FHA yesterday announced plans to increase lender requirements and to consider reducing allowed seller concessions.
The first announcement was about increased lender requirements which may lead to some further tightening in lender underwriting standards.
More significant for most consumers is the announcement about the renewal of plans to "reduce the maximum allowable seller concession from its current level to one more in line with industry norms."
This has been under consideration for a couple years or so. It was part of the reforms that were discussed in 2010 by then Asst Secretary David H Stevens.
"We are also proposing a third policy measure to reduce the maximum permissible seller concession from its current 6 percent level to 3 percent, which is in line with industry norms. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value."
The new announcement does not indicate a proposed level for seller concessions and it does not provide a definite time frame.
The biggest impact if seller concessions are reduced will be felt at the lower loan sizes. Seller concessions of 3% cover most of the closing costs for loan amounts over $150,000. For loan amounts under $100,000, buyers will see their required funds to close increase significantly. Or they will pay a higher rate in order to fund some of their loan costs in their interest rate.
FHA lending has seen numerous changes over the last few months. One of the most sigificant impacts on consumers has been with a series of increases in the monthly mortgage insurance premium.
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FHA 30 Yr MMI Rates |
Premium |
MI Payment for $150,000 Loan
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Since April 2011 |
1.15% |
$143.80 monthly |
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After Oct 2010 |
.90% |
$112.50 monthly |
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Before Oct 2010 |
.50% |
$62.50 monthly |
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Another of the changes discussed in the proposals made in 2010 was an increase in the minimum downpayments to 5%. Fortunately, I have not seen anything further on that.
Please leave your thoughts on this possible change. There will be a comment period announced when the specifics of the proposed changes on seller concessions are published.
Some Do Nots of HomeBuying
It is important for you , as a home buyer, to know that the documentation used to support your loan approval can be re-verified even until the day of closing.
You may be asked for updated pay stubs and bank statements. Most lenders verify you are still employed within a day of your loan closing.
Credit updates are also generally repulled just prior to your closing date.
As loan approval requirements get tougher and tougher, it is important to remember these lender rechecks.
Nothing is worse than going from an approval to a denial only days before your loan closes because of something you could have waited to do.
And it does happen.
So with that in mind here are Some Do Nots.
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Do not make bank deposits other than regular pay income deposits in the bank accounts you are using to qualify for your purchase. If you need to deposit anything unusual, be sure to discuss with your loan officer the documentation that may be needed. |
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Do not bring account balances below the amount used for the approval. Your bank accounts will be checked again prior to closing. The lender may require to see the most recent statement. Generally the lender will ask to verify that your earnest money and appraisal/credit report charges have cleared the account. Your funds to close must remain in your account, and the needed funds to close may very well include a minimum amount in reserve.
Dropping your account balance to a level below that used for your approval is risky business.
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Do not have return checks or overdraft protection. This is an extension of the previous DoNot. The lender considers your financial management ability as part of the loan approval. It does not look good for your bank statement balance to fall into the negative just prior to closing your home purchase. Even if you have overdraft protection, take special care to avoid going negative. Even if it does not impact your actual approval, it could cause closing delays or require unnecessary last minute documentation.
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Do not incur additional debt. This is probably the biggest loan closing killer. A new car. Some new furniture for your new home. Discuss with your loan officer any new debt - before you apply. Also mention any debt that has not shown up on your credit report when you apply. |
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Do not open new accounts. This is the same as opening new debt, but I list it separately because some people might not consider a department store charge card as a new debt. Any new account, even if you might not charge anything to it, should wait. The inquiry or the new account itself might impact your credit score. Plus it will just be additional, and unnecessary, documentation at the last minute to show that you have not used the new card.
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Any change to your finances - income, employment, bank account charges, bank account deposits, new credit, even new credit inquiries - should be discussed with your loan officer before they take place.
Mortgage rates continue to be historically low. This home for sale in Hixson, TN, is a great example of how affordable your new home payment can be. Terri Rule with Re/Max Properties North is the listing agent for this property.
The payments shown are for a conventional 5% down payment with standard mortgage insurance and with lender paid mortgage insurance. You can compare these payment options with an FHA loan that has a lower down payment requirement.
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Many home buyers indicate that they do not like mortgage insurance, but mortgage insurance is what makes it possible to purchase a home with less than 20% down payment. Many home buyers though are not aware of the different options for mortgage insurance premiums.
By considering the different options home buyers can select the mortgage insurance option that best suits their budget and long term plans.
Terri Rule is having an open house for this home on Sunday, October 2, 2011. Call her at 423-994-3993 with any questions about this great home for sale in Hixson.
Call me, 423-280-0345, with any questions about your home purchase financing and your different mortgage insurance options. Visit my HomeBuyer YouTube channel to learn more about home buying programs.
Home mortgage rates have reached new lows in response to the recent announcement from the Federal Reserve to work to keep long term rates as low as possible.
These low rates have increased the push for existing home owners to refinance their mortgages. And if you are able to refinance your present mortgage, the new lows in interest rates offer you a great opportunity for maximum saving.
For excited home buyers though these low rates may provide an opportunity for home prices to begin to edge upwards.
