Tag: Mortgage loan

Financing-home loans, Real Estate

2014 VA loan limits for the DC Metro area

Posted on by Kristen K. Foley, REALTOR®

Anyone who knows mehome ownership for vets, they know I love a VA Loan.  VA loans are truly the best deal on the market (in my humble opinion)…and they do not have all of the problems that some agents and veterans think they do.  The appraisal process can be a little more difficult, but only in the fact that they MAY require some repairs (such as fixing peeling lead-based paint…not such a bad thing to require)  and a re-inspect if repairs were required, but more often than not, they do not require anything.  They value the home just the same as a conventional appraiser and I have never seen a VA appraiser come in low on a property that was priced right.  I digress…

Just to update you folks, the VA loan limits for a 0% down loan (yes…ZERO down) have changed in many higher cost areas.  For most areas, it is still a max of loan limit of $417,000.  In Northern Virginia and DC, the loan limit has always been higher and is now $692,500…NOT BAD!  And if you are willing to put money down, they will lend up to (I am told) @ $1.5 million (depending on the down payment of course).

VA loans have low rates and if you are disabled in ANY way, they will waive the funding fee (this fee is 9 times out of 10 financed into the loan amount anyway).  They will also allow up to 6% of the purchase price towards closing costs in subsidies from the seller…if you are in an area where subsidies “fly”…more on that another time (*there are a few caveats to this, so be sure you have a good lender who will find a way to get the most out of any seller subsidies you have negotiated…such as the seller buying down your rate, etc*)

Lastly, the VA will allow you to do what is called a streamline refinance.  If a lower rate is available, you can get it and there is no appraisal required.  Additionally, most lenders will pay the refi costs, so you can pretty much to the refi for free or for VERY little out of pocket.  If it benefits the veteran, it is allowed.

This is an amazing way to realize the dream of home-ownership…and a rightful benefit for our nation’s heroes who have risked their lives for our freedom and liberties!

In summery, if you are eligible to get a VA loan, consider it!

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Financing-home loans, Real Estate, The Market

Lock Your Mortgage Rate: New Loan Fees Expected Within Days

Posted on by Kristen K. Foley, REALTOR®

Article sent from a lender partner: Will and Nancy Jacobs with First Heritage Mortgage in Virginia

Starting soon, nearly all home buyers and refinancing households nationwide will pay higher mortgage loan fees. Congress has made it law.

13 months ago, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Congress enacted a one-year cut to FICA payroll taxes.

FICA stands for Federal Insurance Contributions Act. Taxes collected under FICA fund such programs as Social Security and Medicare.

The stimulus plan temporarily lowered tax rates for salaried workers from 6.2% to 4.2%; and for self-employed persons from 12.4% to 10.4%. Effective January 1, 2012, “regular” tax rates were to return.

That is, until late-December 2011. In one of its last moves of the year, Congress passed a temporary, two-month extension to the payroll tax cut, extending it through February 29, 2012. The expected cost to the U.S. Treasury is $33 billion.

To recoup those costs, Congress has turned to Fannie Mae, Freddie Mac and the FHA.

Each entity has been ordered to collect news fees on each new mortgage is backs, and has been told to forward said fees to U.S. Treasury directly. There’s no “workaround” allowed or forgiveness applied — each new loan is subject to the payment.

The rules are listed on page 17 of the law’s final draft, in a section unambiguously titled “Title IV — Mortgage Fees and Premiums”.

According to the law :

*  Fannie Mae and Freddie Mac must collect an average fee of no less than 10 basis points (0.1%) per new loan

The FHA must raise its monthly mortgage insurance premiums 10 basis points for all new loans

The expected cost to consumers is no less than $10 monthly per $100,000 borrowed. Some analysts, however, expect Fannie Mae and Freddie Mac to collect more than is minimally required. This could add an additional $30-50 to your monthly mortgage payment per $100,000 borrowed.

Therefore, if you’ve been shopping for a home or for mortgage rates , take advantage. Within days, lenders are expected to start collecting Payroll Tax Extension fees from mortgage applicants — a move that will cost you money.

Lock today to avoid the big fees. Save yourself money.

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Financing-home loans, Investing, Real Estate, The Market

Looks like the FHA loan limits will go back to $729,750

Posted on by Kristen K. Foley, REALTOR®
Logo of the Federal Housing Administration.
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Looks like the FHA loan limits will go back to $729,750, not Fannie Mae or Freddie Mac limits though at this point.  It isn’t a done deal yet…the president still needs to sign it into law but this is a good sign!  See article below.

