Nick Pakulla Mortgage Lender Loan Officer in MD DC VA

Yesterday FHA announced an increase in Mortgage Insurance premiums (the 4^th time in 3 years) beginning on April 1, 2012. This will have a big impact for locations like Rockville MD, or Bethesda MD. Also, FHA posted a notice in the Federal Register last week regarding the implementation of a decrease in the maximum closing cost assistance from sellers (right now maximums are at 6%).

The Mortgage Insurance Premium Changes, planned for April 1:

• FHA upfront mortgage insurance will increase from 1.00% (now), up to 1.75% April 1.
• FHA annual mortgage insurance will increase from 1.15% (now), up to 1.25% April 1.
• FHA mortgages above $625,500 will be subject to an additional 0.25% annual mortgage insurance fee, or 1.5% April 1.

Proposed Closing Cost Credit Changes, implemented in the near future after comment period:

• FHA is proposing that the closing costs be limited to the greater of $6,000 or 3% of the sales price.
• FHA is also proposing to narrow the definition of acceptable concessions. FHA proposes to eliminate payment supplements offered by sellers, such as a year’s worth of homeowner association fees, as they are viewed by HUD as inducements to purchase.
• Comments on this proposal can be made at http://www.regulations.gov

Anyone planning on obtaining a FHA mortgage in Rockville or Bethesda MD and who is on the fence about buying may find this important information to know so they can get in before the changes. Remember our bank’s 80/10/10 financing or 5% down conventional products offer alternatives to FHA.

Please note: This information is subject to change by the FHA. It is based on an initial FHA announcement made February 27, 2012. It's unofficial until FHA releases a mortgagee letter.

Happy New Year! Hope you had a great Holiday and were able to enjoy time with your family.

As the 2012 spring market is getting started off with pre-approvals and buyer inquiries, there were several changes (and re-changes) near the end of 2011 that may have led to some confusion and will likely impact your buyers. Below is a current recap of loan limits, minimum down payments, and maximum seller contributions for all loan options available.

Mortgage rates continue to stay at all time lows! Let’s make 2012 the best year yet!

Location Loan Limit Min. Down Payment Max. Closing Concessions

Below 417,000 Conventional:

Baltimore $417,000 5% 3%

DC $417,000 5% 3%

Investment $417,000 20% 2%

Above 417,000 High-Balance Conventional:

Baltimore $494,500 10% 6%

DC $625,500 10% 6%

Investment - 35% 2%

10% Down Jumbo ** Using First Place Bank Specific Second Mortgage Product:

Baltimore $900,000 10% 6%

DC $1,100,000 10% 6%

FHA Loans:

Baltimore $560,000 3.5% 6%

DC $729,750 3.5% 6%

VA:

Howard $478,400 0% ~4%

Baltimore $494,500 0% ~4%

DC $625,500 0% ~4%

*VA is now very specific per county, please consult the VA County loan limit site: http://www.benefits.va.gov/homeloans/loan_limits.asp

** borrowers can purchase above the VA loan limits by putting down 25% of the difference of the maximum loan limit and the sales price.

FHA Updates Loan Limits as of November 18, 2011

On November 18, 2011, the President signed into law H.R. 2112, Consolidated and Further Continuing Appropriations Act 2012 (HR2112). Section 238 of HR 2112 re-establishes the FHA loan limit at the higher of the dollar limit in Section 203(b)(2) or the dollar limit prescribed in Section 202 of the Economic Stimulus Act of 2008 for Forward mortgages.

Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

VA Funding Fees Revert Back to pre-change levels

FUNDING FEE UPDATE AS OF NOVEMBER 22, 2011: On November 21, 2011, the President signed H.R. 674. Section 265 of the law raises funding fees to the pre-November 18, 2011 levels. The fees specified in Section 265 are valid through September 30, 2016.

First Time Use

• < 5% down = 2.15%
• 5-10% down = 1.5%
• 10% or more = 1.25%

Second and Subsequent Use

• < 5% down = 3.3%
• 5-10% down = 1.5%
• 10% or more = 1.25%

Nick Pakulla

First Place Bank

Loan Officer

15400 Calhoun Drive Suite 170

Rockville, MD 20855

Direct: 301.585.RATE (7283) | Cell: 443.956.8774 | Fax: 301.560.6303

NMLS# 728211

Email: NPakulla@fpfc.net

Apply now: http://www.firstplacebank.com/NickPakulla

It was just announced today that a bill has been approved that will raise the FHA (FHA only) mortgage loan limit back to $729,750 for the DC area and $560,000 for the Baltimore metro area. Unfortunately, they did not raise the Fannie / Freddie conventional mortgage loan limit and they still remain at $625,500 and $494,500 respectively. Although the conventional limits are not raised, this will still help buyers who don’t have 10% down and are looking to buy above the conventional limits.

Below is the link to an article if you would like to read more about the change. Remember, for borrowers with 10% down our bank’s 2^nd Mortgage can bridge the gap between conforming and true jumbo, and will be much more cost effective than going FHA (see example below). Please call us with any questions. Thanks and Happy Friday!

http://www.bloomberg.com/news/2011-11-18/u-s-congress-votes-to-raise-top-limit-for-government-insured-mortgages.html

Example – FHA with 10% down vs. First Place Bank second mortgage:

$800,000 purchase with FHA 10% down:
$720,000 financed @ 4.25% = $3,542 per month
FHA MIP = $660 per month ($0 going towards principal / not tax deductible)
Total = $4,202

$800,000 purchase with First Place Bank Second Mortgage 10% down:
$625,500 first mortgage @ 4.25% = $3,077 per month
$94,500 second mortgage @ 7.25% = $645 per month (tax deductible and part of payment is going towards principal)
Total = $3,723 – much better option!

Thanks,
Nick

Nick Pakulla
First Place Bank
Loan Officer
15400 Calhoun Drive Suite 170
Rockville, MD 20855
Direct: 301.585.RATE (7283) | Cell: 443.956.8774 | Fax: 301.560.6303
NMLS# 728211
Email: NPakulla@fpfc.net
Apply now: http://www.firstplacebank.com/NickPakulla

With Rockville MD mortgage rates still near all-time lows many buyers will have significantly higher payments and may qualify for less if they head back up (like they did last spring). Please pass the example below to your buyers to show how beneficial low interest rates are!

$417,000 borrowed
@4.125% = $2,020 per month
@5.125% = $2,270 per month – this is $90,000 in wasted interest paid over the life of the same $417,000 loan!
@5.125% a $2,020 principal and interest payment would equate to a mortgage of only $371,000! This means that in this example buyers today can finance $46,000 more for the same exact principal and interest payment due to low mortgage rates.

If you look at the chart above, for the past 2 years mortgage rates have been in the low 5%’s during spring…. Will history repeat itself again? Even scarier, look how quickly mortgage rates shot up from November 2010 to January 2011.

HAPPY HALLOWEEN!

***About First Place Bank

First Place Bank is an established community bank new to the MD/DC/VA market. With all the struggles of the “large banks” the community banking model has proven to be much more efficient. We still offer 80/10/10’s, in-office underwriting, and have a group of local bank approved appraisers (no 3^rd party appraisal system). My entire group made the move to First Place Bank after thirteen years at a large bank mainly because we believe in a higher level of service. We work with some of the best Realtors in the area and our goal is to create a new, higher standard in the mortgage business. All top Realtors should have a community bank option to rely on. Please consider us for your next buyer. Thank you.