI are directly tied to the borrower's FICO so in many cases FHA still makes more sense.

   As far as streamlines go, it depends on when they closed. Loans originated before June 2009 only have .01 of up front PMI and .55 monthly PMI so they come out ahead despite the new changes. The other thing to consider is FHA PMI is now permanent, all 360 payments, so if someone has an existing loan that may be near the cancellation point, a refi might not make sense.

The biggest thing to keep in mind is that on a streamline, you can't roll closing costs into the loan. Your best bet is to work with someone who can price out a no closing cost loan that is still competetive.

When you have household income decreasing, consumer and home prices rising and so much uncertainty about the immediate future, it doesn't matter how much down payment you have or how much the additional fees will be because instead of consumers being fearless of the future, they are very much afraid  and won't take any action until their fears disappear.

It is the economy and  I don't see it changing anytime soon with the leadership we still have, do you?

Sometimes I really think they put "stupid juice" in the water our lawmakers drink. 

Meanwhile, you are so right. Shop for the loan just like you'd shop for any other important purchase. 

Lenn, I hope consumers read this post and every comment that follows.  There is a wealth of information here that will help them make educated decisions going forward. Those seeking a mortgage need a top notch mortgage professional and to notch Realtor.  The economy and government regulations are playing an enormous role in today's real estate market.

Lenn, sadly, no one can keep up. Too many guidelines that change too fast. Even though I knew all that off the top of my head, I had to go check just to make sure since I was putting it in print. To further complicate it, some of those percentages can change if the LTV is 95% or less.  FHA guidelines for consumers= Clear as mud.

Everytime 'they' try to help it hurts the industry.  Why do appraisals cost $550 to $600 now?  Certainly doesn't benefit the buyers.  It still the same, you must show you are overqualified to get the conventional loan or fit the matrix for FHA or VA loans that allow a 57% debt ratio. Crazy!!

Wait till you have to do a FHA loan on a Manufactured home on owned land.  Talk about jumping throw hoops. Just had one close and I think the lender wanted everything but the buyers first born.

Here they are still doing USDA loans 102% of the purchase price I just they don't get this is what got us here talk about STUPID!!!!

I agree Location Location Location.  We live in an area with beautiful Lakes and these buyers from out of the area think they can come here and steal something, they just don't want to understand that these properties have not lost value like the homes on dry lots.  My favorite call is I want my dream house on a lake with a pool for less than $100K.  That's not Reality.  Right now your luck to get your dream home with a pool on a dry lot for that price.  They just don't get it!  Even better please stop sending me these tare downs that are price too high, thats what you get for your price range.

This is so timely with the drop in interest rates.  I find myself telling people it is not their time to refinance now, only to find out they did it anyway.  In the long run, they are the one loosing out.

I just got off the phone with the VP of a local credit union and he laughed when I saw a Motor Home they reposessed for sale on their web site and said why can a borrower buy a $100k - $200k Motor Home that you can't find where they parked it and still finance it and drive it off the lot that day, but it takes us a month to finance a non-motorized stationary home that typically appreciates instead of depreciates?  His reply:  That is our government working for you.

Good explanation, Lenn Harley at (800) 711-7988 on the subject of the economy.

Lenn, we do this everyday, so these costs are not a surpise to us, but I'm surprised at how many buyer's have no idea what is involved in securing a loan. Count the costs.

A super post I came across among the many archieves and frequent bloggers. Thanks for being apart of Active Rain.-