Are FHA mortgages a good deal these days?

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

The Forgotten Loan

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

Big Fee Increases Coming From Fannie Mae & Feddie Mac

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

You CAN buy a home!

The American dream can be yours and you CAN buy a home.

Owning your own home is more than just a matter of pride (but there is a lot of that), it’s also a great first step toward financial and personal security.
If you’ve never owned a home before (or if you haven’t owned one in three years), you can easily start the process of buying a home.  There are many programs geared toward First Time Home Buyers.

We can help you with every step toward homeownership.
However, you might want to do some of your own research to begin the process.

1. Decide how much you can afford
The first step is to find out how much you can spend on a home.  There are lots of calculators online that can help you.  One great resource is ginniemae.gov.  Here you can find calculators that will help you to decide whether you should buy or rent and, if you should buy, how much you can spend and how much you need to save.
For first time homeowners or people who have not owned a home in three years, there might be some public programs that will help you become of homeowner for the first time.  Many states have home buying programs that help new homeowners with downpayments.  We will help you determine if you qualify for a program.

2. Shop for a loan
Just as you shop for a bargain in a store, you should also shop for a good interest rate on a home loan.
Remember the higher your credit score, the lower your interest rate.  Getting a high credit score is as simple as paying your bills on time, every time, for a number of months or years. You can see your credit report is once a year at annualcreditreport.com.  You might have to pay extra to get your credit score, but the information can tell you a lot about what kind of home loan you qualify for.  Scores of 700 or higher are considered the best.
You will have to have some sort of downpayment. The downpayment is usually 3 percent to 10 percent of the purchase price.  But it is possible to make a deal without money down.  We’ll discuss this with you.

3. Choose a real estate agent
We can help you find all the houses available in your price range and give you tips on how to buy and negotiate for a home. We’ll help you through all the paperwork and tell how to take each step in the process.

Remember YOU can buy a home and we can help you.

Tags: buyers, buying a home, first time buyers, first time home buyers, home buying, mortgage loans

They’re called USDA Rural Development 502 Loans

There is another news announcement that “Buyers Being Lured to 100% Loan Program” that was in the recent issues of The Wall Street Journal. The article states that more buyers in search of home loans are turning to an obscure program operated by the United States Department of Agriculture.

Well, we wrote about this program a few months back. The blog entry detailed this little know mortgage loan program.   The program allows no-money-down purchases. For those that qualify, a borrower can seek up to 102 percent, including a mortgage insurance policy.  To quality, buyers can’t have income that exceeds 115 percent of the median county income. Additionally, the loans are restricted to low-density areas (usually towns of no more than 25,000 residents). The loans are made by private lenders, which are then insured by the government.

For more information, contact your personal mortgage representative.  Or, if you don’t have one, we can highly recommend a few that we have done business with and have been completely satisfied with their service, as have our clients.  Just contact us by calling 609-417-1084. 

Find your next home at our new and updated web site.

Tags: buyers, Finances, financial, loans, mortgage loans, mortgages, no downpayment, no money down

Mortgage Reforms from HUD

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

An Open Letter to Mortgage Representatives and Loan Officers

A day never goes by that I don’t receive an e-mail, a postal letter, or a fax from some loan officer/mortgage representative telling me what they can offer my customers and clients. I could paper my office walls with all of the ones that I receive. But I can understand your motivation…you’re trying to solicit more business for yourself. Because that’s what I do. I’ve spoken to many of you and you ask a very valid question -

“What can I do to earn your business and have you refer your clients and customers to me?”

I can now answer that question – refer home buyers to me. Now, to better understand my answer I need to expand on it a bit more. First of all, I have not had a serious home buyer that I haven’t been able to find a home for. It may take a bit of time, but I end up finding them exactly what they were looking for. Secondly, I have never had a deal fall apart because of the house disappearing or my buyers no longer qualify to own it (different then no longer being qualified to acquire the funds to purchase it).

With that said, I can now more fully explain my perspective and you can better understand where I’m coming from. I spend a considerable amount of time, money, and effort to attract home buyers to our business. These buyers are very precious to us so we aren’t going to be quick to throw them away. If they don’t have a mortgage representative and ask us who we would recommend, do you think we are going to recommend -

1. Someone we’ve never worked with and just wants us to give them a try, or
2. Someone that we have worked with before and has demonstrated that they will makes sure that the deal goes to the settlement table.

