I have prospective buyers asking me if FHA mortgages are a good deal these days, or are they strictly for lower-income home buyers?
In the past, most Federal Housing Administration (FHA) loans were made to lower-income borrowers. In fact, that is why FHA was established. In the 1930s, a working person would have to save 50 percent of the value of a house before being able to get a mortgage. The FHA changed that with programs that guaranteed loans made to people with lower down payments.
FHA itself does not actually lend money or set interest rates. Instead, it guarantees loans, insuring that private lenders are protected against defaults on loans. Today the FHA has a variety of loan guarantee programs for first-time borrowers, reverse mortgages, and refinances. The percentage of FHA loans in the mortgage market is about 25 percent.
In fact, while FHA loans still require smaller down payments and often have low interest rates, not all FHA borrowers are low income. In areas where real estate is expensive, borrowers can take FHA mortgages for as much as $729,750 but the limits vary from place-to-place. I can discuss FHA limits and requirements with you if you think such a loan would be good for you.
There are a lot of reasons people look to FHA loans. Today, if you want to make a down payment of less than 10 percent, you almost certainly will have to do an FHA loan. Borrowers can get a home mortgage for as little as 3.5 percent down.
As a government-insured loan, an FHA mortgage has easier credit qualifying guidelines than most lenders. Today, nearly all lenders require a credit score of 700 or more to qualify for a conventional mortgage. FHA credit score requirements are slightly lower.
Nonetheless, there is no guarantee that an FHA mortgage is a better deal than a conventional one. As always, shop around and deal with a reputable lender.
Tags: mortgage loans, mortgages, mortgages types
Posted by
admin on Aug 11, 2009 in
Finances,
Mortgages I just received a reminder from one of the many mortgage reps that I get updates from. The reminder was about a loan program that is often forgotten. I’m even guilty of forgetting about it even though I had written an article about it previously. This forgotten loan program is the USDA Rural Home Loan. The best part of this loan program is that the buyer does not need a downpayment. That’s right, $0 downpayment. However, the home that you are planning to buy must be located in one of the eligible areas of New Jersey. The loan limits that USDA operates under are the same ones that Fannie Mae, Freddie Mac, and other have established.
So, if you’re ready to purchase your new home, give me a call to discuss your real estate needs in greater detail and that way I can help you determine if a USDA Rural Home Loan is for you. You do not have to be employed or affiliated with the USDA or even a governement employee. This is a great way for first time home buyers, that may not have enough funds to put as a downpayment, or even the non-first time home buyer who needs to move into a bigger home but lacks sufficient funds for the 3.5% downpayment needed for an FHA loan. First time home buyers, this is great opprotunity to get into your own home AND qualify to receive your $8000 First Time Home Buyer Tax Credit.
Terry Iwaniw
REALTOR Associate
ReSales & Investment Realty, LLC
Off: 856-795-3111 x263
Cell: 609-417-1086
http://snjrealestate.ning.com
http://www.snewjerseyhomes.com
Connect on Facebook – http://profile.to/terryiwaniw
Tags: first time buyers, first time home buyer tax credit, mortgage loans, mortgages, no downpayment loans, usda rural loans
Posted by
admin on Jun 12, 2009 in
Finances,
Mortgages A mortgage is a kind of an agreement made to pay the money, which was loaned, to a person by keeping the house as collateral. Mortgage is a promise made to pay the debts by putting it in writing basically. Mortgages have terms and interest rates which are either adjustable or fixed.
Mortgage terms:
Mortgages are designed in such a way that they can be paid in installments for a certain period. The time frame which allows the person to pay back his mortgage is called the term. The term may be 10 or 15 or even 30 years. The length of the term determines the amount of money to be paid, which is actually spread in installments.
