Register Real Estate Advisors

Have you been thinking of buying a home? Excellent, I can help.

Are you waiting to see what happens with home prices? With so many foreclosures and short sales out there still having a negative impact on pricing there may never be a better time to buy.

Are you waiting to see what is going to happen with interest rates? They are staying historically low. Just this morning a lender told me that FHA has a 3.75% interest on a thirty year mortgage. Wow! In my lifetime I have seen the interest rates as high 20%… And now as low as 3.75%

Are you waiting for something to else happen?

Wait no more…

Here is some other news from the FHA, unfortunately, it’s not good.

The Federal Housing Administration will raise mortgage insurance premiums this April in order to repair the health of its emergency fund.

The FHA upfront mortgage insurance premium will increase to 1.75% from 1% of the base home loan amount. This will apply regardless of the term or loan-to-value ratio beginning in April.  In addition, the annual mortgage insurance premium will increase by 10 basis points for loans under the $271,050 limit for single family homes in our area.

On a typical FHA 30 yr, $150,000 loan, these changes will increase the monthly payment around $18/month and add $1125 to the balance of the loan.

Call me, text me, email me, message me… Lets talk about your next home.

If you are in the market for a housing purchase and you’re going to use an FHA Loan, then you need to lock into a purchase before April 1st to save money on your monthly mortgage payment.  FHA is taking steps to bolster their reserves.  By doing this, they are charging the consumer more for their Mortgage Insurance.  Call us today at RREA if you need to find your next home before April 1st – 281.288.3500.  The news release is below that explains in detail what you can expect from FHA in the coming months.

WASHINGTON – As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante today announced a new premium structure for FHA-insured single family mortgage loans.  FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent.

These premium changes will impact new loans insured by FHA beginning in April and June of 2012.  Details will soon be published in a Mortgagee Letter to FHA-approved lenders.

“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante.  “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or after April 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.

Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.

WASHINGTON (U.S. Department of Housing and Urban Development) – Citimortgage Inc., a subsidiary of Citibank N.A., has agreed to pay $158.3 million in damages to the U.S. Department of Housing and Urban Development (HUD) under the False Claims Act after charges of mortgage misconduct. The government’s complaint of over six years of wrongdoing in connection with Citimortgage’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program ended in a settlement approved by U.S. District Judge Victor Marrero. Citimortgage admitted responsibility for failing to comply with HUD-FHA loan requirements and to falsifying FHA mortgage insurance eligibility documents. The case against Citimortgage is just one in a series filed against lenders who ignored HUD requirements for approving government-backed loans.

There are both townhomes and condominiums in and around the Houston area.  You will need to know the difference if you are interested in purchasing either homes.  A townhouse is considered a single family residence and the paper work for the Realtor and Lender is the same as a free standing home purchase.  If you are purchasing a condominium, there is additional and different paperwork for the Realtor and Lender to prepare and strict guidelines for financing.

How do you know the difference between a townhouse and a condominium?  One way is to look at the legal description- in most cases, a townhome has a lot/block legal description and a condo will show “unit __” of “Building ___” or on tax records it will show style as being a condo.  If it is still unclear after looking at the tax records, the next step would be to have a title company pull the title information on the property to see how it was legally recorded.

If you are purchasing a condominium, you need to understand that they are considered high risk properties.  The condition and value depend on the neighbors as much as the owners, so owner occupancy is very important.  If too many owners are using the condo as an investment property or second home, then it could limit the type of loan you can get on your condo.  If you are getting a conventional loan on your condominium you have to put down atleast 20% so there will be no mortgage insurance required.  If you do a conventional loan with less than 20% down, then you will be required to get mortgage insurance and the owner occupancy rate must be atleast 75%.  So if the majority of the condos are used as rental units or second homes and you don’t have 20% to put down, you will not be able to get a conventional loan.   For an FHA or VA Loan, the government rules state that the condo association must be on the approved list for either FHA or VA before you can do a loan through them.  The approved lists are available online.  If the property is not on the approved list, then you do have the option to submit to FHA or VA for approval, but this is a long process.  For the property to get approved for an FHA or VA Loan they will require that it has an owner occupancy of atleast 50%, there cannot be any lawsuits going on with the property, past dues cannot be more than 15%, and any other requirements they want to add.

