More Home Buyers, Not Enough Homes?

0 comments on this article Posted by admin in Mortgage on March 19th, 2012 , tagged with , , .

According to the latest data from Realtor.com there are more homebuyers out there but they are finding fewer homes for sale than they did a year ago.

People looking to buy a new house are quickly realizing they are not alone. There are fewer houses on the market now then there have been in years, and the lack of inventory is a major factor in how the housing market is playing out today.

In February, the number of homes listed for sale rose 0.5 percent from January, but fell 22 percent from the same time last year. The median time a home spent on the market fell nearly 10 percent to 111 days, indicating they’re selling faster. Demand for homes typically ramps up toward spring, when many buyers want to complete the transaction and be settled in by the time school starts.

Prices also rose to reflect demand. Of the 146 markets tracked by Realtor.com, 106 of them saw an increase in asking price of 6.8 percent overall since last year. The median asking price of the 1.78 million homes nationwide is $188,000.

Chicago led the markets where asking prices dropped, with a 7.6 percent decrease. It was followed by Knoxville, Tenn., and three markets in California: Orange County, Sacramento and Los Angeles. Inventories of homes for sale rose in 86 markets.

According to a spokesman for Realtor.com the drop in inventory and increase in prices and demand shows some promise for a housing recovery, many potential sellers are still waiting for prices to rise further before listing their homes. With approximately 11 million homeowners owing more on their mortgage than their home is worth, selling while prices are still low is a money-losing venture.


Foreclosure Starts On The Rise, Driven By Fannie Mae And Freddie Mac

1 comment on this article Posted by admin in Home Loans on March 16th, 2012 , tagged with , , , .

Seems like the mortgage industry is on the verge of snaking out a foreclosure pipeline which is currently clogged with millions of defaulted home loans.

Foreclosure starts on homeowners who have defaulted on their loans, which climbed from 28% in January, to 203,458 from 159,092 te previous month. This is according to the LPS Mortgage Monitor, a housing report which was published by Lender Processing Services.

The increases primarily come courtesy of Fannie Mae and Freddie Mac, according to the report. Foreclosure starts on loans controlled by the government-owned mortgage companies  jumped 60% in December and all starts on loans controlled by all other investors (private, bank-owned, and Federal Housing Authority) were also up about 10%. A spokeswoman for the Federal Housing Finance Authority (the government regulator that has controlled the companies since they went bankrupt in2 008) didn’t respond to a request for a comment on the matter.

The numbers are bringing new urgency to a series of recent efforts by the Obama administration to throw some a lifeline to struggling homeowners. The government recently announced an expansion of the Home Affordable Refinance Program, an opportunity for as many as three million homeowners with Federal Housing Authority insured loans to refinance at lower rates, as well as reaching a settlement with five big banks over servicing misconduct that will provide $20 billion in principal write-downs and other aid to borrowers.

The initiatives mainly provide assistance to mortgage holders who are currently on their payments and seem to be underwater. For those of who have stopped making payments altogether on their loan have a bleak future ahead as they don’t qualify for government assistance and in some instances, haven’t made payments in several years.

Some mortgage holders who have delinquent loans (loans that haven’t been regularly paid off) have accused the financial institutions managing their loans of making a wide range of mistakes that ended up being costly. The accusations of mistakes included: lost paperwork improper rejection for a loan modification, or an accounting error that triggered a wrongful foreclosure. Under the foreclosure settlement, banks such as Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial have promised to make dozens of reforms designed to make servicing more fair for borrowers, though past history in doing so leaves ample room for skepticism.

The jump in foreclosure starts in the wake of the settlement was expected as banks worried about the threat of lawsuits over “robo-signing” and other fraudulent activities relating to foreclosures once again. The settlement was announced on February 9 and the Lender Processing Services report is for January. Also surprising is the degree to which the spike in January foreclosure starts was driven by Fannie Mae and Freddie Mac. The reason fort his wasn’t clear but the fact that the mortgage giants seem to be leading the charge to push through foreclosures will likely provide additional fuel to the critics of the agencies. The acting director of the Federal Housing Finance Authority, Edward DeMarco, has recently come under fire for refusing to allow principal reductions on the roughly 60% of outstanding loans controlled by the mortgage giants.

While the report mainly brings bad news, there was something it left for some to look forward to: While delinquencies and foreclosures are still well above the historical norms, they have begun to edge down in most stats. An example of this would be Nevada, where 16.2% of home loans were in default, more than four times the rate of North Dakota, but down 20% since the same time last year.  With that being said, a report by Core Logic, a data company that tracks mortgages, about four million U.S. loans are seriously delinquent or in some stage of foreclosure.


