Posts

FHA to Raise Annual Mortgage Insurance Premium

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FHA will likely increase the Annual Mortgage Insurance Premium in October. It is currently at 0.55% of the loan amount, but it will increase anywhere from 0.90% all the way up to the recently authorized 1.55% of the loan amount. The good news is that the Up Front Mortgage Insurance Premium will likely decrease. We […]Read More

FHA Buyers MUST Include Spouse’s Credit; Why Our Broker Channel Remains Better than Our Direct Lending Channel

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Married FHA buyers MUST provide their spouse’s credit too, no matter what the circumstances are. We often get married buyers who want to get FHA financing on their own, but are precluded from doing so b/c their spouse’s credit is so bad or b/c their spouse has so much debt that debt ratios are pushed […]Read More

HVCC May Not Go Away; FHA Assumability is Valuable

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Note that we have a few lenders at 4.125% today, but those lenders require Impound Accounts (taxes and insurance get paid every month with mortgage payment). Many lenders offer lower rates with Impounds, but we do not quote those rates b/c so many of our borrowers do not like this requirement. We are certainly not […]Read More

FHA Financing

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FHA loans represent equally good opportunities for the same reasons Conventional Loans are so appealing – the loan limit goes all the way to $729,750, and the rates are low. Advantages of FHA Loans include: Small down payment of only 3.5% of purchase price Debt ratios up to 57% Entire down payment can be a […]Read More

Irrational Fear of FHA Financing? We Can Help

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Last week we touted FHA loans again b/c they are “assumable”. BUT, many sellers and asset managers continue to fear FHA financed offers, and we think that fear is utterly irrational. There is almost no difference between an “AS IS” FHA Offer and an “AS IS” Conventional Offer. The only difference is that the FHA […]Read More

Rent vs FHA Buy vs Investor Buy Numbers: MESSAGE: BUY

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We have a $315,000 purchase in Antioch for a 3,000 square foot house. An investor is buying it with 20% down. The “Rent Survey” came back with a range of $2,150 to $2,400 per month. With 20% down, the investor’s PITI with a rate of 5.375%* will be about $1,825 per month. This house could […]Read More

Loan-to-Value Limits for FHA and Conventional Financing

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Loan-to-Value Limits: For FHA Purchases for SFRs, Town-homes/PUDS, and FHA Approved Condos: The LTV limit remains 96.5%. For Conventional Purchases with Mortgage Insurance: Condos can go to 90% LTV, and SFRs can go to 95%. Remember that Town-home or PUD complexes (where the buyer owns the land under the structure) do not have to be […]Read More

Flips “OK” for FHA and Conventional, but “Coach” the Appraiser!

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We are getting numerous “FLIPS” in our office, as we have several lenders who accept them for both FHA and conventional purchases (even NON-owner occupied). A Flip is a property that changed title (to an owner other than a foreclosing bank) in the previous 90 days. Remember, however, that lenders scrutinize Flip appraisals much more […]Read More

FHA for UNITS; FHA Instead of TIC Financing

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Once again, positive economic news signals the market that the Fed may start pushing up interest rates for two reasons: (1) a stronger economy may bring on inflation (higher rates hold off inflation); and (2) a stronger economy does not need the extra support of the Fed’s low interest rates. Don’t forget that FHA financing […]Read More

90 Day Flip Rule for FHA Explained

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Several of our FHA sources no longer enforce the 90 day flip rule; irrespective of who the seller is (the seller can be an investor who just bought at auction, for example). However, the requirements get onerous if the current buyer is paying more than 20% more for the property than did the previous buyer. […]Read More

Reasons to Buy Now; FHA Assumable!

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Yesterday, our client’s CPA told her that she was “stretching herself too thin” with a $500,000 FHA purchase, even though her debt ratio was less than 38%. We were surprised to say the least, and we of course pointed out the reasons why we think now is a great time to buy: (1) buyers can […]Read More

FHA Changes; Fed Speaks Today

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The Fed is also expected to announce continued efforts to keep rates low now that economic news from December (unemployment and manufacturing) has come out worse than expected. If the economic news had continued to show improvement, it is likely the Fed would have allowed rates to go up a bit. SO, it looks like […]Read More

95% “Dream Loans” with No MI – FHA May Be Better

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We had clients ask about the 95% Loan-to-Value loans with no mortgage insurance that are being touted by some lenders. But despite the lack of mortgage insurance, these loans are often less competitive than they might appear at first blush. When there is “no mortgage insurance” on a high LTV loan, that simply means the […]Read More

FHA Appraisals NOT subject to HVCC Nonsense Until Feb. 15th!