It is definitely easier and less risky to purcahse a townhome, but many condominiums are popular around the city and qualify for both VA and FHA Loans.  Check with a Realtor at Register Real Estate Advisors to learn more about the townhomes and condos in the area where you want to relocate to.  Our agents can help you move into any home you choose!  Call us today to get started.

Thought this might be useful information for investors.

The Federal Housing Administration is extending 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 soon set to expire, is “intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” Carol J. Galante, the acting Federal Housing Administration commissioner, said in a statement. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”

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.

“It’s certainly an inducement to move real estate and reduce inventories,” says Don Cameron, a real estate investor who owns a franchise of We Buy Ugly Houses in South Florida. “Why wait 90 days before you can close on a home?”

The waiver, however, still prevents predatory flipping, and sellers must justify any increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (such as by providing extra documentation on renovation expenses). Sales also must be in “arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.”

Source: “Government Extends Waiver of Anti-Flipping Law, Allowing Homes to be Bought and then Sold in 90 Days,” McClatchy-Tribune Regional News (Dec. 29, 2011) and HUD.gov

It’s that time of the week again… White Board Monday! This week’s episode answers the question, “What is the FHA?”

If you have any housing questions or are interested in purchasing a home, feel free to call or email me any time at 281.288.3500 or jay@rrea.com .

Remember, we have an in-house lender to get you qualified today. You can get that started at http://rrea.com/mortgage/ .

Qualifications for an FHA/Hud foreclosure are very similar to the requirements for a short sale, but there are some differences.
Eligibility requirements include:

• Property must me owner occupied (you must still live in the home unless you provide a verifiable reason why you have already vacated (ie job loss, job transfer, divorce).
• The property must be your primary residence (no investment properties)
• The homeowner must be 31 days or more delinquent on their mortgage at the time of closing.

If you find yourself in a hardship situation that requires a short sale or Pre-foreclosure sale, and need help I can you get through the process as a Certified Distressed Property Expert I have the the tools and knowledge to help get the deal closed.

Following is some excellent information and Q&As provided by HUD:
Question 1: When submitting a PFS Variance for approval, what items need to be attached to a PFS Variance?
Answer: Depending on the type of Variance, the Mortgagee may need to submit the HUD-1 Settlement Sheet, the first three (3) pages of the FHA “As Is” Appraisal, and/or Hardship Letter.

Question 2: Previous HUD-1 Settlement Sheets have been submitted to NSC, only for NSC to deny the Variance due to buyer or seller receiving cash at the PFS closing. Please provide guidance.
Answer: The HUD-1 Settlement Sheet is to be “completely” filled out, providing both the buyer’s and seller’s costs and fees. Neither the buyer nor seller is to walk away from the PFS closing with “cash.” The seller, if applicable, may be eligible for the Seller Incentive, but even the Incentive is “not” to be reflected as a payment of cash on the HUD-1.
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FHA rules are changing on October 4th, 2010. This change is regarding the upfront collection of Mortgage Insurance Premiums (MIP) and the monthly rate amount. To illustrate how these changes will affect buyers, I will use a scenario of a $100,000 30-year home loan and the minimum of 3.5% down, no other factors included.

The first change is a reduction in the up-front MIP that can be financed into the loan. This reduction will result in a drop of 2.25% to 1%. Let’s take a look at how this change will affect your up-front MIP. The current FHA calculation for MIP is to multiply the loan amount by the percentage of the up-front MIP (2.25%).

100,000 Sales Price – 3,500 Down Payment = 96,500 Loan Amount
96,500 x .0225 = $2,171.25

The up-front MIP with the current FHA rules is $2,171.25. After October 4th, 2010, the FHA calculation will change the percentage of 2.25% to 1%.

