Is An FHA Mortgage Right for You?

There are many reasons for homebuyers to investigate an FHA home purchase. First time homebuyers should explore FHA loan options because it’s easier to qualify for an FHA home mortgage. Your loan is guaranteed by the government, making your application more attractive to lenders. Since the typical first-time FHA home loan applicant is young and in the early phases of their careers, chances are they still have student loans and other debt to content with; an FHA home mortgage often costs less and is more forgiving of youthful indiscretions with credit and payments.

Source of this info is: FHA.com

FHA home loans don’t require a big down payment at closing time. For first-time homebuyers this can be a real plus; that typical borrower in the early stages of a new career often doesn’t have a lot of money set aside specifically for purchasing a home. The FHA mortgage requires a low 3.5% down payment, and that money can come from a variety of sources including HUD down payment assistance grants.

For first time buyers, closing costs are another issue that can be a financial drain; typical closing costs for FHA home loans are around 2% or 3% of the total mortgage. One advantage when taking out an FHA loan? FHA mortgage terms may allow you to build in closing costs into your mortgage.
FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans can help people get out of toxic debt situations caused by sub-prime mortgages with interest rates that have spiraled out of control. Are you facing default or foreclosure on a conventional loan? FHA home mortgage refinancing is a godsend for those who want to keep their homes and prevent damage to their credit ratings. There are several ways to get into an FHA home loan for refinancing. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable FHA mortgage payments and lower interest rates for those who qualify.

The FHA also provides cash-out refinancing for those who need financing for things such as college or major home improvements. An FHA cash-out refinancing mortgage may offer lower interest rates than traditional home equity financing loans; you may qualify for one of two FHA mortgage plans which offer cash-out plans. One offers loan amounts for up to 95% of the appraised value of the home, another FHA refinancing loan offers amounts up to 85% of the appraised value. Each program has its own specific requirements and rules; talk to your lender to learn what your options are under FHA cash-out refinancing mortgages.

FHA mortgage loans should take up no more than 29% of your monthly income, and you must have verification of your income to make the calculation. Rquirements for FHA mortgage products such as FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government. If your job situation has changed since your last tax filing, you may be able to furnish proof of income through your new employer.

If you currently have an FHA mortgage, you may be eligible for a rate reduction through a FHA Streamline process. This process usually requires no appraisal and minimal documentation.

FHA home loans have requirements for income, debt-to-income ratios, maximum loan amounts and other details; each type of FHA loan is unique and must be applied for individually. Ask me assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider calling me to apply for an FHA home mortgage, or if you have an existing home loan, you can explore your options with FHA refinancing.

Mortgage Rates Rising

Morning market indicators are showing mortage rates will be rising this afternoon. Bond market is in the red.

According to this morning's report from the National Association of Realtors, people were ready to buy homes in June,
Low interest rates and falling prices helped boost the NAR's pending home sales index 3.6% last month -- the fifth monthly increase and the longest streak of gains since 2003. The index is up 6.7% from June 2008.
The index is based on sales contracts on existing homes. The NAR reports on sales of existing homes once the sales close, which usually happens about six to eight weeks later.

Personal incomes of U.S. residents fell 1.3% in June, more than forecast and the biggest drop in four years, the Commerce Department reported this morning.

Clete Thomas completed an unlikely win by the Detroit Tigers by hitting a 425 foot walk off home run in the bottom of the ninth inning agains the Baltimore Orioles. Justin Verlander gave up 5 runs in the first inning then settled down to go eight innings. Even though JD didn't get the win, he didn't allow any more damage after the first, allowing the Tigers to crawl back into the game. 2 games up on the Chicago White Sox. Washburn goes tonight for his first start in a Tigers uniform.

HVCC: Causing Headaches for Everyone

The Home Valuation Code of Conduct (HVCC) is an agreement between New York Attorney General Cuomo, Fannie Mae and Freddie Mac, and their new regulator the Federal Housing Finance Agency that was presented as a means to stop mortgage and appraisal fraud.

At first glance, the intent appears to solve issues where appraised values may be influenced by lending institutions or other parties involved in the mortgage and real estate transaction. However, a deeper look at the details in this agreement reveals language that ultimately hurts the consumer.

An official statement from the National Association of Mortgage Brokers (NAMB) about HVCC -

A revised HVCC released on December 23, 2008, by New York Attorney General
Cuomo is a de facto regulatory action, failing to follow necessary regulatory
procedure.