Mortgage interest rate:
The interest rate depends on the percentage to be paid on the mortgage loan amount. The interest rates vary according to the credit score of the person. If the credit score of the person is very high, the interest rate and the amount of monthly installments are lower. If the credit score is lower then the interest rates and the monthly installment amount are higher. Hence a good credit score will help getting lower interest rates to the debtor.
Types of mortgages:
Mortgages – Adjustable rate of interest
Under this type of mortgages, the interest rate changes from period to period according to the fluctuations of the market. The degree of change of mortgage interest rate is directly associated with the index to which it is tied. Since index will differ as they may be tied to a foreign bank rate of interest in certain cases, it is good to ask to which index the adjustable rate of interest is tied to. Usually they are fixed for a period of 1-5 years and then become adjustable.
Mortgages – fixed rate:
The interest rate of the loan amount is fixed in the case of fixed rate mortgage till the end of the term regardless of the market fluctuations. The debtor will never have to pay more than the fixed interest rate at any cost. The only means by which a fixed rate mortgage can change is through Refinancing.
Refinancing:
It is a process of changing the existing mortgage terms of agreement. The debtor can go for refinancing when the interest rates are lower so that he can save money qualifying for the lower rate of interest. The length of the term can also be adjusted to be either long or short using refinance option. Care needs to be taken when going for refinancing of mortgages as it entails for new closing costs. Fees and closing costs are involved in this method.
Appraisal:
The crucial part of mortgage is the appraisal. Before going for a loan from a bank, the value of the house must be assessed properly. An appraiser can determine how much the house is worth actually by inspecting the features of the house and by comparing it with the neighborhood houses. If any addition or embellishment is made to the house, it can raise the value of the house, but may require to appraise the new value of the document.
Tags: home buying, home financing, mortgages, mortgages types
Posted by
admin on May 1, 2009 in
Finances,
Mortgages The proposed law allowing bankruptcy judges to modify mortgages, known as the cramdown bill, was voted down Thursday by the U.S. Senate.
The financial industry opposed the bill, arguing that the change would drive up interest rates and make the market less stable. Some senators also were concerned that their constituents who pay their bills on time would resent this measure.
Minority Leader Mitch McConnell, who led the opposition, says the vote “ensures that homeowners who pay their bills and follow the rules won’t see an interest-rate hike at the whim of a bankruptcy judge.”
The reform was a key part of President Obama’s foreclosure prevention plan, leaving some to question ultimate likelihood of its success.
“It won’t render the loan modification program useless, but it removed an important ingredient that would have helped realign everybody’s interests,” says Barry Zigas, director of housing policy for the Consumer Federation of America.
Source: CNNMoney.com, Tami Lubby (04/30/2009)
Tags: cramdown bill, Finances, home financing, mortgage modifications, mortgages
Posted by
admin on Apr 17, 2009 in
Finances,
Housing,
Mortgages We’ve had many a buyer call us and ask how the $8000 tax credit can help them buy a home if they can’t get that money until they buy a home. A classic Catch-22. Well, NJ has come up with an answer for those first time home buyers who need the tax credit money to help them with their downpayment or closing costs.
The New Jersey Housing Mortgage Finance Agency (NJHMFA) is offering cash payments, in the form of a zero interest loan, of up to $5,000 for qualified first-time home buyers in order to help them defray their closing costs or to satisfy the downpayment requirements. This will then help new home buyers get into the housing market and buy their first home.
This zero interest loan, offered as part of NJHMFA’s “Prefund” program, would act like a cash advance against the $8,000 tax credit that is being offered to first time home buyers who purchase their home between April 8 and December 1 of this year. Basically, home buyers would be provided with the payment as a loan and would be required to repay the advance/loan when they receive their federal tax credit.
