Mortgage News

FHA Mortgage Insurance Premiums are about to change again

Hard to believe all the changes that continue to come out from HUD regarding the FHA mortgage insurance fund but the reality is that more and more people are using FHA as the primary financing choice in today’s market.    The new rules go into effect on all case numbers pulled on and after September 7th, 2010.  This is a good and a bad thing.

The good part- the upfront mortgage insurance premiums are going to go DOWN, yes I said down from 2.25% of the loan amount to 1%.  So on a $300,000 loan amount your total upfront mortgage insurance premium right now is $6750 but with the new premiums it wil actually go down to $3,000.  This part is great since I can not tell you how many people stayed away from FHA specifically for this purpose.

Now the bad news- the annual mortgage insurance is going UP, yep that is correct- it is going from its current levels of .50-.55 monthly to .85-.90 and the worst part is that it could go up again in the near future if HUD decides that it wants to take it up.  So what does that mean to you- here is how it translates out:

On that same $300,000 loan under the current  premiums your monthly mortgage insurance would be $122 per month and with the new premiums that start September 7th the monthly would be $207 per month.  That’s an $85 per month increase!!!!

The idea of FHA being here to help customers and save them money is really not the case as much as it used to be- so the point is if you have been sitting on the fence trying to decide whether to refinance or to purchase that new home- its time to get a move on or it will cost you more come September 7th!

Please feel free to call us at AnnieMac Home Mortgage and we can help you to get you into the perfect loan for you.  Call me at 856-505-6717.

AnnieMac Home Mortgage just had our Better Business Bureau rating increased to and A+                                                                                      Can your lender offer you that type of customer support?

Three Ways to Mess Up a Home Mortgage Closing

This is an article that I found on CNN.com yesterday and was written by Bankrate.com.  Its funny because this is something new that has just popped up from our compliance department in the last few days.  We actually are required to have a new credit report pulled within 5 days of closing a loan to make sure new accounts or balances have not been added to our clients reports.  We are not checking new credit scores just balances and credit inquires.

I thought it was important for you the customer to understand so there are no surprises.  We have actually gone a step forward with this and when we send you out a disclosure package we have the customer signing a form so that they understand the importance of this new initiative so that you the customer are aware.  Please comment or email with any questions regarding this new procedure.

Three Ways to Mess Up a Home Mortgage Closing

BUSINESS BIZ COMPANIES MARKETSBankrate.com | 21 Jun 2010 | 11:04 AM ET

// Want a lender to delay or even cancel your mortgage closing? Then change your “borrower circumstances” between the day you apply for and the day you close a home loan.

Lenders have gotten stricter in response to the mortgage meltdown. The latest tightening of the screws comes from Fannie Mae. The mortgage titan’s Loan Quality Initiative, which went into effect June 1, requires lenders to track “changes in borrower circumstances” between application and closing.

The rules aren’t new, but Fannie will enforce them more vigorously. For borrowers, it means certain actions are likely to delay or otherwise mess up a mortgage closing.

“Any change in circumstance could affect and delay a borrower’s closing on a transaction,” says David Adamo, CEO of Luxury Mortgage of Stamford, Conn.

Following are three things borrowers can do to mess up their next mortgage closing.

Get a new credit card or auto loan

If you want to implode your impending mortgage, get a new credit card or auto loan.

Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie’s Loan Quality Initiative adds urgency to this request.

For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn’t know about it. Later, the borrower misses a couple of mortgage payments.

Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That’s a money loser for the lender.

So at the eleventh hour, most lenders check credit for new accounts.

Even merely opening an account — without charging anything to it — can be a mistake.

Retailers often offer discounts to customers who apply for store credit, Adamo says. “That is something that most consumers will take advantage of, and even something as benign as that could affect a borrower’s ability to close on a mortgage approval.”

Charge up credit cards

Charging up credit cards with thousands of dollars’ worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It’s best to leave those cards alone.

“Don’t increase your credit card balances at all. Consider paying cash for everything,” says Dan Green, a mortgage planner for Waterstone Mortgage in Cincinnati.

Mortgage approval is based partly on debt-to-income ratio. The lender looks at the borrower’s minimum monthly debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.

Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.

Change jobs

Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.

“Because the rules about any job change, especially if you go to commission or bonus, usually you need a two-year history,” says Bob Walters, chief economist for Quicken Loans. “So if all of a sudden you switch from W-2 to some other kind of compensation, and you don’t have the history, a lot of times that income can’t be included. So all of a sudden you’ll find maybe you don’t qualify.”

© 2010 Bankrate.com

FHA mortgage insurance premiums are going up

On January 21st, 2010 HUD announced that the FHA mortgage insurance premiums will be increasing.  The changes never seem to end in the mortgage industry right now- everyday changes happen and costs continue to go up.  Here is a breakdown on what to expect:

  • For all new FHA case numbers assigned on or after April 5th, 2010 FHA will collect an upfront mortgage insurance premium of 2.25%
  • This is an increase from the current 1.75%
  • This policy change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

So what does that mean to you- the borrower?  It means that if you have been thinking about refinancing now is the time to act.  Make sure to get your lender to pull your case number before April 5th otherwise you will pay more in the long run.  Even with the increase in premiums, FHA will still remain the main option for most refinance candidates who want to great rates and good terms.

A lot of people have been on the fence of whether to refinance or not and this is one good reason along with the fact that rates are all time lows and they are scheduled to start increasing- so call now and talk to one of our knowledgeable mortgage consultants who can help you on your way to saving money!

AnnieMac Home Mortgage – 856-505-6717  jonofrio@annie-mac.com