This market right now gives home buyers the best combination of low home prices and low interest rates.
From 2000 until 2007 home prices went through a period of rapid growth with the housing bubble. Since that bubble, prices had seen a fairly steep decline, pushed in a large degree by the many foreclosures.
This year and especially in the last few months, home prices seem to have reached a bottom. It looks like home prices may even be enjoying a bit of a recovery.
This is good news for us all - to see home prices back on the mend. This chart is from the recent FHFA home price survey.
What is shows is the home prices are beginning to rebound. They have fallen to the level that matches what might be expected to have been a normal appreciation increase from pre housing boom times.
But what it means for home buyers, the time is now. Home prices are probably at the bottom, and home mortgage rates are also at bottom.
For information about home purchases please visit my Home Buyer Series videos. A good start is with this video.
You can call me at 423-280-0345 or visit my website at www.RichardSmithHomeLoans.com.
We are approaching the deadline for the new fee structure for Rural Development Guaranteed Home Loan program. I spoke with the USDA area director earlier this month and he clarified that the new monthly fee structure will be applied to all loan submissions that do not receive a Rural Development commitment by September 30, 2011.
This means all files should be sent to Rural Development probably by September 25 or earlier. For Georgia properties, the files will need to be submitted even sooner.
For home buyers who may not know, Rural Development loans must receive a commitment from the area Rural Development office before the purchase transaction can close. This commitment is issued after the lender has completely finalized their loan approval.
This Rural Development commitment typically adds a few days up to an extra week or so to the loan closing time frame.
Even with this extra few days, and even with the new monthly fee, Rural Development is an excellent choice for qualified and eligible home buyers.
The basic eligibility requirements are:
The new fee structure that is effective October 1, 2011 adds an annual fee of .3% of the anticipated average balance. This fee is lower each year, but will be in place for the entire loan amortization. With this fee, Rural Development is lowering the initial up front fee from 3.5% to 2.0%. This upfront fee is generally added to the loan amount.
So Rural Development loan allows eligible buyers to purchase a great home with no down payment. And even with the new fee structure, payment remain lower that most other purchase options. You do not need to be a first time home buyer to take advantage of this great purchase program.
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FHA |
Rural Development |
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Purchase Price |
$150,000 |
$150,000 |
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Down Payment |
$5,250 |
0 |
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Loan Amount |
$144,750 |
$150,000 |
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Up Front Fee |
$1,447 |
$3,000 |
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Payment |
$697.97 |
$730.45 |
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Monthly Fee |
$140.11 |
$38.25 |
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Total Payment |
$838.08 |
$768.70 |
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Rate/APR |
4.0%/4.902% |
4.0%/ 4.412% |
Call me with any questions about your home purchase, or specifically about qualifying for a Rural Development purchase. You can also start your purchase approval at www.RichardSmithHomeLoans.com.
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NMLS ID: 184479; GA – 28928; TN – 40161; 1510 Gunbarrel Road Suite 400, Chattanooga, TN 37421, FHA VA Rural Development in TN and GA
Home purchases and home refinances for Tennessee and Georgia.
I am a mortgage specialist in Chattanooga, TN.
I want the right real estate loan for you. Service and ongoing contact that earn your eargerness to refer your friends and family.
I have over 20 years experience as a mortgage loan officer. I have been making mortgage loans out of Chattanooga since 1994.
Purchase Loans - We offer loans that help keep you down payment low including conventional, FHA, VA, and Rural Development loans. We participate in THDA Downpayment Assistance for Tennessee FHA and Rural Development. For Chattanooga purchase mortgages we offer the CNE Downpayment program. Both Tennessee Housing Development Agency and Chattanooga Neighborhood Enterprises offer HUD approved programs for the First Time Home Buyer.
We can also work with you to keep you total payment low - ask about the different options with conventional mortgage insurance. The informed, right choice here may can save you as much as $100 - $200 each month, depending on your qualifications and loan size.
By offering loan programs from several top national investors combined with inhouse underwriting, we provide an unbeatable combination of loan options and service.
For qualified buyers who have a property, test me. Let me show you how to close your home purchase in 2 weeks.
You can apply online with me secure and easy application. Visit www.RichardSmithHomeLoans.com.
My promise is to get you to the closing table on time and with no surprises. We have real estate agent contacts with expertise in each local area. With those contacts, I can recommend agents that provide you with top quality service.
Refinance Loans - Understanding your refinance objectives is critical to obtaining just the right loan terms. Making certain that your goals are achievable before we even begin the process saves time and money. Working with me means that you will be fully informed at each step of the process.
FHA Renovation - In today's market, you may find that a renovating your home is a good option. With an FHA renovation loan, FHA 203k, you get excellent terms. Also the FHA loan amount calculations typically allow you to receive more money for your renovations, meaning that you may very well get all the work you want.
If you are interested in a government loan, FHA, VA, or Rural Development, go to an experience lender. I have offered government loans since 1994. Take advantage of our inhouse underwriting, superior processing and closing staffs. Churchill's lender relationships and experience will make a difference for you.
