Chris Spicher, Host of AV Nice, has a conversation with Dean Henderson who is the president of Financial Independence Mortgage. The Fast & Easy Mortgage Broker.
Dean Henderson, President (NMLS 233298)
Financial Independence Mortgage (NMLS 233853)
“The Fast & Easy Broker”
661-726-9000
Licensed by the CA Dept of Real Estate Broker #01055950
It has happened again! For the third year in a row, the Federal Housing Finance Authority (FHFA) has increased the amount of money that can be borrowed through a standard home loan.
Not planning to buy soon? Please keep reading to see why this news can still be important to you.
The details:
• The standard loan limit (also known as conforming loan limit) rose by 6.9% to a maximum amount of $484,350 in low cost counties like Kern, Riverside and San Bernardino for Conventional and VA Loans. In certain high cost areas like Los Angeles and Orange Counties, the new limit is $726,525. FHA Loan limits in low cost counties like Kern, Riverside and San Bernardino will be $314,817.
• The percentage increase is equal to the national appreciation average over the last year.
• Loan limits were kept high for 10 years, even as values declined. Now that the market has surpassed prior peaks, loan limits are on the rise again.
This means you may be able to:
• Purchase a higher priced home with more financing options, possibly including lower rates.
• Refinance an existing, higher-rate “jumbo” loan and possibly drop mortgage insurance premiums, too.
• Combine a 1st and 2nd mortgage.
If you have questions about what this change could mean for you, please reach out. And if you have friends who may benefit from this news, please pass it along. I’ll be honored to help.
For Fast & Easy Loan Approvals Call:
Dean Henderson, CRMS
(661) 726-9000
NMLS# 233298
2018 Federal Government Shutdown
What a Government Shutdown Means for REALTORS®
Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on January 19, 2018. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.
An extension of the National Flood Insurance Program (NFIP) was attached to the CR that Congress failed to pass. This means that for the duration of the shutdown, the NFIP will not be able to issue new or renew flood insurance policies. However, existing policies will not be affected until 30 days after their expiration date. Homebuyers will also be able to assume existing policies and claims will continue to be processed and paid as usual. For more detailed information, FEMA’s latest guidance to insurance companies can be found here(link is external).
HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program except for HECM loans. It will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. FHA Contractors managing the REO/HUD Homes portfolio can continue to operate. Loss mitigation programs will continue to operate. You can expect some delays with FHA processing due to short staffing. (See the HUD Contingency Plan for Possible Lapse in Appropriations(link is external) for more info.)
During previous shutdowns, Fannie Mae and Freddie Mac have continued normal operations, just as their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds. Fannie and Freddie are expected to announce relaxed procedures that would permit closings to go forward without federal verification of Social Security numbers and IRS tax transcripts. However, lenders would still have to obtain federal verification of both before the GSE’s will accept loans for purchase. Any relaxed requirements would not apply to loan modification re-financings.
The U.S. Department of Agriculture will not issue new rural housing Direct Loans or Guaranteed Loans. Scheduled closings of Direct Loans will not occur. Scheduled closings of Guaranteed Loans without the guarantee previously issued would be closed at the lender’s own risk.
The VA loan guaranty program will be operational. The VA has determined that housing is an “essential service.” In addition, VA projects that “95.5% of VA employees would either be fully funded or required to perform excepted functions during a shutdown” (Download the VA Contingency Plan here(link is external) for more info.)
The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted. We have received indications that many loan originators are adopting revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T Fannie Mae and Freddie Mac are expected to adopt relaxed provisions allowing closings but subject to tax transcript verification before the GSE’s purchase the loans.
The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing. As with IRS income verification, policies vary among lenders, with many choosing to exercise forbearance during the shutdown period subject to subsequent verification. Fannie Mae and Freddie Mac are expected to adopt policies to allow for closing subject to subsequent verification and before GSE purchase of the loan.
For more information contact:
Dean Henderson, CRMS
(661)726-9000
The Fed increased rates at their most recent meeting. They also indicated they will likely raise rates three additional times in 2018. Please read on for more:The Federal Reserve Board (the Fed), controls the Fed Fund Rate and the Discount Rate. These are charges for overnight loans from bank to bank or from the Fed to member banks.
What does an increase mean for regular people?
• It could cause banks to increase their “prime rates,” which are often used to calculate interest on consumer products like credit cards and home equity lines of credit (HELOCs).
• Mortgage rates are long-term rates and not directly controlled by Fed rate changes. However, mortgage rates are influenced by Fed policy, and rates can rise in anticipation of future Fed action. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time.