Government Starts Converting Foreclosures To Rentals

1 comment on this article Posted by admin in Home Loans on February 29th, 2012 , tagged with , , , .

According to a recent announcement by U.S. housing regulator, nearly 2,500 government-owned properties are being put up for sale in a pilot program aimed at converting foreclosed properties into rental units.

The regulator said the first pilot transaction opens the gate for pre-qualified investors to submit applications to show that they have the finances to purchase pools of the foreclosed properties held by Fannie Mae. Investors who pass this test will be eligible to bid according to the Federal Housing Finance Agency. Bidders who are successful would have to rent out the properties for a specified period of time.

The foreclosure-to-rental plan is part of U.S. President Barack Obama’s broader efforts to shore up the housing market and lessen the pain of foreclosures.

As explained by the Obama Administration – When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will help:

  1. Reduce the inventory of unsold homes
  2. Help stabilize housing prices
  3. Support neighborhoods
  4. Provide sustainable rental housing for American families.

FHFA, which oversees both Fannie Mae and Freddie Mac, launched the pilot program earlier this month when it invited interested investors to pre-qualify to participate. It was announced that the first major pilot sale of foreclosed properties into the rental housing marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.

The properties being put up for sale come from a number of the areas hardest-hit by the U.S. housing downturn including Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida.


Importance Of Good Credit When Applying For Home Loan

2 comments on this article Posted by admin in Mortgage on February 19th, 2012 , tagged with , .

If you are in the market for buying a home then you certainly know that credit plays a big role in the process. It is something potential home buyers should be aware of as better credit end up meaning mortgage opportunities with lower rates.

What is Credit?

Credit is defined as a contractual agreement between two parties: a lender and a borrower. When it comes to credit, the borrower assumes something of value and agrees to repay the lender on a future date.

How does it work?

First and foremost, users are required to apply for credit (in this case, lets say a credit card or a loan). The lender then decides if the borrower is a good candidate for receiving the loan and during the decision process, the lender’s decision is usually based heavily on the borrower’s credit history. They asses the level of risk involved in extending credit to you and if you have displayed a poor repayment history, it is less likely that you will be approved for the loan or a line of credit.

Lower credit scores equates to higher interest rates. Over the life of a mortgage or an auto loan, higher interest rates will end up costing thousands of dollars. If you ever plan to take out either of these types of loans or a new credit card, it would be wise to to pull your credit reports to see where you stand and start making improvements now.

Who actually looks at your credit record?

Many people are surprised to learn that it isn’t just credit card companies looking at your credit record. In fact employers, landlords, and insurance companies gain access to your credit record. They review your past payment history and spending habits to determine whether you are a responsible financial consumer. For those of you who demonstrate an inconsistent payment history in the past, this is an indication of things to consider in the future.

What is a Credit Report?

Your credit report is a record of money you’ve borrowed, your history of paying it back and how much open credit is available to you. A credit report typically consists of:

  1. A list of debts and a history of how you’ve paid them, including credit cards, car loans and student loans.
  2. Any bills referred to a collection agency, such as utility or medical bills that you did not pay or were significantly late.
  3. Public-record information, such as tax liens and bankruptcies that may be linked to you.
  4. Inquiries made about your creditworthiness, showing how many inquiries were made for your credit and if you were given credit based on the inquiry.

What is your Credit Score?

Your credit score is a number that usually helps lenders decide how likely you are to repay your debts. It plays a significant role when securing mortgage and typically ranges from 300 to 850 points. A credit score is based on the following:

  1. Your payment history and ability to repay your debts on time. Late payments will decrease your credit score.
  2. The amount of total debt you owe, including credit cards, student loans and car loans.If your credit cards are at their limits, this can lower your credit score – even if the amount you owe isn’t large.
  3. How long you’ve used credit and how you’ve managed it. If you show a pattern of managing your credit wisely, keeping credit card balances low and paying your bills on time, your credit score will be positively affected.
  4. How often you apply for new credit and take on new debt. If you’ve applied for several credit cards at the same time, your credit score can go down.
  5. The types of credit you currently use, including credit cards, retail accounts, installment loans, finance company accounts and mortgages.

A general guide to interpreting your score:

  1. Credit scores ranging from 770 to 850 are considered very good, and the best credit rates are usually available to borrowers within this range.
  2. Credit scores above 700 are considered good, and most borrowers’ credit scores are within this range. The median credit score is about 725.
  3. Credit scores below the mid-600s may have difficulty obtaining a loan, and will experience higher interest rates and/ or larger down payments.

