FHA is making changes to the structure and pricing of their Mortgage Insurance Premiums. The FHA Reform Bill was signed by President Obama on August 12, 2010 and gave HUD permission to increase annual mortgage insurance premiums. These changes will go into effect October 4, 2010.
These changes will only effect new FHA borrowers. Borrowers in existing FHA loan products do not have to worry about these changes, unless they are looking to refinance after October 4th.
What does this all mean to a potential FHA borrower? Basically, the price of monthly mortgage insurance is going up; thusly, the borrower's total monthly mortgage payment is going to increase. A homebuyer using FHA financing is going to find that their overall borrowing power will be reduced.
With the new guidelines, on a typical FHA purchase loan with the required 3.5% down, the annual mortgage insurance premium will be .90% of the base loan amount(current rate is .55% of total loan amount). If a borrower puts 5% or more down, the annual premium will be reduced to .85%.
Also, if a borrower arranges a 15 year term, and has 10% or less down, the annual premium will be .25%.
FHA will be reducing the required Upfront Mortgage Insurance Premium (UFMIP) from the current 2.25% to 1%.
Here is a sample loan scenario:
$100,000 purchase price, 30 year fixed FHA financing with 3.5% down payment
The borrower would need a $3,500 down payment. The borrower will have to pay a 1% UFMIP of $965, which will be added to the loan amount and amortized over 30 years. The total loan amount would be $97,465.
The annual mortgage insurance premium is .90% of $96,500 which is $72.37 per month.
Using the current calculation of annual mortgage insurance premium (at the .55% rate) the monthly payment in this scenario would have been $45.22. the increase to the borrower in this example is $27.14 per month.
The larger the purchase price and loan amount, the greater the impact these changes will have on a borrower's monthly payment.
Even with the upcoming changes, FHA financing is still a great option for a low down payment purchase. Please contact me, and I will explain the full impact of these changes in detail: (513) 520-6044 or bahale1@gmail.com
Tuesday, September 7, 2010
Tuesday, July 27, 2010
Where Did Rural Development Home Loans Go?
Some may be wondering what happened to Rural Development (RD) loans…
RD loans provide 100% financing at reasonable interest rates for buyers looking in specific rural areas.
Funding for USDA Rural Development loans ran out earlier this year. Funds usually run out early each year, since this is one of the only 100% financing loan programs available to borrowers. Congress is working to make some changes to the funding of this program, so that funds won’t run out (the program would end up being similar to FHA or VA, where there is a percentage funding fee paid added to the loan amount at closing).
This is what has been happening the past few months:
The House passed the Senate version of the bill, but they added an amendment for additional funding. The Senate voted last week to invoke Cloture, stop the filibustering, and accept the House version of the bill, but that vote fell short with 46 of the 60 votes needed.
So…the bill is back in the House, and the action reverts to them (the House).
I will post any new developments as they happen.
RD loans provide 100% financing at reasonable interest rates for buyers looking in specific rural areas.
Funding for USDA Rural Development loans ran out earlier this year. Funds usually run out early each year, since this is one of the only 100% financing loan programs available to borrowers. Congress is working to make some changes to the funding of this program, so that funds won’t run out (the program would end up being similar to FHA or VA, where there is a percentage funding fee paid added to the loan amount at closing).
This is what has been happening the past few months:
The House passed the Senate version of the bill, but they added an amendment for additional funding. The Senate voted last week to invoke Cloture, stop the filibustering, and accept the House version of the bill, but that vote fell short with 46 of the 60 votes needed.
So…the bill is back in the House, and the action reverts to them (the House).
I will post any new developments as they happen.
Monday, July 12, 2010
Ohio Housing Finance Agency has revised interest rates for first time homebuyers - great rates, great programs!
4.75% for loans without 2.5% assistance grant
5.25% for loans with 2.5% assistance grant
4.50% for Ohio Heroes without 2.5% assistance grant
5.00% for Ohio Heroes with 2.5% assistance grant
4.75% for Grant for Grads 2.5% assistance grant
This is a 30 year fixed rate. FHA/VA/USDA-RD loans are eligible. Effective 7/8/2010.