Upcoming change in leadership at the Fed:
In January 2018, the current Fed chair, Janet Yellen, will step aside for a new chair, Jerome Powell. Time will tell whether this transition will impact overall policy.
Here’s what we know:
With the uncertainty, I’m tracking the changes carefully and am happy to keep you informed whenever you like.
Thank you for allowing me to provide you updates on industry news. Please reach out if I can answer any questions for you or help with financing (or refinancing) your home.
Dean Henderson, CRMS
661-726-9000
November 28, 2017 Ben Lane HousingWireLast year, the Federal Housing Finance Agency increased the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac for the first time since the housing crisis.
And now, the FHFA is doing it again.
For the second year in a row, and the second time since 2006, the FHFA is increasing the conforming loan limits for Fannie and Freddie in 2018.
The FHFA announced Tuesday that it is increasing the conforming loan limits from $424,100 to $453,100 for 2018.
The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels.
Fannie and Freddie’s conforming loan limits stayed at $417,000 until last year, when the FHFA finally increased the loan limit to $424,100.
But, as the FHFA noted Tuesday, home prices are on the rise, which necessitates a second straight yearly increase in the conforming loan limit.
The FHFA’s third quarter 2017 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that house prices increased 6.8%, on average, between the third quarters of 2016 and 2017.
Therefore, the FHFA said that the baseline maximum conforming loan limit in 2018 will increase by the same percentage – from $424,100 to $453,100.
Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit.
Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit.
According to the FHFA, median home values “generally increased” in high-cost areas in 2017, which drove up the maximum loan limits in many of those areas.
Therefore, the new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 (which is 150% of $453,100) for one-unit properties in the contiguous U.S.
In 2017, the high-cost loan limit was $636,150.
According to the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
In these areas, the baseline loan limit will be $679,650 for one-unit properties, but the FHFA notes that loan limits may be higher in some specific locations.
For a full look at the conforming loan limits, by county, click here.
The FHFA notes that as a result of “generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit,” the 2018 maximum conforming loan limit will be higher in all but 71 counties or county equivalents in the U.S. than it was in 2017.
Buy a Home With a 1% Down Conventional Mortgage And No Monthly PMIThe conventional 1% down mortgage is the best financing option in the market to help homebuyers purchase a home with a low down payment. This mortgage program is available to ALL homebuyers and you do not have to be a first time buyer to qualify. Buyers also have the option of removing the mortgage insurance “PMI” from their payment so they can obtain an even lower monthly payment. I included a Question & Answer section below so you know how to qualify for this program.
The 1% Down Conventional Mortgage Program
The conventional 1% down mortgage is very popular with homebuyers, as it is helping them purchase a home with a low down payment and a low fixed rate.
With rising health-care costs and student loan debts that many people have these days, it is getting more and more difficult for homebuyers to save up for a down payment to purchase a home.
Until recently, buyers had to put down 3% to qualify for conventional financing, or they were stuck with 3.5% down FHA financing and their expensive monthly mortgage insurance if they only had a minimum down payment.
This 1% down mortgage program is helping more buyers obtain homeownership sooner.
To qualify for this new program, a buyer only has to come up with 1% down. Then the lender gives the buyer a 2% lender credit towards the down payment giving the buyer 3% equity at closing.
Please note, there is NO 2nd mortgage or outside down payment assistance programs involved with this 1% down mortgage program. This is a regular conventional financing program.
Buyers can also get a gift for the 1% down payment, so now prospective buyers can reach out to family and ask for a gift to help them purchase a home.
There is also an option to eliminate the monthly mortgage insurance “PMI” from the mortgage payment, so this is helping buyers obtain an even lower monthly payment. This is a great option for buyers, so now they don’t have to worry about having to remove the monthly PMI from their mortgage payment.
With FHA financing, if you put down less than 10% with FHA, you have to pay the monthly mortgage insurance for the life of the loan,
With monthly rents continuing to rise in most parts of California, home ownership is looking like a much better investment for renters.
As you can see below, just a 4% increase in annual rent, can drive a $1,500 monthly rent up to $1,974 in just 8 years, an increase of $474, which is a 32% increase in overall rent.
Compare this to buying a home and obtaining a low fixed rate and monthly payment that will never change. When you own a home, it is a great hedge against inflation for the future, whereas rent will continue to go up over time.
With the new 1% down program, you can now get into a home for the price of a couple of month’s rent. With mortgage rates also still near all time lows, the cost of borrowing money to finance a home is still very good.