The Home Valuation Code of Conduct (HVCC), as written, goes too
far. It will impair consumer choice and impede competition, ultimately
costing consumers more money and hurting small businesses in a way simpler, more
effective, less burdensome solutions would not.

In a response from The Appraisal Press – HVCC: The Cure Is Worse Than The Disease, there are five major aspects which they believe will harm the appraisal industry and the consumer:

Under the HVCC, any lender using a professional appraiser incurs
substantial regulatory risks and additional costs, whereas AVMs, BPOs, and other valuation alternatives are expressly and repeatedly exempted from the same regulations and liabilities.

The HVCC unduly restricts the appraiser’s ability to operate a business
in the same manner as the other parties already in the transaction.

Lenders must be prohibited from owning or controlling, in whole or in
part, any sort of valuation entity or mechanism used in the origination of a loan.

All valuations, regardless of method employed, must be provided to the
borrower in the same manner.

Any complaints regarding the valuation process should be reported solely to the IVPI, not to the lender overseeing the origination.

What started with a 2007 lawsuit where Attorney General Andrew Cuomo sued an appraisal division of First American Corp. for allegedly inflating home values on an estimated 260,000 Washington Mutual loans between 2006 and 2007 has now been shifted to blaming street level originators and appraisers.

If revealing truth and transparency were the real motives behind this agreement, more stories would have been exposed where appraisers were pressured by developers and Appraisal Management Companies to bring in value.

The lending community is also sharing their disgust towards HVCC and how it is already hurting consumers and industry professionals.

It is vital for all mortgage and real estate professionals to get behind NAMB’s efforts to fight HVCC, regardless of whether you are a member of NAMB or not.

Please add your name to the petition to repel the HVCC at http://www.hvccpetition.com/

Please contact your representative and ask for their yes vote on HR 3044, legislation that calls for an 18 month moratorium on HVCC.

THIS WEEKS NEWS:

Current Mortgage interest rates are stable, with little movement, but may trend slightly upward.

The S&P 500 was up 7.6% in July. The fifth consecutive month of gains.

Today's cover of Newsweek is declaring the recession is over. If so, the recession officially lasted 19 months, the longest since 1933.

The "Cash for Clunkers" program may be over already due to the high response. Were any of you able to take advantage of the program?

NFL training camps opened up last week. Will this be the year of the Leo's?

The Detroit Tigers showed they like home cooking much more than hotel food by going 2-4 on their 6 game road trip. Losing the series to bottom dwelling Cleveland could come back to haunt this team in September.

Tiger Woods easily cruised to the win of what appears to be the last Buick Open. Here's hoping that some company can step up and sponsor a great event that the PGA pros enjoy coming to. Even normally stoic Tiger looked like he was enjoying himself.

Interesting Facts

Monica McNamara, a Realtor in MD received this from another loan officer and shared it with me . It’s very interesting data.


Investing After A Recession Begins
The S&P 500 has gained an average of +13.1% per year (total return) for the 10-year period that started on January 1st of the calendar year following the official beginning date of each of the last 5 recessions.


Spending Less
The personal savings rate in the USA at the end of April 2009 was 5.7%. Just over a year earlier the nation’s personal savings rate was 0.2%!


Some BIG Ones

5 of the 8 largest corporate bankruptcies in US history (as measured by assets at the time of filing) have occurred in the last 9 months.


Down A Lot From A Year Ago

The actual profits of the companies in the S&P 500 stock index on a trailing 1-year basis are 88% less today than they were 1-year ago.


Gimme A Break
A first time home buyer has until 12/01/09 to purchase a home that qualifies for a tax credit that is worth 10% of the cost of the home, up to $8,000. This tax credit is claimed on IRS Form 5405.


Too Much Debt
The average American homeowner had $1.41 of mortgage debt for every $1 of home equity as of 3/31/09.


A Few Years
53% of adults surveyed believe it will take them at least 5 years from now to grow their net worth back to the level it had reached in late 2007.


Beach Bums
9 of the 10 largest lenders of the nearly of the $1 Trillion of sub-prime mortgages originated during 2005-2006 are based in California.


No Stopping
Baby boomers are the 78 million Americans born between the years 1946-1964. 25% of this group expects to work until they die, up from 15% in December of 2007.


Keep Trying
More that 4 out of every 5 college graduates (80.3%), from the class of 2009, who have applied for jobs have been unable to find work.

Weekly News:

Mortgage Rate indicators show that rates look to be heading downward this week.

Sales of new single-family homes jumped 11% in June

The 2nd QTR GDP report will be released on Friday.