I think that you’ll agree that it is a no brainer, we’re going to go with the proven entity. So, how do you start a lucrative business relationship with us? Send me serious, qualified buyers. If the buyer comes from you, then they are your client. However, when they come to me through my efforts then I will recommend services to them that will insure that the deal goes to the settlement table. Essentially, look at the situation in a logical manner -

• Every buyer working with a real estate agent does not need a mortgage (buyers with cash do not need to get a mortgage). I can find them a home that they can buy.
• All mortgage applicants need a home to use the funds from the mortgage loan on. As a mortgage represenatative, unless you have a real estate license, you can’t locate a home for them.

Because all mortgage applicants (excluding those seeking refinancing) must become home buyers, not all home buyers must become mortgage applicants. So, the fastest way to garner business with us in giving you a shot is to use your buyer as the test and not ours.

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: advertising, mortgage loans, mortgage reps, mortgages, promotion

States Impose Rules That Impact Home Foreclosures

Did anyone notice the drastic decrease in foreclosures in the State of Maryland?   In April, according to RealtyTrac.com, the State of Maryland ranked sixth in foreclosures among all the states but fell to 22nd just 30 days later for the month of May.

You will surely want to know what it is that the State of Maryland did to reduce foreclosure levels so drastically and quickly, and no less important, that other states will certainly want to borrow some of Maryland’s ideas and tactics.

The actual answer has nothing to do with home values, buyer demand or local economics. Even though the reported foreclosure filings dropped from 6,052 in April to 2,351 in May in Maryland this change was not the result of some economic miracle. What happened instead is that Maryland reduced foreclosure levels by changing the rules! Today if you’re a lender and want to foreclose on a home, it will take you longer to complete the process because the rules of the state of Maryland says it will take longer.  Under legislation that the state passed in April, the time required to foreclose on a home was increased from 15 days to not less than 135 days.  And it probably may take much longer. The State of Maryland now “requires a lender to wait 90 days after default before filing the foreclosure action and to send a uniform Notice of Intent to Foreclose to the homeowner 45 days prior to filing an action.”, according to the governor’s office.  That’s at least 135 days under the new rules versus just 15 under the old system.

The revised Maryland rules require lenders to physically notify homeowners about impending foreclosure actions.  This is important because the Maryland rules say that a foreclosure sale cannot occur until 45 days after such notice has been provided. Also, under the new legislation a lender must show that it actually owns the loan before it can foreclose. This new standard which may cause problems for lenders because home mortgages are sold, re-sold and divided up with electronic speed on Wall Street, for which records which may not have changed in local courthouses.

Other states are following Maryland’s example: 

1. Massachusetts has just passed legislation which will require lenders to give homeowners at least 90 days notice before starting a foreclosure.
2.  New York state is reviewing such legislation and is close to adopting similar rules.

While states cannot oversee national banks, savings & loan associations and credit unions regulated by the federal government, the federal government cannot regulate the debt collection process at the state level.  But the federal regulators could take the State of Maryland and any other states that adopt the same rules to court with claims that these state governments are interfering with the right of the federal government to regulate national lenders.  On the other hand, there are sources at REaltyTrac.com that state that there are endless precedents which favor state authorities and if the Supreme Court were to decide against the states then a new Congress and a changing political climate could well result in new federal laws which support the states.

In revising the debt collection rules the states have have not eliminated foreclosures but only slowed the foreclosure process. The impact of revised state legislation is likely to have several results.

1. Foreclosures will still take place, but at a later time.  The revised rules just postpone the inevitable, possibly. The number of toxic loans is unchanged, meaning that millions of badly underwritten mortgages, exploding adjustable rate mortgages (ARMs) and interest-only loans remain a potent source of steep foreclosure numbers in the future. 
2. These longer foreclosure periods give borrowers more leverage and time to negotiate with the lenders. 
3. There may be some homeowners will be saved from being foreclosed on because of these foreclosure delays. Owners will have more time to sell.  And real estate agents will have more time to market these homes without causing the owners to appear to be distressed (which may help them get a better sale prices).   Also, because the process now takes perhaps another 135+ days (an additional 4-5 months) to move through the foreclosure process the lender might well be interested in a short sale or a loan modification. 
4. However, these longer periods may be a benefit to loan servicers and lenders.   How?  Well, the lending community has been overwhelmed with the number of default loans and foreclosures they have to deal with and they have not had sufficient staff to deal with the large foreclosure increases that we have seen during the past 12-18 months. These state-based foreclosure delays may give lenders and loan servicers the much needed time to hire and train more people that can properly deal with owners and real estate agents.  The possible positive result could be more modifications, refinanced loans and repayment plans as opposed to outright foreclosures and short-sales.