Frequently Asked Questions for the Conventional 1% down mortgage
Here are the most frequently asked questions that buyers and real estate agents have in regards to the new conventional 1% down loan option.
1. What is the maximum loan amount with 1% down?
The maximum loan with 1% down is $424,100, which is the conventional loan limit.
If you need to borrow over $424,100, the minimum down payment is only 5% down.
2. Can I receive the 1% down payment as a gift?
Yes, the 1% down payment can be gifted on this program. Closing costs and reserves can also be gifted if needed.
3. What credit score is required to qualify for this program?
We require a 700 credit score to qualify for this loan program.
4. Is the 1% down program for 1st time buyers only?
No, you just cannot own another home at the time of closing.
5. Is private mortgage insurance “PMI” required with the 1% down mortgage program?
Yes, borrowers are required to pay private mortgage insurance “PMI” on the 1% down mortgage. The amount of monthly mortgage insurance you pay will depend on your credit score. There is also an option to eliminate the monthly PMI from the mortgage payment.
6. How do you eliminate the monthly mortgage insurance “PMI’ option on this program?
It’s very simple. All you have to do is take a slightly higher interest rate than normal, say from 3.75% to 4%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.
7. Can I get 1% down on 2nd homes or Investment Properties?
No, the 1% down is for Primary Residences only. On 2nd homes, you only have to put down 10% to obtain the No PMI payment option. On investment properties this program is not available, as you have to put down 20%, which eliminates the Mortgage insurance anyway.
8. Do condos qualify for this program?
Yes, you can also purchase a condo using this program with only 1% down and get the No PMI option.
9. Can I use an adjustable-rate mortgage with the 1% down mortgage?
No, the 1% down mortgage requires a 30-year fixed rate mortgage only.
10. What is the maximum number of units for a home with the 1% down payment mortgage?
The 3 percent down mortgage is for single-unit homes only. This includes single-family detached homes and single-family attached homes such as condominiums and town homes. 2-unit homes, 3-unit homes, and 4-unit homes cannot be financed with the conventional 3% down mortgage.
11. But FHA mortgage rates are lower than this program?
Yes FHA interest rates are lower, but when you factor in the very expensive FHA monthly mortgage insurance, the FHA overall monthly payment will always be higher than this 1% down No PMI option.
12. What if I put down 3% or 5%, will I get a lower rate?
Yes, if you put down 3% or 5% for the down payment, you will get a lower interest rate. With Conventional Financing, The larger the down payment, the lower the interest rate you will get.
4 other reasons the Conventional 1% down program will benefit home buyers vs FHA financing
There are some other great benefits to using this conventional program vs FHA financing, so you have have more available homes to choose from.
1. This conventional program is a great option for buyers in complexes that are NON FHA approved, so now you have more inventory to choose from and agents have more homes to show them!
2. This conventional program will help you afford to purchase a single family home instead of a condo, as it frees up having to pay monthly mortgage insurance and HOA dues, which can amount to roughly $600-$700 a month on a typical condo. This will open up a lot more inventory you to purchase.
3. Conventional does NOT have an anti-home flipping policy, which means conventional buyers are allowed to purchase homes that are being fixed up and flipped by investors with less restrictions. So now you don’t have to worry about the FHA’s strict anti-home flipping policies. FHA buyers have to wait 90 days before they can buy a flipped home.
4. Compared to conventional financing, FHA appraisals can be a little more strict in terms of asking sellers for repairs on a property, so this is another benefit of going conventional.
If you would like to get approved for this program, or you have any questions about any of this information above, please feel free to contact me directly at 661-726-9000.
Dean Henderson, CRMS
President
Financial Independence Mortgage
661-726-9000
NMLS 233298
CA BRE LIC# 01055950
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
Upfront Guarantee Fee and Monthly/Annual Fee Decrease
USDA has announced a reduction in the upfront guarantee fee and monthly/annual fee for fiscal year (FY) 2017 effective with Conditional Commitments issued on or after October 1, 2016 through September 30, 2017. The current and new reduced fees are as follows:
USDA Rural Development Reducing Guarantee and Annual Fees in October:
Effective October 1, 2016 (the start of fiscal year 2017) program fees for USDA Rural Development’s guaranteed home loan program will be significantly reduced.
The upfront guarantee fee will change from 2.75% to 1.0% of the loan amount.
The annual fee will change from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.
The new fee structure will save homebuyers thousands of dollars up front and reduce monthly payments significantly.
For More Information about the USDA program call:
Dean Henderson, CRMS
President
Financial Independence Mortgage
(661) 726-9000
It 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