You are entitled by law to get a free copy of your credit report:

  1. Every 12 months
  2. Every time you find a mistake and want to make sure it’s been fixed
  3. If you’ve been denied credit and in certain other situations, such as fraud

If you want your free annual credit report, go to www.annualcreditreport.com or call (877) 322-8228. For more information about your rights regarding credit and the Fair Credit Reporting Act, visit the Federal Trade Commission website.

Helpful Tips

To help you build, maintain and protect your credit:

  1. Establish credit if you don’t have any. Open a free or low-cost checking or savings account and apply for one or two credit cards but use them carefully. It is important for lenders to verify that you have a credit history to determine your ability to repay your debts
  2. Limit your number of credit cards and try to pay the balances in full every month. Using your credit cards responsibly can help you build excellent credit.
  3. Honor your promise to pay your debts. With good credit, you can borrow for other major expenses, such as a home, car, or education, at a lower cost – ultimately saving you money.
  4. Seek the guidance of a HUD approved counseling agency for free, confidential advice if you run into problems paying your bills. The sooner you reach out, the more likely they can help you.
  5. Be sure to protect your private information. Do not provide any personal information (such as your social security number or credit card numbers) over the phone, online or through the mail unless you know the person or company.

By understanding your credit and realizing the important role it plays when securing a home loan, you’ll be on the right path to successfully obtaining the loan you need. Remember, strong credit will provide you with many financial advantages so it’s worth the effort to maintain it.


FHA Home Loans On The Verge Of Costing More

2 comments on this article Posted by admin in Current Home Loan on February 14th, 2012 , tagged with , , , .

If you plan to get an FHA mortgage or want to refinance your home with an FHA loan, you may find this information helpful and you would want to act on it quickly.

FHA home loans are the easiest type of real estate mortgage loan to qualify for. The FHA loan requirement guidelines for loan qualification are the most flexible of all mortgage loans that require less than 3.5% down and offer refinancing up to 96.5% of the homes value.

According to a recent post on WASHINGTON (AP) – “The Federal Housing Administration could run out of money over the next year and require a $700 million cash infusion from the Treasury Department to stay afloat,”

The FHA’s losses have increased as more homeowners have defaulted on their loans. The FHA does not make loans, but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans only require down payments of 3.5 percent of the purchase price.

A recent study shows that mortgages insured by the Federal Housing Administration would get more expensive this year because of recently approved legislation that calls for an increase on FHA’s mortgage insurance premium. Folks in the mortgage industry expect the increase by no later than April, but it may come before then and it won’t come alone. The FHA plans to announce another increase in its mortgage insurance premiums, in addition to the increase required by Congress.

FHA’s acting commissioner – Carol Galante told the Wall Street Journal that the FHA plans to announce an increase this month. Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development confirmed that “the recent premium increases required by Congress, as well as those FHA intends to announce, will be published in a mortgagee letter in the coming days.”

The legislation requires the FHA to raise the mortgage insurance premium by 10 basis points, or one-tenth of 1 percent of the loan amount. That alone will translate into an additional $200 per year, or about $17 per month, for a borrower who takes out a $200,000 FHA mortgage. It remains to be seen how big the other increase will be.

The change is part of a larger attempt by the FHA to protect its Mutual Mortgage Insurance Fund, which many say is in danger of requiring a multibillion dollar government bailout.

So, if you need a FHA home loan or are looking to refinance, don’t waste time waiting.


Choosing The Best Lender For A Home Loan

5 comments on this article Posted by admin in Mortgage Lenders on February 14th, 2012 , tagged with , , .

Are you in the market for a mortgage, and are shopping around for lenders? Like most people, are you considering home loan rates and other costs? Are you thinking about the lenders themselves, not just the numbers they’re presenting you with?

Here’s a list of steps to follow when determining which lender is right for you:

1. Compare fees and interest rates

A good place to start is by comparing loans based on their annual percentage rate (APR), but it’s not enough. One should get a more accurate breakdown of costs by asking various lenders for a formal “good faith estimate” of all the fees you’ll incur with your loan — this is a standard form lenders must provide you that is more detailed than the overview you’ll get with an offer. One should also ask about potential charges that may not appear on that list, such as prepayment penalties.

2. Consider your circumstances

Bigger lenders aren’t necessarily better than smaller ones, especially if you have unusual circumstances. There are some lenders that specialize in loans for people with bad credit, while others may have more options for those with smaller down payments. If you have special borrowing needs, look for a lender with experience working with people in similar situations.