Please contact me for specific program details. Call me at (513) 520-6044 or email: bahale1@gmail.com
4.75% for loans without 2.5% assistance grant
5.25% for loans with 2.5% assistance grant
4.50% for Ohio Heroes without 2.5% assistance grant
5.00% for Ohio Heroes with 2.5% assistance grant
4.75% for Grant for Grads 2.5% assistance grant
This is a 30 year fixed rate. FHA/VA/USDA-RD loans are eligible. Effective 7/8/2010.
Please contact me for specific program details. Call me at (513) 520-6044 or email: bahale1@gmail.com
Thursday, July 1, 2010
Tax Credit Extension
The tax credit extending the date to close a purchase transaction has passed Congress. Homebuyers must have been under a fully executed purchase contract on or before April 30, 2010 to qualify for the tax credit. President Obama is expected to sign this measure later this week.
Tuesday, May 18, 2010
Monday, April 12, 2010
Friday, April 2, 2010
Friday, March 26, 2010
Wednesday, March 10, 2010
Grant Funds Available For Homebuyers in OH, KY and TN
If you are a homebuyer that is frantically trying to save enough for the required down payment for the purchase of your new home, you may be able to qualify for a grant up to a maximum of $5,000, based on documented need. The Federal Home Loan Bank of Cincinnati has made a total of $200,000 available through the "Welcome Home" program. Funds are available for homebuyers purchasing in Ohio, Kentucky, and Tennessee. There are restrictions including loan and income limits. Homebuyers have to have at least $500 of their own funds and if he or she is a first time homebuyer, complete a homebuyer counseling program. The funds are distributed on a first come, first serve basis, so they are expected to run out quickly. Home buyers must have a fully-executed purchase contract, signed loan documentation, and all corresponding income and asset documentation to register for funds. Please contact me immediately if you are interested at bahale1@gmail.com or (513) 520-6044.
Friday, March 5, 2010
Debt Ratio Defined
You may be wondering what you can manage to pay each month for a house payment. Your debt ratio can give provide that information to you. You want to make sure that you are purchasing a home in the price range that will keep your house payment in your affordability comfort zone.
The definition of total debt ratio, from a homeowner’s perspective is the following: your total monthly debt service plus total monthly housing expense divided by your monthly gross income.
The items that are used to determine your debt service are the following:
Monthly car payments
Monthly credit card minimum payments
Monthly installment loan payments
Monthly student loan payments
Monthly child support and/or alimony payments
Also, if you have purchased something “12 months same-as-cash” and that agreement doesn’t require a minimum monthly payment, your mortgage consultant will take 5% of the remaining balance and use that as the minimum monthly payment as required by current underwriting guidelines.
Your total monthly housing expense is comprised of the following:
Principal and interest payment
Private mortgage insurance (if applicable)
Property taxes
Homeowners insurance
Condo/Homeowners association fees (if applicable)
Most loan parameters are calling for total debt ratios under 45%. This means that if you make $3,000 per month gross income, you can qualify for a loan with total monthly debts of $1,350.
Let’s look at an example:
A prospective homeowner makes $3,000 gross income per month. They have a $250 per month car payment and 2 monthly credit card payments of $50 each. That means that they have $350 in debt service monthly. To stay at or below a 45% debt ratio, they would need to keep their monthly housing expense (in total) at $1,000 or less.
Your mortgage consultant will also calculate your housing ratio, which is your total monthly housing expense divided by your monthly gross income. In the example above, the prospective homeowner’s housing ratio would be 33%.
Some loan programs are more restrictive about the maximum allowable limits for your housing ratio. Your mortgage consultant will guide you through the calculations, so that you know exactly what your debt ratio will be in each possible loan scenario and price point.
You will also want to look at your monthly net income (the amount you actually see in your checking account!) and consider your other monthly bills and expenses, such as insurance(s), utility bills, food, entertainment, education, etc, along with your current monthly debt service, and make sure that your prospective monthly housing expense fits into your monthly budget. You don’t want to end up “house poor”!
Calculating your debt ratio is a crucial first step in determining what price point you will qualify for in regards to your home purchase. Please contact me to help you analyze your debt ratio at (513) 520-6044 or email me at bahale1@gmail.com
The definition of total debt ratio, from a homeowner’s perspective is the following: your total monthly debt service plus total monthly housing expense divided by your monthly gross income.
