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Higher (And Lower) FHA Mortgage Insurance Premiums Start October 4, 2010

On August 13, 2010, in Mortgage Programs & News, by admin | View Comments

FHA mortgage insurance premiums ready to changeFor the second time this year, the FHA is modifying mortgage insurance.

Beginning with FHA case numbers issued on or after October 4, 2010, the FHA is changing its upfront and annual mortgage insurance premium structure.

Under the new terms, assuming a 30-year fixed rate FHA mortgage with at least 5 percent equity:

  • Upfront MIP drops to 1.000% of the amount borrowed from 2.250%
  • Annual MIP increases to 0.850% of the amount borrowed from 0.500%

For homeowners in Tucson and everywhere else , this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan’s long-term costs.

Using a $100,000 mortgage as an example, upfront MIP falls to $1,000 from $2,250; monthly MIP jumps to $70.83 from $41.67. The FHA expects the change will yield an additional $300 million in premiums monthly.

The update is a huge win for the FHA whose reserve funds are self-proclaimed to be “perilously low”.  The extra monies should help recapitalize and stabilize the government group.

The FHA is on pace to back 1.7 million loans this year.

For the majority of refinancing FHA homeowners and home buyers, the MIP change is neither good nor bad — the borrowing landscape will just looks a bit different.  Yes, loans will cost more to carry each month, but also they’ll be less expensive to procure. It’s a trade-off and you can apply math formulas to solve for the best time to apply FHA.

It may be wise to get your FHA case number before October 4, for example, depending on your time frame in the home and the expected life of the mortgage. Or, it may be better to wait until after October 4 to apply.

If you’re unsure of how the new FHA mortgage premiums will impact your mortgage, be sure to call or email your loan officer for help.

NOTE : The FHA originally announced an implementation date of September 7. It was subsequently amended to October 4, 2010.

Fannie Mae Announces FURTHER tightening!

On May 5, 2010, in Mortgage Programs & News, by Todd Abelson | View Comments

Continuing on the path to “right its ship”, tighter restrictions and/or program eliminations were announced, effective as early as June 19, 2010. In summary, here they are:

  1. Borrowers using ARMs (Adjustable Rate Mortgages) with a fixed period of 5 years or less, MUST qualify based upon the GREATER of the fully adjusted rate -or- the start rate + 2%.
  2. Use of Interest-Only loans will no longer be allowed for Cash-out refinances, rental properties, or multi-unit properties (even if owner-occupied). Furthermore, the Borrower must have a 720 FICO score AND 24 months of PITI reserves!
  3. Elimination of Balloon programs (they are actually called 5/25 or 7/23 “Two-Steps”)
  4. Better definition of restrictions on pre-foreclosure or Deed-in-lieu of foreclosure

Click here to read the entire announcement

Call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson Arizona for all your mortgage needs at (520) 331-LEND

The Federal Home Buyer Tax Credit Enters Its Home Stretch — 30 Days Left

On April 1, 2010, in Mortgage Programs & News, by admin | View Comments

Federal home buyer tax creditThere’s just 30 days remaining to use the federal home buyer tax credit.

The credit ranges up to $8,000 for first-time homebuyers, and up to $6,500 for existing homeworkers who have lived in their main home for 5 of the last 8 years.

Claiming the federal tax credit is a two-step process. First, you must be under contract for a new home on or before April 30, 2010.  Then, you must close on said home on or before June 30, 2010.

There are no exceptions on the dates (except for certain members of the military).

Timeline aside, homebuyers and the subject property must also meet minimum requirements in order to be tax credit-eligible:

  • You can’t purchase the home from a parent, spouse, or child
  • You can’t purchase the home from an entity in which the seller is a majority owner
  • You can’t acquire the home by gift or inheritance
  • Each buyer in the purchase must meet eligibility requirements
  • The home sale price may not exceed $800,000
  • Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete eligibility checklist is published on the IRS website.  Or, if you find IRS-speak too difficult, make a phone call to your accountant.  Asking a tax professional’s advice on a tax-related matter is never a time-waster.

And lastly, don’t forget that if you’re claiming to federal tax credit for home buyers, it’s a tax credit and not a deduction.  This means that a tax filer who qualifies for the full $8,000 and for whom the “normal” federal tax liability is $8,000, will owe no federal taxes in 2010 to the IRS.

If you’re an active buyer in Tucson, or anywhere else in the country , mark your calendar for April 30, 2010. It’s 30 days from now and, as the date gets closer, buyer traffic will increase. The likely result is higher home prices and more difficult negotiations.  The best time to act may be today.

Funding for Rural Housing Program ending?

On March 31, 2010, in Mortgage Programs & News, by Todd Abelson | View Comments

Recently, Rural Development’s national office in Washington, D.C., issued a letter stating that funding for the “Guaranteed Rural Housing” (GRH) program would most likely be exhausted by the end of April 2010.

Once funding is exhausted, local RD offices will NOT issue RD Conditional Commitments “subject to receipt of appropriated funds.” This is because it is not certain when additional funding will be available.

If you have a loan in-process under this program, you better check to make sure funds are available so as to not be “left at the alter”.

Call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson Arizona for all your mortgage needs! 520-331-LEND

7 Weeks Remain To Find A Home, Claim Up To $8,000 In Tax Credits

On March 9, 2010, in Mortgage Programs & News, by admin | View Comments

7 weeks remain for the Home Buyer Tax Credit ExpirationIn November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of “move-up” buyers — homeowners that have owned and lived in their home for 5 of the last 8 years.

The credit ranges up to $8,000 per buyer. There’s now just 7 weeks left to take advantage.

To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.

In addition to meeting the deadline dates, there’s a basic set of requirements to be tax credit-eligible:

  • You can’t purchase the home from a parent, spouse, or child
  • You can’t purchase the home from an entity in which the seller is a majority owner
  • You can’t acquire the home by gift or inheritance
  • Each buyer in the purchase must meet eligibility requirements

There’s other criteria, too.

For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.

You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional’s opinion is always wise.

And lastly, don’t forget that government’s tax credit program is a true tax credit. It’s not a tax deduction.  This means that a tax filer whose “normal” tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.

If you’re currently in the House Hunt, mark your calendar for April 30, 2010. It’s 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase.  You may find sellers more willing to negotiate today than several weeks from now.

Now is a great time to buy a home in Tucson, AZ!

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