3. Look at the available range of loan types

Take a look at all the home loan options available today so you can take advantage of all the choice that are available to you. Look for a lender who offers a wide variety of loan types, from conventional fixed-rate and adjustable-rate to newer ones such as hybrid ARMs and option ARMs. Your lender should be able to match you with a mortgage that’s right for your financial situation and risk tolerance.

4. Evaluate the level of customer service offered by the lender

You’re looking for flexibility and responsiveness from a lender when you’re comparing offers, ask each lender about their policy regarding locking in their quoted rates and see whether there is a fee. Also, ask them to amend one of the terms (such as a payment cap) and see how willingly they agree. And also note how well they listen to you. If you ask for a 30-year fixed-rate mortgage, they ought to present that as an option, not push you toward something different, such as an interest-only loan.

5. Check the lender’s reputation

Make sure to check the vendors reputation, word of mouth is important in every business, including the real estate marker. If you’ve never worked with a particular lender, you’ll want to find out the opinion of people who have and their reviews.


Home Loan Options Available Today

4 comments on this article Posted by admin in Current Home Loan on February 9th, 2012 , tagged with , .

There are a variety of ways you can capitalize on the best mortgage rates on the market. It’s best to acquire good mortgage rates when you purchase or refinance your home.

Listed below are the current home loan options -

Basic Types of FHA Home Loans

The FHA offers a variety of options for people who want to buy, refinance or make improvements to their home. FHA loans are not only aimed at first time home buyers but are as diverse as the housing market itself.

Qualified applicants of the FHA mortgages for first-time home buyers can get loans up to 96.5% with a minimum of 3.5% down payment. FHA loan applicants are allowed to finance the required upfront mortgage insurance premium into the mortgage, and the loan can be for one-to-four unit structures depending on borrower eligibility and other circumstances.

For borrowers who want to save some money and use their home improvement skills, FHA-guaranteed loans for fixer-upper properties are also available. Just like a more traditional FHA mortgage, fixer-upper loans feature a minimum 3.5% down payment.

According to the FHA rules “The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal,”.

These loans are for occupants only — the borrower must certify that they wants to live on the property as the primary residence. These loans are not for investors, landlords, flippers or other parties who don’t intend to live in the home. These types of mortgages, called FHA 203(k) loans, are also available as a refinancing loan according to the FHA official site.

The FHA also offers a guaranteed loan especially for borrowers aged 62 and older who want to convert the value built up in a home over time into cash. The FHA HECM loan, (also known by some as a Home Equity Conversion Mortgage or Reverse Mortgage,) is for qualifying borrowers who live in the home full-time. According to the FHA, “no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage.”

This type of FHA home loan is paid off when the borrower dies or sells the property. Eligible properties are one-to-four unit residences and the borrower must live on the property. Summer homes are not eligible for an FHA insured HECM loan.

You can also apply for an FHA mortgage for manufactured homes or mobile homes. These loans are unique – different financing and underwriting requirements apply. FHA loans for mobile or manufactured homes have requirements with regard to being attached to a fixed foundation, which allows the home to be classified as “real property”. Foundation issues are very important for these FHA mortgage loans, you can call the FHA directly to learn more at (800) 225-5342.

Combination Mortgage Insurance for Manufactured Home and Lot

This program insures mortgage loans made by private lenders to buyers of manufactured homes and the lots on which to place them. HUD’s provides mortgage insurance on manufactured homes under Title I since 1969, this has encouraged mortgage lenders to finance manufactured homes, which had traditionally been financed as personal property through comparatively high-interest, short-term consumer installment loans.

Title I programs offer coinsurance — HUD insures private lenders against losses of up to 90% of the value of a single loan, while the lender retains responsibility for the remaining 10%. The buyer will be required to make a down payment. The interest rate will be negotiated between the borrower and the lender.

Title I insurance may be used for loans of up to $92,904 for a manufactured home and lot and $23,226 for a lot only. The lot must be appraised by a HUD-approved appraiser. The dollar limits for combination and lot loans may be increased up to 85% in designated high-cost areas. The maximum loan term is 20 years for a single-module home and lot, 25 years for a multiple module home and lot, and 15 years for a lot only.

Private lending institutions are eligible for insurance on loans made under the program along with all buyers of manufactured homes who plan to use the homes as their principal residence are eligible for the program.