In the above cases, both the lenders and owners could come out ahead.  Now the foreclosure numbers could fall as increasing numbers of homes were saved instead of delayed.

One concern may be that lenders may back away from those states where the foreclosure process has been tightened/revised, as in the State of Maryland. These lenders have already been writing down billions of dollars in losses so it could make sense to them to suspend loan activities in those areas which represent the most risk (like insurance companies have done in response to floods and hurricanes in certain areas in the recent past). Reduced loan availability in selected states could result in higher local interest rates, slower sales and reduced home prices throughout a state, thus causing an negative impact on the hosuing market in those states.

In trying to balance between the negative and positive aspects of the rule revisions by states, we believe that the positive aspects outweight the negative ones.  If there is anything that can or should be done to help owners save their homes from foreclosure due to being victims of predatory loans or because of circumstances completely out of their control, then those actions must be looked at seriously and in greater detail.  We look forward to when the State of New Jersey adopts such revisions and does so without causing more problems then it solves.

Linda & Terry Iwaniw
Foreclosure Prevention Consultants
REATOR Associates
RE/MAX Home Team
609-417-1084

Tags: Finances, Foreclosures, loan defaults, loans, mortgage loans, mortgages

Mortgage Loans For NJ Home Buyers – USDA Rural Development 502 Guaranteed Housing Loan Program

We’ve just been informed of a new mortgage loan program available to New Jersey Home Buyers.  The mortgage loan program is called USDA Rural Development 502 Guaranteed Housing Loan Program and has the following special advantages*:

• No Down Payment
• No Mortgage Insurance
• No Cash Reserves Required
• No stated maximum loan amount; maximum loan based on repayment ability
• Loan up to 102%** of appraised value allowed
• No First Time Homebuyer Requirement
• New and Existing Homes OK
• Fully amortized 30-year fixed rate loan
• No Prepayment Penalty
• No Seller Contribution Limit
• No limitation on source of funds for closing costs
• 100% gifted closing cost or down payment assistance is permitted
• Loan amount can include closing costs and repairs up to appraised value
• While an RD GRH loan is not FICO Score driven, RD does reward you for higher scores.  Borrowers with a score of 620*** mid-score or higher get an automatic “Credit Waiver” and do not need to explain credit derogatory including bankruptcy and no rental verification is required (see Note 1).

The 502 Guaranteed Mortgage Loan is a guaranteed loan secured by Rural Development is made by an approved mortgage lender to a borrower who is unable to qualify fully for a conventional loan because of substantial down-payment requirements.

If you’d like to know more about this and what areas in New Jersey are eligible for this loan, please contact us at 609-417-1086.

* To qualified borrowers
** Appraisal may be exceeded by amount of Gauranteed Fee
*** FICO score may be adjusted upwards by the Agency
Note 1: Exception – Any applicant with delinquent Federal debts, regardless of credit risk score and any applicant with an unsatisfactory payment history on a previous Rural Development loan, regardless of credit risk score.  For general information purposes only.  Loan approval subject to Lender underwriting guidelines and RD regulations 1980-D and applicable ANs.

Tags: bankruptcy, buyers, home buyers, mortgage loans, mortgages, usda

Forget about the price of homes! Watch the price of money!

Everybody has been reading in the news about the number of foreclosures and how the prices of homes are dropping.  As much as this might be a doom to buyers, the key factor to watch is the price of money.  What good does it do you, as a buyer, to find that great house that had it’s price drop…but now the interest rates are such that you can’t afford to borrow the money needed to buy that home.

Just read these news items -

“IndyMac in Trouble…After announcing on Monday that it would shutter its mortgage lending operations but continue business as a retail bank, IndyMac was hit on Tuesday by a potentially fatal blow to that part of its business as well.Bank depositors rushed to withdraw money from the bank, even though such deposits are insured up to $100,000 by the Federal Deposit Insurance Corporation and IndyMac stock fell even further to $0.44 per share.

The company had announced that it would be terminating about half of its 7,200 employees and it has sold most of its retail mortgage branches to Illinois-based Prospect Mortgage for an undisclosed price.”

Here is another source of mortgage funds that have disappeared.  So, my question to buyers is…how long do you want to wait to buy that new home?  While you’re watching for that home price to drop even more (as the news media, that does NOT do business in the housing market, states it will), do you know if you’re going to be able to afford the mortgage loan?  Or are you going to wait yourself out of the market?

Tags: home buying, mortgage loans, mortgages