Archives For 1st Time Buyers

house-huntingAccording to a survey conducted by Bankrate.com, one in four Americans are considering buying a home this year. If this statistic proves to be true, that means that 59 million people will be looking to enter the housing market in 2017.

The survey also revealed 3 key takeaways:

  1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
  2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
  3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

Holden Lewis, a mortgage analyst for Bankrate.com, pointed to one big reason why many Americans are starting to consider homeownership:

“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

Bottom Line

If buying a home is a part of your dream for 2017, let’s get together to determine if you are able to.

I’d love to serve you and your family! ~Cole cole@coleholmes.com #StressFreeHomeLoans

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FHA Cuts Annual MIP!

January 9, 2017 — Leave a comment

fha updateFHA announced this morning that it is lowering the annual premium 25 bps.  It is effective for loans with a closing or disbursement date on or after January 27th, 2017.  By making the change effective for loans closed instead of case numbers assigned, it eliminates a lot of the confusion caused in 2015 when premiums were last reduced.

How does this translate into real dollars?

In most cases 3.5% down payment on a 30yr fixed loan (less than $625,000) the current annual MIP equals 85 basis points of the loan amount (Loan Amount X 0.85%).  The new rate equals 60 basis points (Loan Amount X 0.60%).

For example – using the perimeters above, a $200,000 loan currently yields monthly mortgage insurance payment of $141.67.  Under the new rate the monthly mortgage insurance payment drops to $100.  Generating ~$500 p/yr in savings!

This is HUGE!

Here is a link to the press release:  https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2017/HUDNo_17-003

Here is a link to the Mortgagee Letter:  https://portal.hud.gov/hudportal/documents/huddoc?id=17-01ml.pdf

fha updateFHA published the 2017 mortgage limits this afternoon.  They follow the limits outlined in the FHFA announcement last week.

The new FHA limits apply to case numbers assigned on or after January 1st, 2017.

The new single-family “floor” is $275,665 and the new maximum loan amount in high cost areas is $636,150.


For the Dallas-Fort Worth area most counties will see an increased loan limit up to $362,250.  Just to be sure, though, here’s the link to search your specific county

FHA County Loan Limit Search


For HECMs, the maximum claim amount for FHA-insured HECMs will be $636,150.

Here is a link to areas that had increases in 2017 (including those that increased from $271,050 to $275,665):

http://portal.hud.gov/hudportal/documents/huddoc?id=limitsincreasedcy16.pdf

No areas were decreased from 2016 to 2017.  

Mortgagee Letters:

Mortgagee Letter 2016-20 (forward):  http://portal.hud.gov/hudportal/documents/huddoc?id=16-20ml.pdf

Mortgagee Letter 2016-19 (reverse):  http://portal.hud.gov/hudportal/documents/huddoc?id=16-19ml.pdf

no-moneyYes! In addition to VA & USDA we have the Wealth Builder Loan

What Is the Wealth Building Loan?

Designed as an equity-creating mortgage option, the Wealth Building Loan requires no down payment and offers offers eligible borrowers a 7-1 Adjustable Rate Mortgage with a 20-year amortization.

Wealth Building Loan Benefits

The Wealth Building Loan eliminates monthly mortgage insurance payments nearly four years sooner than a 30-year conventional loan with a 3 percent down payment. Overall, this loan option helps homebuyers build equity quickly by applying more of their payment to principal and less to interest each month.

Wealth Building Loan Qualifying Factors

A few qualifying factors for this program include:

  • Occupancy: Primary residence, owner occupied
  • Property type: 1-unit residences, condominiums
  • Maximum loan amount: $417,000 (except in certain FHFA High Cost Areas)
  • Loan type: 7-1 Adjustable Rate Mortgage with a 20‑year amortization

Learn More About the Wealth Building Loan Application Process

Call or email me today and I will walk you through the Wealth Building Loan application process and answer any questions that may arise. Get started with a pre-qualification!

With adjustable rate mortgages, the interest rate is variable and may increase or decrease every year after the initial fixed rate period based on changes to an index. This could result in an increase in the monthly payment. All loan requests are subject to credit approval as well as specific program requirements and guidelines. 

privacyYour right to privacy is a significant concern for mortgage professionals who are involved in the solicitation, origination, processing, closing and servicing of mortgage transactions.  Multiple laws protect the privacy of borrowers, and violation of these laws can result in serious liability.  Privacy laws protect borrowers from the time they receive a solicitation for a mortgage loan until their loans are repaid.