Buyers of manufactured homes may apply for insurance through a HUD-approved lender or through a lender’s approved retailer. You can get more information by contacting the National Help Desk at (800) CALL-FHA. To learn more about manufactured housing, including how to file a complaint about the home or gain information on missing HUD labels, regulations visit Manufactured Housing web page or the Manufactured Housing Institute website.

Energy Efficient Mortgage Insurance

The Energy Efficient Mortgage Loan program helps current or potential homeowners significantly lower their monthly utility bills by enabling them to incorporate the cost of adding energy efficient improvements into their new home or existing housing. This FHA program eliminates the need for homeowners who are interested in making their home more energy efficient to take out an additional mortgage loan to cover the cost of the improvements they intend to make to their property. The program is available as part of a FHA insured home purchase or by refinancing your current mortgage loan.

The Energy Efficient Mortgage Loan program is one of many FHA programs that insures mortgage loans. Borrowers who qualify for FHA’s popular Section 203(b) fixed-rate mortgage loan may finance up to 97% of their home loan. They are also able to fold their closing costs and the up-front mortgage insurance premium into the total cost of the loan. Energy Efficient Mortgages can also be used with FHA Section 203(k) rehabilitation program; in this case the Energy Efficient Mortgage generally follows the Section 203(k) rehabilitation program’s financing guidelines.

The Energy Efficient Mortgage Loan program is available to anyone who meets the income requirements for FHA’s Section 203(b) and is able to make the monthly mortgage payments. The cost involved in adding energy efficient features to the home and an estimate of the energy savings must be determined by a home energy rating system or a qualified energy consultant. Up to $200 of the cost of the energy inspection report may be included in the mortgage. Cooperative units are not eligible. Individual condominium units may be insured if they are not in projects that have been approved by FHA or the Department of Veterans Affairs, or they meet certain Fannie Mae guidelines.

Energy Efficient Mortgages can be used to make energy-efficient improvements in one- or two-unit existing and new homes. The improvements can be included in a borrower’s mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. The cost of the improvements that may be eligible for financing as part of the mortgage is either 5% of the property’s value (not to exceed $8,000) or $4,000, whichever is greater. View the current FHA loan limits.

FHA PowerSaver Home Energy Retrofit Loan Pilot Program

This is a new pilot program which was implemented in fiscal year 2011, which offers borrowers low-cost loans to make energy-saving improvements to their homes. Backed by the Federal Housing Administration (FHA), these new FHA PowerSaver loans offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.

PowerSaver loans are available to homeowners who desire to make energy improvements to their home, and will qualify for the loan. Key loan requirements include the following:

  1. Minimum credit score: 660
  2. Maximum total debt to income ratio: 45% (monthly income divided by monthly debt payments)
  3. Maximum combined loan-to-value (market value of the home divided by first mortgage loan balance and PowerSaver): 100% (Note: this requirement is not applicable in certain conditions).
  4. Property type: One- unit, owner-occupied, principal residence properties only.
  5. Appraisal requirement: Exterior-only inspection residential appraisal or other FHA accepted method of property valuation.

PowerSaver insures a lien positioned in first place, or second place, and also insures loans without a lien, as long as the loan amount is less than $7,500.

Home and Property Disaster Loans

The U.S. Small Business Administration (SBA) is responsible for providing affordable, timely and accessible financial assistance to homeowners and renters located in a declared disaster area. Financial assistance is available in the form of low-interest, long-term loans for losses that are not fully covered by insurance or other recoveries.SBA’s disaster loans are the primary form of federal assistance for the repair and rebuilding of non-farm, private sector disaster losses. The disaster loan program is the only form of SBA assistance not limited to small businesses. Homeowners can apply for a real property loan for up to $200,000 to repair or replace their primary residence to its pre-disaster condition. The loan may not be used to upgrade the home or make additions to it. If, however, building codes require structural improvements to repair the disaster damage, the loan may be used to meet these requirements. Loans may be increased by as much as 20% of the verified losses (not to exceed $200,000) to protect the damaged real property from possible future disasters of the same kind.Homeowners or renters can apply for a personal property loan for up to $40,000 to help repair or replace personal property, such as clothing, furniture, automobiles, etc., lost in the disaster. As a rule of thumb, personal property is anything that is not considered real estate or a part of the actual structure. This loan may not be used to replace extraordinarily expensive or irreplaceable items, such as antiques, collections, pleasure boats, recreational vehicles, fur coats, etc.

To be eligible for SBA assistance, homeowners and renters must have sustained physical damage and be located in a disaster declared county.

