Justin Perry

The most common question I have been receiving lately from my clients is, "What mortgage programs are left?" Of course if you have excellent credit and a 20% down payment the world's doors are still open to you and just about any bank with money to lend will be happy to extend you a mortgage. But what about people who either don't have a 20% downpayment or they just don't want to put all their savings into their home in the form of a down payment? FHA! It is still the best product available. There are so many great things about FHA mortgages but let me start with the negatives:

• There are loan limits specific to each town/county.
• If the property is a condo it must either be on the approved list or you need to get a spot approval.
• The home must be free of chipping lead paint and must be in reasonable condition. (who doesn't want that?)
• An FHA appraisal is require which costs about $100 more than a standard appraisal.

Now for the positives for FHA:

• Only about a 3% contribution is required and that 3% can come from a family member or close friend.
• The FHA monthly mortgage insurance is about 60% less than what you would expect to pay on a conventional loan. And thats assuming you can even get a conventional mortgage, which even with 10% down is not easy right now.
• There are no income limitations like with most bond-backed state programs like Mass Housing.
• You can still qualify for the first time homebuyer tax credit unlike state programs like NH Housing.
• The upfront mortgage insurance can be financed into the loan.
• You can use an FHA mortgage loan to buy a 1-4 unit property.
• The 30 year fixed rates on an FHA mortgage are typically better than what you can get on a conventional loan with 20% down!
• FHA offers the streamline refinance which allows you to refinance down the road with no appraisal, no credit check and no verifying income or assets.

As you can see the benefits of FHA mortgages heavily outweigh any negatives. If you or someone you know would like to learn more about whether or not an FHA loan is right for you please call or email me anytime. http://www.justinperry.net/justinsblog

Many of my clients enjoy the mortgage rate lock advisory that is on my website and is updated daily as an RSS feed. Below is an example of today's mortage interest rate lock advisory and it can be found here: http://www.justinperry.net/DailyRateLockAdvisory. If you would like to add this RSS feed to your site just let me know. As a disclaimer I do not construct these rather I use them as a tool.

Rate Lock Advisory - Tuesday Nov. 4th

Tuesday's bond market has opened up slightly despite sizable stock gains during early trading. The stock markets are strong this morning with the Dow up 262 points and the Nasdaq up 42 points. The bond market is currently up 2/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.

Today's only relevant data came from the Commerce Department who posted September's Factory Orders report. It showed a decline of 2.5% that was an improvement from August's 4/3% drop, but was also much weaker than the 0.8% decline that was expected. This means that new orders at U.S. factories fell much more than thought and indicates a rapidly slowing manufacturing sector. This is good news for bonds and mortgage rates.

There is no important data scheduled for release tomorrow. Thursday's sole important report is the 3rd Quarter Productivity reading. The productivity index is expected to show a level of worker productivity during the third quarter much lower than last quarter's final reading of 4.3%. Analysts have forecasted a 1.0 rise in worker output. A larger increase would be good news for the bond market because high levels of productivity helps the economy to expand without inflationary pressures being a concern.

We also will get weekly unemployment figures from the Labor Department early tomorrow morning. It is expected to show that new claims for benefits fell slightly to 476,000 last week. While this data usually does not have much of an impact on the markets because it tracks only a week's worth of claims, tomorrow's release may be a little more influential than usual. This is because the release will cover the last full week of October and with Friday's monthly report coming out for the entire month, traders will be looking for any significant change in claims that may alter their estimates for the monthly report.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2008