NOVEMBER 18, 2011
Congress Increases the Ceiling on Size of Mortgages
By ALAN ZIBEL
WASHINGTON—U.S. lawmakers moved Thursday to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration.
Congress passed a broad spending bill that included a provision to restore to $729,750 the maximum size of mortgage that can be backed by the FHA, giving some borrowers the option of putting less money down to obtain a mortgage in expensive cities.  FHA-backed loans currently account for a third of new mortgages for home purchases and can be made with down payments of as little as 3.5%, compared with the 20% industry standard.  The bill goes next to President Barack Obama to be signed into law.
The loan limits fell to $625,500 on Oct. 1 in expensive markets like New York, San Francisco and Washington. They declined in around 250 counties for loans guaranteed by mortgage-finance companies Fannie Mae and Freddie Mac, and in around 600 counties for FHA-backed loans. In some cases, the FHA loan limits fell below those of Fannie Mae and Freddie Mac.
The housing lobby pushed for Congress to reinstate loan limits for Fannie, Freddie and FHA, citing concerns that any steps to raise borrowing costs might be too much for fragile housing markets to bear. Limits for Fannie and Freddie loans were not restored.  Sen. Robert Menendez (D., N.J.) said that restoring the loan limits will benefit the housing market at a time when it is weak. Doing so, he said, “won’t cost taxpayers a dime” and will benefit the housing market in many other parts of the country besides those cities.
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Tim McLaughlin
Senior Vice President, Secondary Marketing

Weichert Financial Services
225 Littleton Road, Morris Plains, NJ 07950

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Financing-home loans

GSE and FHA Loan Limit Changes for 2011: Scope of Impact

Posted on by Kristen K. Foley, REALTOR®
Special Studies, June 1, 2011 
By Robert Dietz, Ph.D., and Natalia Siniavskaia, Ph.D.
Economics and Housing Policy Group
National Association of Home Builders

October 1, 2011, some mortgage loan limits for the government-sponsored enterprises Fannie Mae and Freddie Mac (GSEs) and the Federal Housing Administration (FHA) will drop from their current temporary levels to reduced limits based on permanent criteria established by Congress in 2008.[1]

Read the rest of the article here: http://www.nahb.org/generic.aspx?genericContentID=159279

 

 

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Financing-home loans, Real Estate, The Market

FHA – Seasoning requirements

Posted on by Kristen K. Foley, REALTOR®

HUD has published the final version of its predatory lending rule established to combat “flipping.” Flipping is the term used to describe the resale of a recently acquired property for an artificially inflated value. Under the new rule, recently flipped properties are not eligible for FHA mortgage insurance.

Some of the other features of the rule include:

  • Only the owner of record may sell a home to an individual who will get an FHA mortgage. It cannot involve the sale or assignment of a sales contract.
  • Resales occurring 90 days or fewer after the purchase of the property are not eligible for FHA insurance.
  • Resales occurring between 91 and 180 days after purchase will be eligible only if the lender obtains an additional independent appraisal based on a resale profit percentage threshold established by the FHA. Lenders may prove that the increased value of the property is due to rehabilitation.

In areas where flipping is a problem, HUD may require that lenders provide additional documentation to sup-port the value of the property. This would supersede the 91–180 day rule shown above.

Make sure you are working with an agent who is aware of these rules if you are seeking an FHA loan..you could end up in default if you find out too late in a transaction to purchase a home that meets this criteria.  Also verify any additional risk layering that your specific lender may use to protect themselves that adds additional requirements to the above noted.

Hope this helps!

 

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Financing-home loans, Real Estate, The Market

First-Time Homebuyers

Posted on by Kristen K. Foley, REALTOR®
A bedroom in an AIMCO apartment home
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Quoted from:

Focus on First Time Homebuyers by Tim McLaughlin

There has been a dramatic shift occurring in the housing sector. According to Realty Times, of the 8.4 million people who have purchased a home in the last two years, 41 percent of them have been first time buyers. This number is up from 35 percent in 2007, and experts believe this growing demographic will influence the home-style landscape in the years to come for first time purchasers.

Today’s first time homebuyers have as much desire to establish household independence as their parents did, but the economic environment has impacted their preferences to some degree. This demographic is much more aware of both how much home they need and what they can afford. But they also have specific preferences in layout, efficiency and neighborhood type according to recent statistics.

On average, over the past few years, first time buyers are buying smaller, lower priced houses than trade up buyers are, the majority buying homes with avg. square feet under 2,500. This buying preference is partially affected by the economy and by maintenance costs, according to Realty Times.