The items that are used to determine your debt service are the following:
Monthly car payments
Monthly credit card minimum payments
Monthly installment loan payments
Monthly student loan payments
Monthly child support and/or alimony payments
Also, if you have purchased something “12 months same-as-cash” and that agreement doesn’t require a minimum monthly payment, your mortgage consultant will take 5% of the remaining balance and use that as the minimum monthly payment as required by current underwriting guidelines.
Your total monthly housing expense is comprised of the following:
Principal and interest payment
Private mortgage insurance (if applicable)
Property taxes
Homeowners insurance
Condo/Homeowners association fees (if applicable)
Most loan parameters are calling for total debt ratios under 45%. This means that if you make $3,000 per month gross income, you can qualify for a loan with total monthly debts of $1,350.
Let’s look at an example:
A prospective homeowner makes $3,000 gross income per month. They have a $250 per month car payment and 2 monthly credit card payments of $50 each. That means that they have $350 in debt service monthly. To stay at or below a 45% debt ratio, they would need to keep their monthly housing expense (in total) at $1,000 or less.
Your mortgage consultant will also calculate your housing ratio, which is your total monthly housing expense divided by your monthly gross income. In the example above, the prospective homeowner’s housing ratio would be 33%.
Some loan programs are more restrictive about the maximum allowable limits for your housing ratio. Your mortgage consultant will guide you through the calculations, so that you know exactly what your debt ratio will be in each possible loan scenario and price point.
You will also want to look at your monthly net income (the amount you actually see in your checking account!) and consider your other monthly bills and expenses, such as insurance(s), utility bills, food, entertainment, education, etc, along with your current monthly debt service, and make sure that your prospective monthly housing expense fits into your monthly budget. You don’t want to end up “house poor”!
Calculating your debt ratio is a crucial first step in determining what price point you will qualify for in regards to your home purchase. Please contact me to help you analyze your debt ratio at (513) 520-6044 or email me at bahale1@gmail.com
Thursday, March 4, 2010
U.S. Department of Housing and Urban Development (HUD)
HUD protecting children from lead paint.Details -->U.S. Department of Housing and Urban Development (HUD)
Saturday, February 27, 2010
U.S. Department of Housing and Urban Development (HUD)
Warning against loan modification scams: U.S. Department of Housing and Urban Development (HUD)
Thursday, February 25, 2010
Tuesday, February 23, 2010
Monday, February 22, 2010
Extended First Time Home Buyer Tax Credit
Don't Miss It!
Dear first time homebuyer: are you one of the many who did not get the chance to buy a home in 2008 or 2009? Maybe you were worried about your job, the economy, or maybe you looked around at a few homes and didn’t find something that you were picturing as your “dream” house?
2010 has dawned upon us and home prices are still low, interest rates are still low, and like flowers in the spring, the economy seems to be showing tiny signs of green shoots…
…and you still have a chance to buy a home and benefit from the tax credit!
Are you aware that the tax credit has been extended? Yes, indeed you have been granted that rare second chance to get out there, find a home, and receive money for your efforts!
As part of the ongoing plan to stimulate the US housing market, congress passed legislation in late 2009 to extend the First Time Home Buyer Tax Credit until April 30, 2010. You can receive up to $8,000 with this tax credit. Just imagine the things you can do with that amount of money!
You may be worried: what if I can’t find a house…negotiate the contract…and close on my new home by April 30, 2010? That date is fast approaching! Well, there’s good news on this as well: you have to be under a written, binding purchase contract by April 30, 2010, but you have until June 30, 2010 to close – that’s plenty of time!
So don’t miss out on this opportunity – you have the chance to purchase a well-priced home, obtain a home mortgage with a historically low interest rate, AND receive a tax credit. So make a goal today to rent no more! Please contact me at (513) 520-6044 or email me at bahale1@gmail.com to get started!
Dear first time homebuyer: are you one of the many who did not get the chance to buy a home in 2008 or 2009? Maybe you were worried about your job, the economy, or maybe you looked around at a few homes and didn’t find something that you were picturing as your “dream” house?
2010 has dawned upon us and home prices are still low, interest rates are still low, and like flowers in the spring, the economy seems to be showing tiny signs of green shoots…
…and you still have a chance to buy a home and benefit from the tax credit!
Are you aware that the tax credit has been extended? Yes, indeed you have been granted that rare second chance to get out there, find a home, and receive money for your efforts!
