FHA Mortgage Insurance Premiums UPDATE

 

The new FHA MORTGAGE INSURANCE PREMIUMS go into effect for CASE NUMBERS
assigned on or after 10/4/10

NOW is the time to contact your potential FHA buyers & clients (especially
those possible FHA streamline refinances) and get word out. If they want a
choice of options, they need to get a purchase contract and/or a loan
application in NOW. The new MIP has merits in that it will be a lesser loan
amount financed and therefore less loan to pay off when people sell their
house. However, it causes a HIGHER PITI payment that may not be appealing
to people.

Current upfront mortgage insurance premium – 2.25 bps ~ On or after
10/4/2010 – 1.00 bps ~ LOWER!

Current monthly MIP – .55 bps ~ On or after 10/4/10 – .90 on LTV’s > 95%
~ HIGHER!

Take a look at the attached analysis here: FHA_Premium_Changes_Analysis[1] to see the significant difference this
change will make on a $150,000 purchase price. You will notice the lower
UMIP will mean an $1800 lower loan amount. But, the much higher monthly MIP
would increase the monthly payment $32! This is going to have an impact on
borrowers and their financing options. Call or email me with questions! We
are closing FHA loans in 30 days!

Courtesy of Kathy Lamb Union Saving Bank

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The Improving Mortgage Rates at a closer glance

We can all breathe a bit easier going into the weekend after we saw the stock market bounce back late Friday and end on a positive note after watching the market sell off dramatically all week!   The good news to us in the Real Estate profession when the stock market sells off, investors look for safety in treasuries which allows for mortgage rates to improve.  

30 year fixed rates were averaging 4.75 to 4.875%, on Friday (average because final rates are based upon loan program, loan to value and credit scores).

With the senate passing there version of financial reform…it looks like we could see a bounce in equities this week which could push rates back to those 5.00% levels once again.

One thing that is very clear with the senate’s version are the days of qualifying for mortgage loans with little to no documentation could be over for good.   They made it very clear that lenders must consider an applicant’s income, assets and credit history when determining whether someone can qualify for a mortgage loan!   Seems to make sense, however this was clearly stated in the bill.

Over-all rates continue to remain low and do not look to increase dramatically anytime soon…so this will allow for buyers to purchase homes at historically low rates, even though the tax credit has expired!

Have a great weekend.

Market Update-Interest Rates

 

Not a great week for the stock market, however the good news is that on Friday afternoon the market reversed its downward trend and ended back up over 10,000 by the close.   This could be a good sign going into Monday’s trading as buyers came back into the market at the end of the day!
 
The same could be said for the Real Estate market…many first time buyers are now beginning to call again, in order to take advantage of the tax credit program.
 
Rates continue to stay very low…conventional loans averaging 4.875 to 5.00% and FHA/VA rates averaging 5.00 to 5.125%
 
I say average as there are so many more components that go into an interest rate today; such as credit score, down payment and loan to value…however no matter what an individual buyer’s situation rates are still at historical lows!
 
Many are concerned with all of the regulatory changes and that it will take much longer to close a transaction, however you can still close a loan in 3 to 4 weeks (or less) if it is done right and disclosed properly…we just closed a VA loan last month in less than three weeks…so closing times really have not increased like many had thought and predicted.
 
Have a great weekend!

Changes to HUD homes for buyers-

HUD BUYER AND BROKER INCENTIVES DISCONTINUED
  Effective February 12,2010, any properties listed and/or sold with FHA financing as of this date are no longer eligible for the $100 down payment incentive.

The Sales Allowance of $2500 for owner occupant purchasers will also be discontinued as of February 12, 2010 for all new contracts accepted on or after this date.

The $500 broker bonus for owner occupant purchasers who took advantage of the $2500 sales allowance is also discontinued as of February 12, 2010. 

Market Update- Interest Rates

Uncertainty is never a good thing for the financial markets… –  Government wanting to tax and limit the size and investment activities of big banks-  Representatives wanting to end FNMA and Freddie Mac-  Chairman of the Federal Reserve still not confirmed On a typical day the mortgage market would have rallied with such a big stock market sell off,  however the 10 year note was unchanged for the day! 30 year fixed rates continue to stay right at or below 5.0% Mortgage market has stayed relatively steady even though stock market has had a rocky beginning to the new year. No matter how you look at the stock market or listen to the negative comments in the news…there has never been a better time to purchase Real Estate! Have a great weekend.

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