HUD announces reduced FHA
mortgage insurance rates
On January 9, 2017, the
Department of Housing and Urban Development announced that FHA annual mortgage
insurance premiums (m.i.p.) will be reduced by 25 basis points (.25%) for all FHA loans with
closing/disbursement dates on or after January 27, 2017. This translates into a
savings of $500 annually or $41.67 monthly for borrowers with a $200,000
The effective date pertains to
purchase mortgages closed on or after January 27th or refinance
transactions funding on or after January 27th. Since the federal
Truth-In-Lending Act requires that borrowers have 3 day right of rescission
after closing, refinance transactions are funded after the 3 day rescission
The new annual rates are .60%
for all forward loans with terms >15 years and loan-to-value ratios exceeding
95% and .55% for loans with LTV’s of 95%or less. For loans with terms of 15
years or less, the new rate is .50 % for loans less than 625,500 and LTV over
90%. Loans with 90% or less LTV will have new rate of .25%. Borrowers with loan
amounts exceeding $625,500 will pay between 25% and ,50% depending on LTV. For
additional information, please refer to HUD Mortgagee letter
The new changes will not
affect FHA HECM reverse mortgages.
This is great news for FHA
borrowers as it is being initiated just after mortgage rates have increased
slightly and will help offset any lost buying power due to higher rates. It’s
also especially helpful to offset the huge premium increases put in place since
the collapse of the housing market.
Rates are now at close to
pre-housing crisis levels indicating a strength in the risk level and surplus
reserves in the Mutual Mortgage Insurance Fund (MMIF). The Federal Credit
Reserve Act mandates that the level be maintained at a minimum of 2% of loan
balances to mitigate any losses due to defaults. During the last 4 years, ending
on fiscal year ending September 30, 2016, the fund increased by 44 billion
dollars, so hopefully any future surpluses created may lead to future mortgage
insurance decreases and increase housing affordability for FHA borrowers.
The FHA upfront mortgage
insurance premium will remain at 1.75% of base loan amounts on all FHA
transactions. This is a one-time expense on each transaction and may be
mitigated by credits for borrowers who are refinancing and have already paid the
upfront mortgage insurance premium on their original purchase
NEW – NON TRADITIONAL
Within the last year, new programs have evolved allowing
borrowers who cannot qualify for conventional or government loans to qualify
for non-traditional mortgage programs.
Borrowers typically are either self-employed borrowers who
cannot qualify due to major expense deductions on tax returns ultimately
showing low income or borrowers who have suffered from economic events such as
bankruptcies, foreclosures, short sales or multiple mortgage late payments.
For self-employed borrower who cannot show enough qualifying
income, programs are available using an average of 24 month’s deposits shown on
bank statements. Borrowers with large amounts of liquid assets may be able to
use monthly withdrawals or loan term amortization to qualify for conventional loans.
An example of asset depletion would be such that If you have an account with a $500,000 balance, you can divide the balance by the term of the loan (30 years= 360 months), $500,000 divided by 360 months = $1338.39 can be applied towards your qualifying income without withdrawing any funds. The other option would be to set up a monthly withdrawal program for a specific monthly withdrawal which can be used to add to your present qualifying income. You would need to have at least enough liquid assets to maintain the payments for a period of 3 years.
Bank statement programs allow funding up to 90% of the property’s value. If you
can use the monthly withdrawals or amortization of liquid assets added to your
taxable income, you can finance up to 95% of primary home purchases or 85% of
investment property purchases.
For borrowers who have suffered from economic events and
lack the normal seasoning required for conventional and FHA mortgages, new
programs are available for borrowers with no seasoning requirements or lighter
requirements at low, affordable rates.
These programs are available for primary homes, second homes
and investment properties. Even unusual properties such as unwarrantable
condos, condotels and rural properties may be acceptable on a case by case
basis. Loan amounts start at a minimum of $100,000 up to $3,000,000.
Most non-prime programs are 7/1 ARMs but 30 year fixed
programs are available for .25% higher rate. Most non-prime borrowers use the
program as a bridge loan and refinance when the seasoning or income are no
longer obstacles to qualify for conventional financing.
The important thing to know about this type of mortgage is
that it normally will require more cash down than the traditional programs.
Also, borrowers are also required to have 6 to 12 month’s reserves after
closing. For example, if your monthly payment is $2500, you’ll be required
to have a minimum of $15,000 to $30,000 after closing, depending on the loan to
Since these programs are designed for those with unique
situations, it’s best to call us and discuss your scenario to determine your eligibility.
For more information, call Joe Bell, Innovative Mortgage Services, St. Petersburg,
FL (727) 527-1454 or email firstname.lastname@example.org
An online application is available at http://www.joebellmortgage.com/loanapplication
The most recent positive event in the mortgage industry is
the change in FHA mortgage insurance, which effectively lowered the annual
premium on 30 year fixed mortgages from 1.35% to 0.85%.