The actions that are necessary to maintain compliance with privacy laws are an ongoing concern for mortgage professionals.  Distinct privacy issues arise at each stage of a lending transaction, and additional issues arise while servicing a mortgage loan:

  • Completion of a Loan Application:  Under the Gramm-Leach-Bliley Act (GLB Act), a consumer becomes a customer, earning special protections of his/her personal financial information, when completing an application for a mortgage.
  • Processing of a Loan Application:  While processing a loan application, lenders and other settlement service providers exchange personal financial information about the loan applicant.  The Fair Credit Reporting Act (FCRA) protects the privacy of information that a lender and a consumer-reporting agency exchange.  The Gramm-Leach-Bliley Act (GLB) and the Safeguards Rule protect any private information exchanged by other settlement service providers.
  • Mortgage Settlement:  At the time of settlement, a loan is often transferred to a second financial institution for loan servicing.  The settlement service providers who no longer have a customer relationship with the borrower must safeguard the privacy of the borrower’s information during the period of time that they are required to retain records related to the transaction.  The Safeguards Rule establishes the standards for protecting the privacy of the borrower’s personal information.  When record retention periods expire and settlement service providers want to dispose of outdated records, they must protect the privacy of the information shown on the records by adhering to the requirements of the Fair and Accurate Credit Transactions Act’s (FACTA) Disposal Rule.
  • Loan Servicing:  As long as it accepts mortgage payments and provides statements to the borrower, a loan servicer must comply with the provisions of the Gramm-Leach-Bliley Act (GLB Act).  The loan servicer must protect the privacy of personal information and comply with the rules that address the sharing of information with affiliated and non-affiliated parties.  The loan servicer will also function as a furnisher of information to consumer reporting agencies.  When providing information to consumer reporting agencies on the borrower’s payment history, loan servicers must comply with the provisions of the Fair Credit Reporting Act (FCRA).
  • Loan Repayment:  When a borrower completes payment of a loan and record retention periods expire, the loan servicer must dispose of information in compliance with the Fair and Accurate Credit Transactions Act’s (FACTA) Disposal Rule.

question mark manAnswer: To remove private mortgage insurance you must be up to date with your monthly payments. And you have to reach the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home.

GREAT info from the CFPB’s original articlehere

To remove private mortgage insurance (PMI) that you pay on your mortgage loan, you must be up to date with your monthly payments. These rules apply to mortgages closed on or after July 29, 1999. Federal law generally provides two ways for you to remove PMI from your home loan: canceling PMI or PMI termination.

Request PMI cancellation

The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your lender.

You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home.

There are other important criteria you must meet if you want to cancel PMI on your loan:

  • Your request must be in writing.
  • You must have a good payment history and be current on your payments.
  • Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
  • Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn’t declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.

If you meet these requirements your servicer generally must cancel your PMI when you request it.

Automatic PMI termination

Even if you don’t ask your lender to cancel PMI, your lender still must terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home. You also need to be current on your payments on the anticipated cancellation date. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.

It’s worth noting a termination request is different than a cancellation request. Your lender must terminate PMI even if the principal balance of your loan has not actually reached 78 percent of the original value of your home – for example, because the value of your home declined.

Final PMI termination

There is one other important requirement that some homeowners need to be aware of:  your lender must terminate PMI if you reach the midpoint of your loan’s amortization schedule before the 78 percent date. The midpoint of your loan’s amortization schedule is halfway through the life of your loan. Most loans are 30-year loans, so the midpoint would occur after 15 years have passed.

Termination of PMI at the loan’s midpoint may occur before reaching 78 percent of the original value of your home for people who have a mortgage with an interest-only period, principal forbearance, or a balloon payment. Keep in mind that you must be current on your monthly payments for termination to occur.

If your loan is guaranteed by the Federal Housing Administration (FHA) or Department ofVeterans Affairs (VA), these rules generally won’t apply.  If you have questions about mortgage insurance on an FHA or VA loan, contact your servicer.

If you have lender-paid mortgage insurance, different rules apply.

 

rent v own

GREAT words of wisdom from my friends over at KCM – There are some renters that have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgageeither your mortgage or your landlord’s.

As The Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.  

That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

The graph below shows the widening gap in net worth between a homeowner and a renter:

increasing gap in family wealth

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting with home values and interest rates projected to climb.