As part of the ongoing plan to stimulate the US housing market, congress passed legislation in late 2009 to extend the First Time Home Buyer Tax Credit until April 30, 2010. You can receive up to $8,000 with this tax credit. Just imagine the things you can do with that amount of money!
You may be worried: what if I can’t find a house…negotiate the contract…and close on my new home by April 30, 2010? That date is fast approaching! Well, there’s good news on this as well: you have to be under a written, binding purchase contract by April 30, 2010, but you have until June 30, 2010 to close – that’s plenty of time!
So don’t miss out on this opportunity – you have the chance to purchase a well-priced home, obtain a home mortgage with a historically low interest rate, AND receive a tax credit. So make a goal today to rent no more! Please contact me at (513) 520-6044 or email me at bahale1@gmail.com to get started!
Sunday, February 7, 2010
What To Expect When Applying For A Mortgage Part 4
Your Initial Consultation and Beyond
If geography allows, you will meet with your mortgage consultant in person, so that you can further discuss your personal financial goals and expectations. Your mortgage consultant will want to make sure that she is advising you of the proper loan programs to meet your specific needs and budget. This consultation ensures that you are comfortable with the process and well-informed of your choices. Your mortgage consultant will guide you step-by-step through the loan process, and will manage all the details of your transaction. She will keep you updated, educated, and in control.
If you are applying for a pre-approval for a purchase loan, your mortgage consultant will guide you as to how much of a house payment (including principal and interest, private mortgage insurance, property taxes and homeowners insurance – PITI) is within your budget. That monthly payment will translate to a purchase price range that you can shop for homes within. Once you have chosen a property that you want to write an offer to purchase on, she will provide your realtor with a customized pre-approval letter. The pre-approval letter will help strengthen your purchase offer’s position with the prospective seller of that property.
Applying for a mortgage can be a daunting task. The important thing to remember is to be well-prepared before calling your mortgage consultant. If you’ve reviewed your credit history recently, there should be no bombshells. If you have your income and asset documentation saved and readily available, then it should take just a few minutes to get everything together. Your mortgage consultant is there to make the process easier for you. She is knowledgeable, efficient and focused on making your experience pleasant.
If you’d like to discuss the mortgage process in greater detail, please contact me at bahale1@gmail.com.
If geography allows, you will meet with your mortgage consultant in person, so that you can further discuss your personal financial goals and expectations. Your mortgage consultant will want to make sure that she is advising you of the proper loan programs to meet your specific needs and budget. This consultation ensures that you are comfortable with the process and well-informed of your choices. Your mortgage consultant will guide you step-by-step through the loan process, and will manage all the details of your transaction. She will keep you updated, educated, and in control.
If you are applying for a pre-approval for a purchase loan, your mortgage consultant will guide you as to how much of a house payment (including principal and interest, private mortgage insurance, property taxes and homeowners insurance – PITI) is within your budget. That monthly payment will translate to a purchase price range that you can shop for homes within. Once you have chosen a property that you want to write an offer to purchase on, she will provide your realtor with a customized pre-approval letter. The pre-approval letter will help strengthen your purchase offer’s position with the prospective seller of that property.
Applying for a mortgage can be a daunting task. The important thing to remember is to be well-prepared before calling your mortgage consultant. If you’ve reviewed your credit history recently, there should be no bombshells. If you have your income and asset documentation saved and readily available, then it should take just a few minutes to get everything together. Your mortgage consultant is there to make the process easier for you. She is knowledgeable, efficient and focused on making your experience pleasant.
If you’d like to discuss the mortgage process in greater detail, please contact me at bahale1@gmail.com.
Thursday, January 21, 2010
What To Expect When Applying For A Mortgage Part 3
Obtaining Your Mortgage Pre-Approval
The most important aspect of the mortgage process is determining how much home you can afford to purchase. This will be the driving force of your home search. Be prepared to provide a detailed summary of your economic life for the past 2 years.
Once in contact with your mortgage consultant, she will ask you for some basic information to complete the loan application. This will include questions about your employment and residency for the past 2 years, and your current income and assets. If you are purchasing a home, she will need to know the amount of your down payment.