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Despite the rate increases, we had some great news yesterday. The imposition of HVCC guidelines on FHA Appraisals has been delayed for another 45 days (to Feb. 15th). This is extremely good news, as we have literally “saved” at least 25 deals in the last 12 months solely and only because we were able to […]Read More

New FHA Guidelines

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Below are the NEW FHA guidelines for condominium financing. Note that only a very few lenders still do Spot Approvals, but we have wholesale access to those lenders, and we have become experts at garnering Spot Approvals. Extends the “spot approval” process until Feb. 1, 2010, allowing individual units to qualify rather than requiring an […]Read More

Assumable FHA Loans Could Add Value to Home

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Rates still remain “historically low”, as we keep saying. And these rates will seem extremely low in the next few years if inflation sets in as expected. This is why the ASSUMABILITY feature of FHA loans should never be disregarded. Only FHA loans are assumable. And those borrowers locking in FHA loans at 5.0% for […]Read More

FHA Spot Approvals Are Still Here

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A Realtor today told us that HOA “Spot Approvals” are no longer allowed? This was a shock to us, as we have at least ten fully approved “Spot Approvals” in our pipeline right now. A “Spot Approval” is an FHA approval for a single unit in a condominium complex that is not a formally FHA […]Read More

Rates Improve as Fed Promises Continued Mortgage Buying; FHA Loans Are Assumable

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Great Story: We had an elderly couple come by yesterday for a Reverse Mortgage. They bought their house in the late 1970s in Danville, CA. Their home cost more than similar nearby homes because it came with an assumable 9.25% mortgage, at a time when mortgage rates were close to 20%. In other words, the […]Read More

Rates Improve Marginally on Inflation Numbers; Rent vs Buy Comparison AGAIN.

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Rent vs Buy in today’s market? With FHA rates so low, and FHA guidelines so flexible, we wonder why anybody with adequate credit would continue to rent in today’s market. A $225,000 house in Eastern Contra Costa County would rent for about $1,650 to $1,700 per month. That same house can be purchased with FHA […]Read More

FHA Appraisal Story – Happy Ending

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FHA Appraisal Story: We have an FHA purchase in Crockett and about half the house is under construction. Our FHA Appraiser disclosed everything, but he only gave value to the finished portion of the home, and disclosed the unfinished portions in a way that would not alarm the lender. The result: The appraisal slid right […]Read More

HVCC Appraisal Horror Story; FHA Not Slower

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Consumer Confidence is up; New Home Sales are up; and Durable Goods Orders are up. Normally all this “good news” would send the stock market up too, and the bond market down – resulting in higher rates. The stock market, however, was unimpressed because New Home Sales and Durable Goods Orders are only up month […]Read More

A Scenario Where FHA Offers are Superior to Conventional Offers

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When to accept the FHA Offer? A Realtor/Client called yesterday to discuss multiple offers she received in the $650,000 range for a $625,000 listing. Several offers involved conventional financing, and several involved FHA financing. Her concern was the appraisal; there were only one or two comparable sales that bracketed the $650,000 price while the majority […]Read More

FHA is NOT Only for First Time Homebuyers; Age is Never an Issue Either

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FHA Loans are NOT just for First Time Homebuyers. Almost any qualified borrower can take advantage of FHA financing. The only exception is that in most cases borrowers are not allowed to have two FHA loans at the same time. But even that rule can be circumvented if a move to a new home is […]Read More

Expect Surge in Housing Inventory; FHA Appraisal Issues at Banks

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We frequently point out how “positive” economic news, like improving industrial production or improving employment statistics, usually pushes interest rates higher. Positive reports send signals to the market that the economy is improving and that the Fed may back off from its support of the bond market. Our point is to remind everyone that when […]Read More

