FHA Prepares for 2017 Housing Boom

fha-update

FHA Prepares for 2017 Housing Boom by Raising Loan Amounts and Lowering Fees

January 9, 2017
by Dean Henderson

After several years of stifled growth held back by ever increasing layers of burdensome government regulations, a new optimism for consumer confidence in housing will be aided by policy changes in the United States Department of Housing and Urban Development(HUD).

The Federal Housing Administration(FHA) has announced that in 2017 the maximum loan amounts for FHA mortgages will be increased in the high-cost California areas of Los Angeles and Orange Counties from $625,500 to $636,150.

In addition to the increased loan amounts FHA has also announced it will decrease the amount of monthly mortgage insurance charged on FHA loans by 25 basis points on most mortgages beginning the week after the new administration takes office.

In the Antelope Valley, most first-time homebuyers utilize the 3.5% down payment FHA program which currently has an annual mortgage insurance factor of .85%.  This will be reduced to .60%.  Assuming an average sales price of $269,000 the monthly mortgage insurance premium will be decreasing from $182.33 to $128.71 which is a savings of over $53 per month or $643 per year.   This could increase the buying power of homebuyers by approximately $8,000.

Ed Golding, HUD’s principal deputy assistant secretary for housing said, “Homeownership is the way most middle class Americans build wealth and achieve financial security for themselves and their families. This conservative reduction in our premium rates is an appropriate measure to support them on their path to the American dream.”

The FHA said that the premium cut “will significantly expand” access to mortgage credit and lower the cost of housing for the approximately 1 million households who are expected to purchase a home or refinance their mortgages using FHA-insured financing in 2017.

For a full breakdown of the premium cuts, click here for the details from HUD.

For more information of FHA Home Loan please contact:
Dean Henderson, CRMS
President, Financial Indepedence Mortgage
(661)726-9000

FHA Condo Loan Law Passed

condos1It will soon get easier for condominium buyers to obtain Federal Housing Administration (FHA) loans.

Last week the Presdient signed into law H.R. 3700, also known as the Housing Opportunity Through Modernization Act, that will require regulators to rewrite several rules that determine FHA eligibility for condo developments.

Current rules disqualify buyers from seeking FHA loans if less than 50 percent of the condominium units are owner-occupied. The law lowers that requirement to a 35 percent owner-occupied ratio.

FHA also would have to relax a hard rule banning transfer fees when a condo is sold to allow condominium associations to collect fees that support community improvements. That policy is consistent with Fannie Mae and Freddie Mac’s existing policy.

The agency also must simplify its re-certification process. As it stands, developments must undergo a rigorous certification hurdle every two years.

FHA overseer, the U.S. Department of Housing and Urban Development, must make some of the changes within 90 days, according to the National Association of Realtors. Other changes will be proposed through rule making.

The Congressional Budget Office estimated that the law would boost FHA-guarantee lending by $8 billion between 2017 and 2021, as more condo buyers would be eligible.

The law will also allow the U.S. Department of Agriculture (USDA) to delegate to preferred lenders its approval authority for USDA loans, and the agency to charge a $50 fee to lenders per loan for using the automated underwriting system.

The bill was unanimously approved by the House in February and by the Senate earlier in July.

For more information call:
Dean Henderson, CRMS
Financial Independence Mortgage
(661) 726-9000

Understanding and Managing Credit Scores

Managing Credit Score BubbleUnderstanding the makeup of your credit score is the first step toward managing and improving it.

As you might expect, payment history is the most influential component in your credit score, followed closely by the amounts you owe. To lesser degrees, the length of time you’ve utilized credit, the number of new accounts or inquiries you have, and the various types of credit accounts you hold also impact your score. Overall reporting also looks at how these factors relate to each other in the context of your personal usage.

To help achieve or maintain a healthy score, always remember the following:

Have a system to assure your bills are always paid on time.

Avoid late payments or the excessive use of credit by maintaining a cash “cushion” to pay for unexpected expenses. Don’t “max out” your cards. It’s better to have a high credit limit with a low balance.

Never close old accounts as the age of these can actually help your score.

If you shop for credit, do so in the shortest time period possible to minimize inquiries counted against you.

Don’t be afraid to use credit. You need several accounts in order to have a credit score. Just be sure to keep corresponding payments within your means.