In addition, first time homebuyers seem to have a different mindset regarding a home purchase. They look at the transaction as securing a place to live in first and foremost. While they have less to spend, they want the space they can afford put to the most effective use. This means that the practical spaces they will use every day, like kitchens, laundry rooms and the master bedroom, are their key focus. They appreciate open spaces that can be defined by furniture rather than walls and hallways. Additionally, home location appears to be important to these buyers, who have a keen interest in transit oriented communities. This makes urban areas highly appealing, as well as suburban areas with walk able town centers.

Of biggest concern to this subset appears to be financing questions: qualifications, the right loan structure with the least amount of money down, and understanding an approval process that is much more cumbersome than what their parents had to deal with.

This market is a tough one to navigate…we have very low inventory because of sellers still waiting for appreciation before they will list, but plenty of buyers out looking to take advantage of the great interest rates and loan programs to get into their first home or move up into their “forever home”.  In this environment, it is so important to have a Realtor you trust to help you navigate the offer process as well as all of the steps between the contract signing and settlement.  Between the appraisal, the home inspection, rent-backs and more…it is important to choose someone you like and trust and who keeps current on laws, best practices and the market pulse to guide you through the process (regardless of how many times you have bought and/or sold a home).

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Financing-home loans, Real Estate, The Market

Rent vs. Buy

Posted on by Kristen K. Foley, REALTOR®
Deutsche Bank
Image via Wikipedia

Deutsche Bank released a very interesting study this week showing that renting a home costs US households more than paying a mortgage for the first time in at least two decades. The rent-buy ratio, or rent as a percentage of after-tax mortgage payments, is based on figures that Deutsche Bank compiled from NAR and the REIS information service. Rent amounted to 100.2% of home-loan costs in last year’s fourth quarter, the highest level since calculations began in 1991.

So dissecting this: renting is now more costly than buying, rates have come back down this week ….it is a great day to buy OR SELL a house!

 

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Financing-home loans, Real Estate

Interest Rates…up, down or stable?

Posted on by Kristen K. Foley, REALTOR®
Development of the balance sheet of the US Fed...
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Interesting Insight from Weichert Financial’s “Market Monitor”

“We continue to witness the uptick in mortgage rates, as foreign investors divest from their holdings in mortgage backed securities, and banks/institutional players sell their holdings to book the gains from these purchases in the 2010 calendar year. We saw a very similar scenario take place at year end 2009, with global investors capitalizing on profits. In the first/second quarter of 2010, those very same sellers became buyers again, driving rates back downward for the remainder of the year. Many traders are wondering if we will see the very same phenomenon happen again in 2011.

The wild card will be the economy. With a growing/strong economy, investors will be more willing to invest in Equities as an alternative investment choice to Fixed Income. If the economy continues to remain stagnant, not so much, and Fixed Income will once again be attractive. We will continue to monitor through year end, but with 30 yrs in the 4’s, 15 yrs in the 3’s, and a 5/1 ARM at 2.99%, these are still very attractive levels. It not too late to capitalize.”

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Financing-home loans, Real Estate

Applying for a home loan…some great questions to ask potential lenders

Posted on by Kristen K. Foley, REALTOR®

The following are some good questions to discuss with potential lenders when applying for a home loan:

  • Are both fixed-rate and adjustable mortgage loans available? (see adjustable rate mortgages below)
  • How long can I “lock-in” the financing at the current interest rate and what is the “lock-in” policy?
  • Is a float down lock available in case rates drop after I have locked in?
  • What are the other fees a lender may charge me in conjunction with my loan?
  • Are funds for a second mortgage available?
  • Is there a pre-payment penalty clause? This involves extra charges for paying off the loan before maturity. About 80% of all loans in the United States are paid off early.
  • What is the “grace” period?
  • How late can a monthly payment be made before a late charge is assessed?
  • What will happen if a payment is missed?
  • If you sell your house, will the new buyer (if he/she qualifies) be able to assume your mortgage at the same interest rate?
  • Do you have to pay “points” to get your new mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A “point” is 1% of the loan.  Or can you buy down points by selecting a slightly higher interest rate. If you do this and end up with negative points, the bank actually gives you money back at closing. 5% vs. 4.75% is no biggie if you aren’t planning to keep the home for a long time and would prefer to come to closing with a little less money.
  • Will the lender require mortgage insurance?
  • Is the loan serviced locally or is the servicing sold? Ask for a written “good faith deposit”.
  • What will the total closing costs be?

On Adjustable Rate Mortgages

  • How often will the interest rate be adjusted?
  • Is there a maximum limit on each rate change?
  • How often will the monthly payment be adjusted?
  • Is there a ceiling on payment adjustments?
  • Can the term of the loan be extended?
  • What is the maximum rate that can be charged over the life of the loan?
  • Is there any potential for negative amortization?
  • What is the annual percentage rate?

Hope this helps!

Happy Saturday!

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