Who can get this zero interest loan/cash advance? The loan/cash advance is available to first time home buyers who:
-
Arrange their financing through the NJHMFA. (You can obtain a list of participating lenders by calling their toll-free number at (800) NJ HOUSE)
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Are qualified for the tax credit offered as a part of the federal stimulus program
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Pledge to apply the proceeds of their tax credit to repay the cash
For more details about the NJHMFA’s First Time Home Buyers Tax Credit Loan Program (TCLP) you can visit the HMFA page (http://www.state.nj.us/dca/hmfa/consu/buyers/ownprg/tclp.html).
Tags: 8000 tax credit, first time home buyer, first time home buyers, HMFA, tax credit, zero interest loan
Posted by
admin on Feb 18, 2009 in
Announcements,
Mortgages 
I just read a news article that both Fannie Mae and Freddie Mac are planning on toughening up their credit score and downpayment rules. As of April 1, they will implement new guidelines for loans backed by them. The new guidelines will require buyers that are putting down less then 25% for a downpayment to be charged a penalty of 3/4 of a point (a point equals 1% of the loan amount). It won’t matter what the buyer’s credit score is, if they are putting less then 25% down for a mortgage loan, they will be penalized 3/4 (0.75%) of a point.
Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a 1 percent add-on as a penalty, while those who are refinancing their homes and who plan to take cash out will be charged as much as three points if they have a low to moderate equity stake in their homes.
Many major lenders are already factoring in these higher fees, which reduces the effectiveness of the stimulus efforts. Brad German, Freddie Mac’s spokesman, said that the loan categories & credit risk combinations targeted by these fees “default at four to eight times” the rate of other mortgages that were backed by Freddie Mac. The reason for these fees, according to German, “We have to manage these risks appropriately,”.
So, if you are seriously planning to buy a home, this may be an ideal time to make that offer on that special home, get under contract, and settled before your mortgage loan includes these new fees and charges. If you haven’t found that new home, yet…don’t delay! Call us NOW at 609-417-1084 so we can help you find that special new home in record time and get you moved in.
Linda & Terry Iwaniw
REALTOR Associates
First Time Home Buyer Specialist
Marketers of HUD Owned Homes
ReSales & Investment Realty, LLC
856-795-3111 x263
609-417-1084
http://www.snewjerseyhomes.com/
Tags: buyer credit, buyers, credit, credit risk, Fannie Mae, fees, Freddie Mac, loan defaults, loan limits, mortgage loans, mortgages, points
Posted by
admin on Nov 14, 2008 in
Finances,
Mortgages The U.S. Department of Housing and Urban Development (HUD) issued long-anticipated mortgage reforms on November 12, 2008, that will help consumers to shop for the lowest cost mortgage and to avoid costly and possibly harmful loan offers from mortgage lenders. HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Although, NJ has had this requirement , it is the first time ever at the federal level. The reforms were announced in response to comments received on the Real Estate Settlement Procedures Act (RESPA) regulations that were released in March. You can read the final RESPA rule and any other reforms on HUD’s website.
Tags: consumers, HUD, mortgage loans, mortgage market, mortgage reforms, mortgages, real estate consumers, reforms
Posted by
admin on Oct 20, 2008 in
Finances,
Misce4llaneous,
Mortgages Housing and Urban Development Secretary Steve Preston has a message for prospective home buyers -
You may have heard that the credit markets were “frozen,” but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA’s volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.
In an exclusive one-on-one interview with Realty Times, the country’s top housing official said that FHA, Fannie and Freddie (who have accounted for a combined 90 percent plus share of the whole U.S. mortgage market) have kept liquidity alive for home buyers and have virtually unlimited funds for new mortgages.
The fact of the matter is that there is no credit crisis for home buyers that have at least 3 percent to put down, have documentable employment, and at least a moderately good credit record. Business loans and various other types of credit may have been more difficult to obtain in recent weeks but, according to Preston, thanks to the government’s backing of the three biggest sources of mortgages tthe buyers and refinancers of homes have had no unusual problems.
HUD is playing a key role in the $700 billion financial system bailout plan now getting underway. Steve Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort and HUD’s main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.