If you have established credit, don’t open new accounts solely for the sake of earning a discount on a new purchase. In the long run, you may spend more than you save up front by paying higher interest rates due to a lower score. Having more accounts also increases the task of making payments and the possibility of missing one.

If you have questions about managing your credit, give us a call. We’re happy to help.

Dean Henderson, CRMS
Financial Independence Mortgage
President
NMLS 233298
(661) 726-9000
Dean@avrefi.com

Home Loan Do’s and Don’ts

A guide to making a smooth loan process

A guide to making a smooth loan process

Now that you have made the decision that you would like to buy a home there are some very important Do’s and Don’t that you need to keep in mind in order to prepare yourself for a smooth mortgage approval process.  The slightest misstep could cause significant difficulties and delays on the closing of your home.  Mortgage guidelines have some strict rules that need to be complied with in order to get you loan approved and it is you loan officer’s job to help guide you through the process and maneuver you around potential road blocks that could lead to a mortgage denial.  These Do’s and Don’t are designed to maximize you FICO scores, minimize your debt-to-income ratios, and assure your funds to close are allowable.

First the Do’s:

  • Do continue making your rent and credit payments on time
  • Do keep working at your current employer.
  • Do ask your loan officer before making any financial moves

Now the Don’ts:

  • Don’t deposit and cash in you bank accounts!
  • Don’t change jobs
  • Don’t make any major purchases. (car, furniture, refrigerator, etc.)
  • Don’t apply for or open and new credit. (even if you’re “preapproved”)
  • Don’t transfer credit card balances or consolidate any debt
  • Don’t pay charge offs or collections.(unless your loan officer says to do it)
  • Don’t close any credit card accounts
  • Don’t increase your credit card balances
  • Don’t change bank accounts.
  • Don’t pay off loans or credit cards (unless your loan officer says it’s ok)
  • Don’t give your landlord notice to move without asking your loan officer first

These are very important rules to following in the before and during you home loan process.  For more guidance to help you navigate to a fast and easy closing please call Dean Henderson at 661-726-9000.

Dean Henderson, CRMS
Financial Independence Mortgage
661-726-9000

New Down Payments Assistance Programs

Down Payment Assistance Program

CalHFA MyHome Assistance Programs

California Housing Finance Agency Launches New Mortgage Assistance Program Helps first-time homebuyers with down payment and closing costs

The California Housing Finance Agency has launched the MyHome Assistance Program for first-time homebuyers who may need help with down payment or closing costs when purchasing a home.

Buyers can receive up to 5% in assistance, low interest rates and deferred payments through MyHome. The program is available to first-time employed buyers with good credit, and can be combined with all CalHFA first mortgage programs and the Mortgage Credit Certificate program, which provides a federal income tax credit that may lower taxes and increase disposable income.

“The lack of savings for a down payment is often the barrier to purchase for first-time homebuyers, even though they can afford the monthly payments,” said CalHFA’s Executive Director, Tia Boatman Patterson. “This new program bundles the first mortgage with down payment and closing cost assistance for our borrowers to make the home buying process simple, affordable and, most importantly, attainable.”

Since 1975, CalHFA has partnered, promoted and preserved safe, affordable housing for Californians, expanding opportunities to hundreds of thousands of residents. CalHFA’s line-up of programs and products demonstrates its commitment to lending with a purpose.

“I’ve got families I’ve been working with for a year, and with MyHome they can finally purchase their first home,” said Ed Bañuelos of Academy Mortgage in Burbank. “This program is awesome, and has a lot to offer people looking to buy a mid-priced home.”

CalHFA offers more programs that help low to moderate income homebuyers including the CalPLUS FHA program, which is a first mortgage loan insured by the Federal Housing Administration, and the CalPLUS Conventional program, a first mortgage loan insured through private mortgage insurance. These loans can be combined with CalHFA’s Zero Interest Program (ZIP) for down payment assistance and/or closing costs – 3.5% assistance for a CalPLUS FHA loan and 3% for a CalPLUS conventional loan.

Help is also available through the Extra Credit Teacher Home Purchase Program, a special program for eligible teachers, administrators and staff in California schools, and the CalHFA Energy Efficient Mortgage + Grant Loan Program that assists with the costs of energy-efficient home improvements.

The California Housing Finance Agency was created in 1975 with the goal of helping more Californians find a place to call home. Its Single Family Lending division has invested more than $19.5 billion to help.

To inquire about this program please call Dean Henderson at (661)726-9000.

