FHA Loans – Waiting to Buy Will Hit Your Pocketbook

Yesterday morning mortgage broker Venessa Ward of Pacific Residential Mortgage spoke to the Bella Casa Real Estate brokerage. She covered a lot of valuable information and I wanted to share some of the key points we learned from Venessa.

Venessa provided this FHA loan scenario to illustrate how waiting to purchase will hit your pocketbook in just a short 6 weeks from now. You will notice three upcoming changes that will affect your out-of-pocket expenses:

  • The UFMI rate is increasing from 1.75% to 2.25% (Up Front Mortgage Insurance is an insurance premium collected by FHA at the time the loan is initially made. It is in contrast to private mortgage insurance (PMI), which is collected by the lender each month when a buyer’s down payment is less than 20% of the purchase price.)
  • The allowable Seller Contribution will decrease from 6% to 3%. For example, a seller can only contribute up to 3% toward the buyer’s settlement charges (formerly called “closing costs”).
  • The Homebuyer Tax Credit expires on April 30. Buyers must be under contract, having a signed purchase agreement in hand by April 30th, but you have until June 30th to close the financing. If a first-time homebuyer misses this April 30th deadline then you will miss out on $8,000.

Now take a look at this chart. In the case of $193,000 loan, there is a potential difference of $14,965 by purchasing after April 2010.

The lending industry has undergone big changes this past year, resulting in different paperwork, requirements to qualify for loans, and more complexity. Bella Casa firmly and absolutely encourages all buyers to ONLY seek financing from LOCAL mortgage lenders. You need to be able to sit face-to-face with your lender so they can educate you about the process and your loan, and also so that you can hold your lender accountable.

We realize that these figures can be confusing, so we highly recommend that you call a local lender to discuss your specific situation.

Special thanks to Venessa Ward from Pacific Residential Mortgage!

Pacific Residential Mortgage has offices in McMinnville and Lake Oswego.

Venessa Ward, Sr. Mortgage Banker
NMLS# 140124
“Making it happen in 2010”

Pacific Residential Mortgage, LLC
117 NE Fifth Street, STE D
McMinnville, OR 97128
(503) 437-9200 Office
(971) 241-2001 Cell
(503) 670-0674 Fax
(800) 758-0030 Toll Free

What is an FHA Mortgage?

This is the first post in a series about the FHA (Federal Housing Administration). In short, the FHA is an agency of the federal government that helps borrowers get amounts they qualify for, and assists lenders by reducing their risk in issuing loans. The FHA is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.

An FHA refinance mortgage or FHA loan allows for the refinance or purchase of a home with a low down payment. These loans are great for the first-time homebuyer.

View or download this brochure about the FHA

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more about “FHA Video FAQs“, posted with vodpod

Mortgage Rates – Economic Update

The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over – and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane.

And to those who can take advantage of currently low home loan rates, DO NOT WAIT, as the clock on these historically low rates is ticking.

Article Source: Glen Bremer Alpine Mortgage Planning Mobile: 503-502-5373 Email: gbremer@alpinemc.com

Does Moving Up Make Sense?

These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move. Somewhere like Berlin might whet your appetite. If so, check out JLL Residential Development Germany.

1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district. What if it’s not just your neighbourhood that your have outgrown? What if it’s because you actually want to move country and live in a completely new place. Why not have a new adventure and move all the way across the world to Australia. If this idea excites you then you should take a look at these real estate agents Australia, just to give you an idea of what you are missing out on. Continue reading “Does Moving Up Make Sense?”

Are You Considering a Rent-to-Own Transaction?

Rent-to-own options are becoming popular again after falling out of favor during the last couple of decades when mortgages were easy to get.

The advantages of rent-to-own to buyers include a way around poor credit, an opportunity to rebuild credit worthiness and a way to try out homeownership without making a costly commitment.

For sellers, it offers cash flow from properties that might otherwise just be sitting there.

Consider these important questions before stepping into a rent-to-own transaction. Continue reading “Are You Considering a Rent-to-Own Transaction?”