HUD’s new “Hope for Homeowners” program, which started October 1, will allow it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages. During an interview, Steve Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press. This program could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.
Congress has authorized HUD to provide funds and other assistance to local governments in order to buy, resell, rent out, or fix up foreclosed houses that are bringing down local property values. Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved — profitably — in the turnaround efforts.
If you’re interested, contact your local city or county housing and community development officials for more details. Even though HUD will be providing the funds, your local officials will be calling the shots and making the decisions.
So, with all of this said, why do mortgage rates seem kind of high?
One answer is that in order to fund the rescue and the new government guarantees, the Treasury Department must sell more new Treasury securities in order to raise more money. In order to attract buyers for these securities the Treasury has to offer higher interest rates to sell them.
Now, on top of that, mortgage related bonds always trade at a slightly higher yield due to the prepayment and delinquency risk. And lastly, the cost of financing mortgages has increased for Freddie Mac and Fannie Mae due to the plan for the FDIC to back the newly issued, unsecured debt of some banks. This obviously makes that debt more attractive for investors by having the government guarantee the bank debt and consequently creating more competition for Fannie Mae and Freddie Mac when they sell their own securities. So, in order to compete for those security buyers, these mortgage giants will have to raise their own yields on their securities, and to pay for that they’ll have to charge borrowers higher interest.
The Federal Housing Finance Agency (FHFA) expects to announce 2009 conforming loan limits for Fannie Mae and Freddie Mac by November 7. The limits define the maximum loan size of mortgages that can be purchased by these entities. To determine high-cost area limits under HERA for 2009, FHFA will use median home values estimated by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD). The FHA median prices will be calculated in the coming weeks by FHA for the purpose of determining its 2009 loan limits.
Watch here for updates to this issue and others pertaining any changes.
Tags: buyers, Finances, financing, home financing, home mortgages, mortgages
Posted by
admin on Oct 13, 2008 in
Finances,
Housing,
Marketplace,
Mortgages Veterans across America now have expanded homeownership opportunities due to the Veterans’ Benefits Improvement Act of 2008, which President George W. Bush signed into law last Friday. The bill includes housing provisions for veterans who are already home owners and those who aspire to homeownership, according to the NATIONAL ASSOCIATION OF REALTORS®.
“This [bill] will go a long way toward helping veterans buy and keep their homes,” says NAR President Dick Gaylord.
Three provisions in the legislation are critical to help veterans during the current housing turmoil.
1. The law will make it easier for veterans who have fallen victim to risky subprime loans to refinance their loans into safer, more affordable loans backed by the U.S Department of Veterans Affairs.
2. The legislation also makes the VA loan limit increases permanent, which will help veterans living in high-cost areas.
3. The VA also can now offer adjustable-rate mortgages to veterans. That would make homeownership more attainable for military families and personnel who often have to move more frequently than their civilian counterparts.
“We need to support and protect those who serve our country,” Gaylord says. “Helping ensure that every veteran who can afford to own a home and wants to do so will have the opportunity and that everyone who responsibly owns a home is able to keep it is part of that commitment.”
If you want to learn more or need help with your real estate needs, please feel free to contact us.
Tags: Housing, VA, VA housing, VA loans, veterans
Posted by
terryriw on Oct 7, 2008 in
Finances,
Mortgages The FLEX/FIXED program is a temporary buy down that provides a qualified borrower with a lower start rate AND the security of a fixed-payment schedule. In the month of October applicants locking into a government loan (FHA or VA) will receive a FREE 1% buy down for the first year of the mortgage.
For example, if the current rate is 6.25% they would pay based on a 5.25% rate for the first 12 payments. Someone purchasing a $200,000.00 home, putting 3% down would save $123/month for the first year!! After the first year, the payment would be recalculated and locked at the 6.25%.
If you want to learn more, contact me.
Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/
Tags: buy down, buyers, Finances, financing, mortgage
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