Waiting Period to Buy Again After a Foreclosure, Short Sale, or Loan Modification?

How long is the waiting period to buy again?By Dean Henderson, CRMS

One of the most common questions I get asked these days is how long does someone need to wait before they qualify for a new mortgage if they have experienced a foreclosure, short sale or loan modification in the past?  Currently, mortgage underwriters are treating all of these events the same.

While re-establishing credit and meeting other lending guidelines will be necessary, there are minimum waiting periods for getting new mortgage loans after these significant negative credit events.

Below are the timelines for obtaining new loans for Conventional Conforming Mortgage Loans (Fannie Mae and Freddie Mac), FHA (Federal Housing Administration Insured Loans),  USDA-RD (United States Department of Agriculture Rural Development Loans) and VA (Veterans Administration Guaranteed Loan).

These are the most common time frames. There may be some rare exceptions to these timelines. These basic guidelines do not serve as a substitute for a discussion with a mortgage professional about your specific situation.

Conventional Loans (Fannie Mae & Freddie Mac) – 7 Years

The waiting period to buy again after a foreclosure, short sale or loan modification is 7 years.  This timeframe may be reduced if the previous short sold property or modified loan was never late and the borrower is putting a large down payment on the new mortgage.  How the previous lender has rated the previous mortgage on the credit report can also have and impact on the waiting period.

FHA (Federal Housing Administration Insured Loans) – 3 Years

The waiting period to buy again after a foreclosure, short sale or loan modification is 3 years.  How the previous lender has rated the previous mortgage on the credit report can have and impact on the waiting period.  FHA does provide some very rare exceptions where the time frame can be reduced which, for example, includes the death of spouse who was the primary wage-earner at the time of the foreclosure, short sale or loan modification.

USDA-RD (United States Department of Agriculture Rural Development Loans) – 3 Years

Like FHA loans the waiting period to buy again after a foreclosure, short sale or loan modification is 3 years.  How the previous lender has rated the previous mortgage on the credit report can have and impact on the waiting period.

VA (Veterans Administration Guaranteed Loan) – 2 Years

VA has the shortest waiting period.  The waiting period to buy again after a foreclosure, short sale or loan modification is only 2 years.  If the previously foreclosed property was a VA loan there may be some issues regarding the reinstatement of the veterans full entitlement benefits.  This can be determined when we order a new Certificate of Eligibility from the US Department of Veteran Affairs.

To find out more specific information regarding these guidelines call Dean Henderson at 661-726-9000.

2012 FHA Future Bright

by Dean Henderson, CRMS

In spite of a gridlocked Congress, 2011 ended with some very positive legislation for the 2012 Federal Housing Administration (FHA) Loan Program.  The local housing market will benefit from higher FHA loan limits and an extension of the FHA Anti-Flipping waiver.

Thanks to the support of Antelope Valley Congressmen Howard “Buck” McKeon (R-CA) and Kevin McCarthy(R-CA) H.R. 2112 was passed by the US Congress which includes a provision to reinstate the FHA loan limit in high-cost areas for two years.

The higher Fannie Mae, Freddie Mac, and FHA conforming loan limits of $729,750 expired Oct. 1, when it was reduced to $625,500. The passage of H.R. 2112 provides for an extension of FHA-insured mortgages at the higher level of $729,750 in high cost areas, including Los Angeles and Orange counties, through December 2013.

Unfortunately, The US Senate and House could not agree on increasing the loan limits for Fannie Mae and Freddie Mac which marks a historic change in the long enjoyed higher max loan limits which were previously dominated by Fannie Mae and Freddie Mac.

In addition to the gift of higher FHA loan limits, FHA has also announced the extension of its “anti-flipping” waiver through the end of 2012, which allows buyers to purchase homes that have already been sold in the last 90 days.

The waiver, which was set to expire on December 31, 2011, has been extended through December 31, 2012.

An anti-flipping rule originally took effect in 2003 to stop a spike in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days. But the U.S. Department of Housing and Urban Development decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing blight in neighborhoods across the country and hampering nearby property values.

The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so. Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase, according to HUD.

The 2012 extension includes requirements that flip transactions be arms-length transactions and requires sellers to document improvements to properties to justify profits in excess of 120% of the seller’s acquisition price.

For more FHA Loan information contact:

Dean Henderson, CRMS

(661) 726-9000