Category Archives: FHA Information

2019 Loan Limit Increase Available Now to $726,525

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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.

Sincerely,
Dean Henderson
Financial Independence Mortgage
President
NMLS 233298
(661) 726-9000
[email protected]
deanhenderson.com

What a Government Shutdown Means for REALTORS®

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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.

NFIP National Flood Insurance Program

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).

Federal Housing Administration

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.)

Government Sponsored Enterprises

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.

Rural Housing Programs

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.

VA Loan Guaranty Program

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.)

Internal Revenue Service

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.

Social Security Administration

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

FHA Prepares for 2017 Housing Boom

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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

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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

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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
[email protected]

Home Loan Do’s and Don’ts

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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

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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?

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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.