Disaster survivors must repay SBA disaster loans. SBA can only approve loans to applicants with a reasonable ability to repay the loan and other obligations from earnings. The terms of each loan are established in accordance with each borrower’s ability to repay. The law gives SBA several powerful tools to make disaster loans affordable: low fixed interest rates, long-terms (up to 30 years), and refinancing of prior real estate liens (in some cases). As required by law, the interest rate for each loan is based on SBA’s determination of whether an applicant has the ability to borrow or use their own resources to overcome the disaster.The SBA can provide up to $200,000 to homeowners to repair or replace their primary residence. Homeowners and renters are eligible for up to $40,000 to help repair or replace personal property. There are no upfront fees or early payment penalties charged by SBA.

Home Mortgage Insurance for Disaster Victims

The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Through Section 203(h), the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners.

This program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified disaster victims. Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. Like the basic FHA mortgage insurance program it resembles (Section 203(b) Mortgage Insurance for One to Four Family Homes), Section 203(h) offers features that make recovery from a disaster easier for homeowners:

  1. No down payment is required. The borrower is eligible for 100% financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6% limitation on seller concessions.
  2. FHA mortgage insurance is not free. Mortgagees collect from the borrowers an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiums that are not financed, but instead are added to the regular mortgage payment.
  3. Some fees are limited. FHA rules impose limits on some of the fees that lender’s may charge in making a mortgage. For example, the lender’s mortgage origination charge for the administrative cost of processing the mortgage may not exceed one “point”, that is, 1% of the amount of the mortgage excluding any financed upfront mortgage insurance premium. In addition, property appraisal and inspection fees are set by FHA.
  4. HUD sets limits on the amount that may be insured. To make sure that its programs serve low and moderate income people, FHA sets limits on the dollar value of the mortgage. The current FHA mortgage limit can be viewed online. These figures vary over time and by place, depending on the cost of living and other factors (higher limits also exist for two to four family properties).

FHA approved lending institutions, such as banks, mortgage companies, and savings and loan associations, are eligible for Section 203(h) insurance. Anyone whose home has been destroyed or severely damaged in an officially declared disaster area is eligible to apply for mortgage insurance under this program.

The borrower’s application for mortgage insurance must be submitted to the lender within one year of the President’s declaration of the disaster. Applications are made through an FHA approved lending institution, who make their requests through a provision known as “Direct Endorsement,” which authorizes them to consider applications without submitting paperwork to HUD. Mortgage insurance processing and administration for this and other FHA single family mortgage insurance products are handled through HUD’s Homeownership Centers.

Contact the FHA Resource Center. Homeowners can also visit HUD’s website for a searchable listing of approved FHA lenders nationwide. Homeowners are encouraged to also contact a HUD-approved housing counseling agency, for assistance with disaster related issues or call toll-free at: (800) 569-4287.

Home Rehabilitation Mortgage Insurance

Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.

Section 203(k) insures mortgages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110% of the appraised value of the property after rehabilitation, whichever is less. Many of the rules and restrictions that make FHA’s basic single family mortgage insurance product (Section 203(b)) relatively convenient for lower income borrowers apply here. But lenders may charge some additional fees, such as a supplemental origination fee, fees to cover the preparation of architectural documents and review of the rehabilitation plan, and a higher appraisal fee.All persons who can make the monthly mortgage payments are eligible to apply. Cooperative units are not eligible; individual condominium units may be insured if they are in projects that have been approved by FHA or the Department of Veterans Affairs, or meet certain Fannie Mae guidelines.

The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses; they can also cover the conversion of a property of any size to a one- to four- unit structure. The types of improvements that borrowers may make using Section 203(k) financing include:

  1. Structural alterations and reconstruction
  2. Modernization and improvements to the home’s function
  3. Elimination of health and safety hazards
  4. Changes that improve appearance and eliminate obsolescence
  5. Reconditioning or replacing plumbing; installing a well and/or septic system
  6. Adding or replacing roofing, gutters, and downspouts
  7. Adding or replacing floors and/or floor treatments
  8. Major landscape work and site improvements
  9. Enhancing accessibility for a disabled person
  10. Making energy conservation improvements

HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards. Applications must be submitted through an FHA approved lender. A brochure, Rehab a Home with HUD’s 203(k), is available online. A set of questions and answers about 203(k) loans is also available.

Indian Home Loan Guarantee Program

This grant provides and operates cost-effective, decent, safe and affordable dwellings for lower income families through an authorized local Public Housing Agency (PHA).