All FHA Lenders NOT Created Equal; Different Lenders Have Different Guidelines

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We received a Condo Purchase this week that had fallen out with another lender. That lender told the real estate agent that there was “no way the property could ever get FHA financing because the complex could never get an FHA Spot Approval”. This was news to us because we had just closed an FHA […]Read More

Take Advantage of FHA; Spot Approvals for Condo Projects Not FHA

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We have been beating this dead horse over and over, but we continue to be surprised by the number of Realtors who do NOT recognize the advantage of FHA financing. The major advantages include: (1) Very small down payments of only 3.5%; (2) The entire down payment can be a gift; (3) FHA transactions can […]Read More

“Spot” Approvals for Non-FHA Approved Condo Complex’s

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We are getting a surprisingly large number of purchases for Condo Complexes that are NOT FHA approved. The reason we are getting them now is because the Complexes used to be far out of the FHA allowable price range so the developers never sought FHA approval. But now that prices have plummeted and FHA Loan […]Read More

FHA’s Share of the Market Climbs Dramatically; FHA Advantages (again)

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According to the MBAA, the government-insured (FHA and VA loans) share of mortgage applications was nearly 36% last month, the highest level since November of 1990; FHA and VA accounted for almost 40% of purchase applications. There are numerous reasons for this: (1) FHA and VA offer the only low-down payment options; (2) FHA loan […]Read More

No More New Construction Tax Credits; Septic Tank OK for FHA w/o a Septic Cert

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The State of California is no longer accepting requests for the $10,000 Tax Credit for New Construction, as they have used up the allotted funds. The $8,000 Federal Tax Credit for all First Time Homebuyers remains in place through November 30th. FHA now allows properties with septic tanks, without a “septic certification”, if the appraiser […]Read More

Market Very Volatile; FHA Closing Costs

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There appears to be some confusion about FHA Closing Costs. Remember first of all that the “Up Front MIP” (1.75% of the loan amount) can just be added to the loan, so it is not usually a closing cost the buyer pays out of pocket. Other closing costs, for a $300,000 FHA purchase, for example, […]Read More

FHA Can Be Better!

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FHA Financing can be better than Conventional Financing for many reasons. Listing Agents and Sellers have no reason to be leery of offers that involve FHA financing. 1. FHA loans are assumable in most cases. Conventional loans are not. This is a huge advantage for buyers locking rates at historical lows now. FHA assumable loans […]Read More

FHA Getting A Bad Rap

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We have had two REO Sellers tell our Realtor clients in the last week that they “will not accept offers that require FHA financing”. There is no logic to this at all in this lending environment. First and foremost, FHA transactions can now be done “as is”, so sellers do not need to worry about […]Read More

Lower Rates Better Than a Lower Price; FHA Limit $729,750

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Yesterday’s stock market rally had little effect on rates, and there is little news today other than an $18 billion bond auction which could affect rates later today, depending on the market’s response to the auction. As we mentioned yesterday, there is a strong possibility that the sharply increasing money supply could drive up rates […]Read More

Rates May Not Get Much Lower; Make Sure “Seller” Can Convey Title; FHA MIP

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Rates may not get any lower, as we have been saying. The Federal Reserve of New York bought $30 billion in mortgage backed securities over a 5 day period last week, and rates only fell marginally, and that was due largely to the collapse of stocks. The point is that the Fed’s purchases represented a […]Read More

Economy Tanks (again); FHA “As Is”; First Time Home Buyer Tax Credit Attachment

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The Stimulus package failed to stimulate, as stocks fell yesterday. In addition, Japan reported its steepest GDP decline on record for the 4th quarter of 2008, Housing Starts were down 17% (far more than expected), Building Permits were way down, and Industrial Production is down. The only thing this bodes well for is interest rates, […]Read More

Additions Without Permits “OK” for FHA & Conventional

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We have had issues with additions or structures that were built without permits on many occasions over the last year, but we finally have a few lenders loosening up with respect to such additions. If the addition is just a “finished basement”, there usually is not an issue, but if there is actually a structure […]Read More