96,500 x .01 = $965

The up-front MIP with the new rules is $965. This first change results in an up-front savings of $1,206.25. Looks great doesn’t it? However, we have not taken a look at monthly premium that you will pay which gets us to the second change. The second change increases the monthly insurance to .09% from .50% of the current loan.

96,500 x .0055 / 12 = $44.22 monthly MIP under current FHA rules
96,500 x .009 / 12 = $72.38 monthly MIP under new FHA rules

This results in an increase of $28.16 per month even after the up-front reduction from the first change.

Mortgage insurance must be carried until the loan-to-value (LTV) reaches 78%. This means monthly MIP payments for about 10 years on average.

$44.22 x 120 months = $5,306.40 under current FHA rules
$72.38 x 120 months = $8,685.60 under new FHA rules

This second change results in $3,379.20 of extra costs to the buyer.

So how do these rule changes affect the buyer? The affect is a decrease in the amount of buying power. Because the new rules result in a higher monthly payment, the amount the buyer can qualify to borrow will drop.

Purchasing a home with a low down payment is important for a number of reasons, including the buyer’s ability to have extra cash left over for closing costs, decorating expenses, upgrades and/or other essentials needed to turn their new house into a home. Thanks to the level of competition between mortgage lenders, it’s now easier than ever to buy a home with a low down payment.

First-Time Homebuyers

There are a lot of perks to being a first-time homebuyer, including the ability to get in the door with a low down payment. Many lenders will ask for a down payment as low as five percent (three percent for FHA loans) to those looking to purchase their first home.

A first-time homebuyer is someone who has rented their previous home(s) or has never purchased a house on a permanent foundation. Individuals who have owned manufactured homes may also be eligible for a first-time homebuyer loan, but the final decision is up to each individual lender.

FHA Loan

This type of loan is guaranteed by the Federal Housing Authority (FHA) and allows for a smaller down payment than many conventional loans. In addition to offering down payments as low as three percent of the total purchase price, FHA loans often carry lower interest rates and are easier to qualify for. This type of loan is ideal for first-time homebuyers, individuals with past credit problems or even those who wish to purchase a second home.

Provide Your Land As Collateral

If you own the land that you intend to build on, many lenders will use the land in place of a down payment. In other words, you build a house on the land that you already own, and the lender gets both if you default. This is why individuals who own land often choose to build, while using the lot in place of a big down payment. In addition, many lenders are more willing to approve a loan if the land is already owned by the buyer.

Owner Financing

When a seller lists their home, they have the option of considering owner financing. In this situation, a buyer provides a down payment to the seller and signs an agreement to pay for the home (plus interest) over a preset number of years. Owner financing typically requires a lower down payment, which can be any amount that the buyer and seller agree to. Because there is no bank qualifying and no credit check, a seller can extend the offer on any terms that they wish.

ANN ARBOR, Mich. (CMPS Institute) – The Federal Housing Administration (FHA) is giving homeowners and buyers until Oct. 4 to lock in a low monthly insurance premium on FHA loans, according to Gibran Nicholas of the CMPS Institute, which trains and certifies mortgage bankers and brokers.
After that, the monthly insurance premiums on FHA loans will increase by over 63 percent.
A homebuyer purchasing a $200,000 home using a $193,000 FHA mortgage before Oct. 4 would pay an insurance premium of $88.46 per month. If the same homebuyer waits until after, the insurance premium would jump to $148.01.
Although the upfront mortgage insurance premium is going down, “the real impact to the homebuyer is actually a net increase in their out-of-pocket costs because the monthly premium is going up by 63 percent,” Nicholas said.
“Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so homebuyers rarely pay the upfront premium out of pocket,” he said. “On the other hand, the increase in the monthly premiums will be paid right out of the homebuyer’s pocket with their mortgage payment each month.”