In order to qualify for this benefit program, you must be Native American/American Indian, need aid in obtaining decent, safe, and/or sanitary rental housing, and characterize your financial situation as low income or very low income .

Indian Home Loan Guarantee Program (Section 184)

This program provides home ownership opportunities to Native Americans, Tribes, Tribally Designated Housing Entities (TDHEs), and Indian Housing Authorities on Indian land, through a guaranteed mortgage loan program available through private financial institutions.

In order to qualify for this benefit program, you must be a Native American/American Indian in the process of buying a home that will be your primary residence. You or your family member(s) must also be enrolled in a federally recognized American Indian tribe or Alaskan Native village.

Fixed Rate Financing with market rate of interest. Length of Loan is 30 years or less. Payments are made monthly. The maximum loan amount is 150% of the FHA lending limits for the area. There are no prepayment penalties.

Manufactured Home Loan Insurance

Federal Housing Administration (FHA) insures mortgage loans made by private lending institutions to finance the purchase of a new or used manufactured home. The program insures lenders against loss from default on loans. The buyer must agree to make the required downpayment and meet credit guidelines. The interest rate is negotiated between the borrower and the lender. The borrower pays an upfront insurance premium, along with an annual premium based on the declining balance of the loan. The maximum loan term is 20 years for a manufactured housing loan.

Private lending institutions are eligible for insurance on loans made under the program. All buyers who meet credit requirements and plan to use the manufactured home as their principal place of residence, are eligible for the program. Buyers of manufactured homes may apply for a loan through a HUD-approved lender or through a lender’s approved manufactured home dealer.

For more information contact the National Help Desk at (800) CALL-FHA. To learn more about the design, construction, and installation of manufactured housing, including how to file a complaint about the home or gain information on missing HUD labels, regulations visit Manufactured Housing web page or the Manufactured Housing Institute website.

Property Improvement Loan Insurance

The Federal Housing Administration (FHA) makes it easier for consumers to obtain affordable home improvement loans by insuring loans made by private lenders to improve properties that meet certain requirements. “Lending institutions make loans from their own funds to eligible borrowers to finance these improvements.”

The Title I program insures loans to finance the light or moderate rehabilitation of properties, as well as the construction of nonresidential buildings on the property. This program may be used to insure such loans for up to 20 years on either single- or multifamily properties. The maximum loan amount is $25,000 for improving a single-family home or for improving or building a nonresidential structure.

For improving a multifamily structure, the maximum loan amount is $12,000 per family unit, not to exceed a total of $60,000 for the structure. These are fixed-rate loans, for which lenders charge interest at market rates. The interest rates are not subsidized by HUD, although some communities participate in local housing rehabilitation programs that provide reduced-rate property improvement loans through Title I lenders.

FHA insures private lenders against the risk of default for up to 90% of any single loan. The annual premium for this insurance is $1 per $100 of the amount advanced; although this fee may be charged to the borrower separately, it is sometimes covered by a higher interest charge.

Only lenders approved by HUD specifically for this program can make loans covered by Title I insurance. Title I loans can be disbursed directly to the borrower or, if the loan is made through a dealer, the disbursement will be made jointly to the dealer and the borrower. While most lenders and dealers/contractors use this program responsibly, HUD urges consumers to use caution in choosing and supervising home repair dealers/contractors conducting Title I repair/renovation work.

Eligible borrowers include the owner of the property to be improved, the person leasing the property (provided that the lease will extend at least 6 months beyond the date when the loan must be repaid), or someone purchasing the property under a land installment contract.

Title I loans may be used to finance permanent property improvements that protect or improve the basic livability or utility of the property–including manufactured homes, single-family and multifamily homes, nonresidential structures, and the preservation of historic homes. The loans can also be used for fire safety equipment.

Applications must be submitted to a Title I approved lender. Our web site offers a searchable list of approved lenders. To learn more about this program and other financing options, you should contact a HUD approved housing counseling agency and a HUD approved lender. Visit the FHA Resource Center for more information on all FHA programs.

Rural Housing Loans

Direct and guaranteed loans may be used to buy, build, or improve the applicant’s permanent residence. New manufactured homes may be financed when they are on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under very limited circumstances, homes may be re-financed with direct loans. Dwellings financed must be modest, decent, safe, and sanitary. The value of a home financed with a direct loan may not exceed the area limit. The property must be located in an eligible rural area. Assistance is available in the States, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of Northern Mariana’s, and the Trust Territories of the Pacific Islands. Direct loans are made at the interest rate specified in RD Instruction 440.1, Exhibit B (available at http://www.rurdev.usda.gov/SupportDocuments/04401.pdf or in any Rural Development local office).