I am experienced with HUD owned properties, and working with other foreclosure companies. We offer the HUD $100 Down purchase program. We also offer the $100 Down program with the Repair Escrow. With the $100 Down program especially, you should demand an experienced loan officer or you take the chance of incurring fees because you have missed the contracted closing date.
I also offer the FannieMae Homepath program for FannieMae owned properties. This is a no mortgage insurance program that can help families purchase a home with little down. It is also a great program for investors.
Relocation is made smooth with our local contacts and use of internet technology - secure online applications, toll free fax number, secure website user accounts, daily status reports, and the informative lock recommendation. Your move will be the happy experience it should be, because you will not be worrying over the financing of your new home.
Local focus - you can find ready resources to learn about the local communities in our service area.
Credit repair - You will not find better credit consultation anywhere. If you need professional assistance to repair your credit, you will know exactly what they need to do for you. For the most part you and I can work through credit issues.
I have been active with the Red Bank Lions club and have served several terms on the board of my church, the Chattanooga Community Kitchen, and the Episcopal Commission of South East Tennessee. I have also worked with the Chattanooga Chamber of Commerce as one of their ambassadors.
Currently, I am a committee chair with the Women's Council of Realtors, a member of the Chattanooga Association of Realtors, the Home Builders Association of Southern Tennessee, the mortgage brokers association,and the mortgage bankers association.
My goal is to WOW you.
Please take time to read some of my recent articles published in the Scotsman Guide.
We specialize in FHA, VA, and Rural Development mortgage loan programs. We offer these programs along with the traditional conventional mortgage programs. We are experienced FHA lenders, with proven results in credit help. We have developed excellent reputations and relationships with our investor partners.
That quality investor relationship is of critical importance to you, our client.
My real estate agents know they receive my full commitment and the commitment of our local and our corporate staff. I stay fully accessible.
I return phone calls.
I tell the truth.
My clients and partners are kept fully informed of the status. My experience both as a mortgage loan officer and as a mortgage lender helps me to identify potential loan approval issues early in the process. This allows my clients to have right expectations about their home financing transaction. I know the financial goals of my clients and work hard to develop a lasting relationship with them.
Credit has become increasingly important in today's market. We have demonstrated results for many of our clients in helping them improve their credit histories without using for fee credit repair companies. In fact, I have been helping clients with their credit for several years. In today's market, good credit management can have a significant impact on loan approval and loan terms. I will take the time to review, explain, evaluate, and advise.
FHA home loans have always been a specialty. Even when FHA was losing market share to subprime and Alt A mortgages, we were closing FHA mortgage loans. Other brokers may have steered borrowers into subprime loans. I worked with borrowers to get an FHA home loan approved. Because of that, I gained considerable processing experience with the art of manual underwriting and full documentation. Processing can make all the difference in getting a loan approved.
For those buyers who do not have a credit score, but do not have bad credit, ask me about our No Score FHA home loan.
We put technology to work for you. This makes your loan process smooth.
You know the status.
You have the information.
You can make the informed decision.
Lending is local. We use technology to give you local service - right where you are.
"I would like to thank you for your help as our mortgage broker during our relocation to Chattanooga. Your knowledge of the process and willingness to take the time to answer my many questions were greatly appreciated. Thank you for professionally handling all the paperwork and helping to ensure that my financing was arranged and that closing occurred on schedule." MH Chattanooga
"Richard is a professional and I would recommend him to anyone needing sound advice about their mortgage." BH Chattanooga, TN
"This is my first purchase. We just had a baby last year. And we are so excited. Richard has keep us informed of the status with daily emails. He always makes sure that we know what to expect next. On top of that, during the loan, my wallet was stolen. Richard came in over the weekend to help with all things I needed to do about indentity theft and to notify the charge card companies and the credit bureaus. He really helped." CK East Ridge, TN.
"My loan went well, really quickly. But there was a problem with the lender taking the appraisal. Richard stayed in touch continuously. I always new what was next. He worked with the realtor and with the appraiser and got the loan done. Even going to another lender, he kept my rate and still closed quickly. " RH Chattanooga, TN
"Richard is one of the most professional and knowledgeable broker/bankers I have had the pleasure of working with, it is refreshing to see his commitment and dedication to our industry." ST Nashville, TN
"I needed to purchase the salon where I worked. It was a great opportunity. Richard told me what needed to be done, but another lender kept making promises. Those promises were never kept. Richard was patient. He told me to keep working with the other company as long as I thought things were going to go through. He would keep my loan ready if I needed it. Well, I needed it. Now I have my salon and it is going well. Richard knew how to get it through." Cleveland
"Richard has been great to work with. I love it when my clients take charge of their advertising campaigns and want to be personally involved to really make it their own. He worked hard to personalize his commercial and has worked to keep his website up-to-date. Thanks Richard for making it easy to work with you and being a man of integrity. If you're interested in making your dreams come true and having financial freedom, Richard is the man to talk to to!" GH Chattanooga, TN
"Richard works hard for my buyers. I know that. He calls me before I call him most of the time. I love the daily updates. He sends weekly articles about changes and other news. I really feel like I know the status. And when something comes up, I know he is giving me the right information. That really is important to me." LP, Chattanooga
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