This translates into a monthly saving of $104.17 on a
This new, lower mortgage insurance premium makes FHA stand
out as a financing option for borrowers with limited funds for down payment as
FHA only require 3.5% down.
Another new option that recently became available is Fannie
Mae conventional financing with only 3% down. This is a great option for
homebuyers with limited funds for down payment and higher credit scores (700+).
While current conventional rates are higher than for FHA, the monthly mortgage
insurance required will eventually be terminated when property loan to value
(LTV) ratio is less than 80%.
For more information visit www.joebellmortgage.com or email email@example.com
In your quest for finding the perfect home, which you may never find, you may want to reconsider one of the homes that had a thing or two that caused it not to make the cut in the first place. In many cases, an upgrade, an addition, pool or garage may be what can turn this home into the “perfect” home.
Whether you are buying a new home or already own an existing home, you can finance the cost of repairs and/or upgrades in the mortgage without having an additional cash outlay of forty to fifty thousand dollars or more.
If you’re buying a home and there’s noticeable defect and repairs and/or upgrades are needed, then it’s time to look at best available financing options which include rehab funding after closing.
The best new program available is the Fannie Mae Homestyle rehab program which allows for most repairs and upgrades and can even include luxury items like swimming pools and landscaping. This opens up the possibility of using your imagination to turn a “not so perfect” home into a dream home! Borrowers can qualify with a 620 FICO and only 5% down on purchase price. Repairs and upgrades costing up to 50% of the purchase price may be added to the loan.
For borrowers with credit issues or who otherwise may not qualify for conventional financing, the FHA 203(k) is another option with limitations regarding types of repairs/upgrades and more costly mortgage insurance that never goes away. The 203(k) program requires a 3,5% minimum down payment towards the purchase price and 100% of the repairs and upgrades can be financed.
Fannie Mae Homepath renovation loans are another option that may only be used with Fannie Mae foreclosures and while no mortgage insurance is required and no appraisal is needed, rates tend to be slightly higher. For primary homeowner’s a minimum 5% down payment towards the purchase price is required and minimum 620 FICO score is required for eligibility. Investors are eligible for Homepath financing with a minimum 15% down payment. Both primary homeowners and investors may buy up to 4 unit properties and usually can use the income from the rental units to qualify.
For the cash strapped buyer, there’s the HUD $100 down program which allows up to $5000 escrow for repairs. If the property needs items such as a a roof repair or has rotted wood that the seller will not repair, this program allows for funds to be held in escrow for work performed after closing, otherwise, banks will not lend against the defective property. This program may only be used for HUD foreclosures.
If you don’t qualify for any of these programs, private lenders are available for short term funds if you have a viable exit strategy.
For more information on these and other financing options, visit www.joebellmortgage.com
FHA financing is now available only one year after a bankruptcy, short sale or foreclosure with new “BACK TO WORK” INITIATIVE
HUD announced that effective 8-15-13, borrowers with a recent history of bankruptcy, foreclosure, judgment, short sale, forbearance, loan modification or deed –in-lieu may be approved for FHA financing if they can prove that they have experienced an Economic Event and can provide documentation to validate the hardship that occurred. Joe Bell. Mortgage broker, Ultimate Mortgage Co. is now accepting applications for borrowers who meet the following criteria:
· Credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s and/or co-borrower’s control;
· Borrower has demonstrated full recovery from the event; and,
· Borrower has completed housing counseling.
An economic event is any occurrence beyond the borrower’s control that results in loss in employment and/or loss of income of 20% or more for a period of at least six months. Borrower must document evidence of recovery from the economic event for a period of at least 12 months.
Loss of Income must be documented in one of two ways:
1. A written Verification of Employment documenting the date and amount that income dropped, and when it was restored, or:
2. Signed tax returns or W-2s showing a minimum 20% loss in Household Income
Loss of Employment must be documented by providing the lender:
If you feel that you can meet the criteria, Joe Bell, mortgage broker, Ultimate Mortgage Co. has lenders available to process your new FHA loan. Call today (727) 527-1454 or apply online:
Congress is considering passing legislation that would deny first time homebuyers down payment assistance funds from charitable foundations such as Ameridream and Nehemiah.
Charitable down payment assistance funds have enabled thousands of renters to become homeowners and have their share of the american pie. To deny future homeowners the assistance that these organizations provided will only make the housing market suffer more than it is now.
While lawmakers are trying to find solutions to prop up the sagging housing market, denial of charitable down payment assistance will only make matters worse.
This is NOT a good time to even consider such a measure. Please contact the congressman and Senator that represents you and urge them to vote against this measure.