In order to qualify for this benefit program, applicants must have very low-, low- or moderate incomes. Very low-income is defined as below 50% of the area median income (AMI); low-income is between 50 and 80% of AMI; moderate income is below 115% of AMI. Families must be without adequate housing, but able to afford the housing payments, including principal, interest, taxes, and insurance (PITI). Qualifying repayment ratios are 29% for PITI to 41% for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have an acceptable credit history. You must also be a U.S. citizen or permanent resident.

Direct loans are repaid over 33 years or 38 years for applicants whose adjusted annual income does not exceed 60% of the area median income, if necessary to show repayment ability. Payment assistance is granted on direct loans to reduce the installment to an “effective interest rate” as low as 1%, depending on adjusted family income. Payment assistance is subject to recapture by the government when the customer no longer resides in the dwelling. There is no funding provided for deferred mortgage authority or loans for deferred mortgage assumptions. Guaranteed loans are amortized over 30 years.

Rural Housing: Farm Labor Housing Loans and Grants

The Farm Labor Housing Loan and Grant program provides capital financing for the development of housing for domestic farm laborers. Farm Labor Housing loans and grants are provided to buy, build, improve, or repair housing for farm laborers, including persons whose income is earned in aquaculture (fish and oyster farms) and those engaged in on-farm processing. Funds can be used to purchase a site or a leasehold interest in a site, to construct housing, day care facilities, or community rooms, to pay fees to purchase durable household furnishings, and to pay construction loan interest.

The Farm Labor Housing Loan and Grant program provides capital financing for the development of housing for domestic farm laborers. Loans are made to farmers, associations of farmers, family farm corporations, Indian tribes, nonprofit organizations, public agencies, and associations of farmworkers. Typically, loan applicants are unable to obtain credit elsewhere, but in some instances, farmers able to get credit elsewhere may obtain loans at a rate of interest based on the cost of federal borrowing. Grants are made to farmworker associations, nonprofit organizations, Indian tribes, and public agencies. Funds may be used in urban areas for nearby farm labor. (This is the only Rural Housing Service rural service area exception.)

Loans are for 33 years at 1% interest. Grants may cover up to 90% of development costs. The balance may be a Farm Labor Housing Program loan.

Rural Housing: Housing Repair Loans and Grants

The Rural Housing Repair Loans and Grants program provides loans and grants to very low-income homeowners to repair, improve, modernize, or to remove health and safety hazards in their rural dwellings. Loans are arranged for up to 20 years at 1% interest. Grants may be arranged for recipients who are 62 years of age or older and can be used only to pay for repairs and improvements to remove health and safety hazards. Loan/grant combinations may be arranged for applicants who can repay part of the cost. Very low-income for this program is defined as below 50% of the area median income.

In order to be eligible for the loan program, you must be a homeowner who has very low income, and you must be a U.S. citizen or permanent resident who lives in a rural area. In order to be eligible for the grant program, you must meet the above requirements, and also be aged 62 years or older.

Loans of up to $20,000 and grants of up to $7,500 are available. Loans are for up to 20 years at 1% interest. A real estate mortgage is required for loans of $7,500 or more. Full title services are required for loans of $7,500 or more. Grants may be recaptured if the property is sold in less than three years. Loans and grants can be combined for up to $27,500 in assistance.

VA – Home Loans – Interest Rate Reduction Refinancing Loan

An Interest Rate Reduction Loan or Streamline Refinance allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying. This is only available to veterans who are refinancing their original VA mortgage and utilized their original eligibility.

You must have a current VA loan to be able to utilize the Interest Rate Reduction Refinancing Loan (IRRRL) program. The interest rate varies and the length of the loan cannot exceed 360 months. Payments are due monthly. No more than 2 points may be rolled into this loan plus allowable closing costs.

Basics Of The Streamline Refinance:

  1. No assumptions are allowed.
  2. The veteran cannot receive any cash back.
  3. VA does not require an appraisal, any income or employment verifications, no credit report and no termite report, yet the mortgage must have been paid as agreed for the last twelve (12) months and must be up to date at the time of refinancing. Each individual mortgage company may require an appraisal, verify employment or have additional requirements at their discretion.
  4. Any other liens must be subordinated to the VA loan.
  5. This loan can be done with “no out of pocket money” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.

Hopefully this post helped you as much as they helped me understand the current home loan options that are available in today. Stay tuned for more information.