Your mortgage consultant will then pull a tri-merge credit report that will reveal your 3 credit scores from TransUnion, Experian, and Equifax. She will use your middle credit score to qualify you for specific loan programs and determine your interest rate. In this current mortgage market: the lower your credit score, the greater the potential you’ll receive a higher interest rate. Credit scores range from 300 to 850, with the best rates given to scores above 740.
The mortgage consultant will run your credit, income, and asset information through an automated underwriting process. The automated underwriting process will produce a general loan approval or a loan decline based on the information provided at that time. The loan approval will be subject to specifics such as appraisal of property, title search, change or loss of employment or assets, and verification of funds for down payment.
This process will help you establish the price range of homes that you will be comfortable shopping in. It is helpful to be completely informed of your mortgage choices from the beginning, so that there are no surprises down the road.
If you’d like to find out what your borrowing power is for a new home, please contact me at bahale1@gmail.com or call (513) 520-6044.
The most important aspect of the mortgage process is determining how much home you can afford to purchase. This will be the driving force of your home search. Be prepared to provide a detailed summary of your economic life for the past 2 years.
Once in contact with your mortgage consultant, she will ask you for some basic information to complete the loan application. This will include questions about your employment and residency for the past 2 years, and your current income and assets. If you are purchasing a home, she will need to know the amount of your down payment.
Your mortgage consultant will then pull a tri-merge credit report that will reveal your 3 credit scores from TransUnion, Experian, and Equifax. She will use your middle credit score to qualify you for specific loan programs and determine your interest rate. In this current mortgage market: the lower your credit score, the greater the potential you’ll receive a higher interest rate. Credit scores range from 300 to 850, with the best rates given to scores above 740.
The mortgage consultant will run your credit, income, and asset information through an automated underwriting process. The automated underwriting process will produce a general loan approval or a loan decline based on the information provided at that time. The loan approval will be subject to specifics such as appraisal of property, title search, change or loss of employment or assets, and verification of funds for down payment.
This process will help you establish the price range of homes that you will be comfortable shopping in. It is helpful to be completely informed of your mortgage choices from the beginning, so that there are no surprises down the road.
If you’d like to find out what your borrowing power is for a new home, please contact me at bahale1@gmail.com or call (513) 520-6044.
Tuesday, January 12, 2010
Further FHA Loan Scrutiny On The Horizon
I woke up to the news that the White House will be looking into the lending practices of some FHA lenders. Look for even tighter guidelines down the road!
There was a lot of confusion this summer when major wholesale FHA lender, Taylor Bean Whitaker (which is mentioned in the link), filed bankruptcy and left many of their home loan clients' mortgage payments missing in limbo for months. If you were affected by that situation, or if you have any questions, please contact me at bahale1@gmail.com or (513) 520-6044. I'd love to hear your comments and feedback!
There was a lot of confusion this summer when major wholesale FHA lender, Taylor Bean Whitaker (which is mentioned in the link), filed bankruptcy and left many of their home loan clients' mortgage payments missing in limbo for months. If you were affected by that situation, or if you have any questions, please contact me at bahale1@gmail.com or (513) 520-6044. I'd love to hear your comments and feedback!
Monday, January 11, 2010
What To Expect When Applying For A Mortgage Part 2
Locate Your Relevant Documentation
Being prepared for your conversation with your mortgage consultant is crucial to getting the most out of your experience. Before contacting your mortgage consultant, gather the following documentation:
• 30 days of recent pay stubs
• 2 years of recent W-2s
• 2 months bank statements, checking and savings
• 401K/IRA statements
• Bankruptcy filing and discharge, if applicable
• Divorce decree/separation agreement, if applicable
You may need additional documentation, especially if you are a first-time homebuyer, self-employed, or a veteran applying for a VA loan. Your mortgage consultant will advise you specifically in those cases.
Some of these items you may not have readily available, so you may have to contact previous employers, banks and others to obtain this information. This may take additional time. Also, some banks charge for reprints of bank statements.
Just remember that you will need to keep track of any new pay stubs, bank statements and anything else your mortgage consultant asks for during the loan process, so don’t throw anything away – and stay away from the shredder!
If you would like a more detailed list of documentation that is specific to your situation, please contact me at bahale1@gmail.com or (513) 520-6044.
Being prepared for your conversation with your mortgage consultant is crucial to getting the most out of your experience. Before contacting your mortgage consultant, gather the following documentation:
• 30 days of recent pay stubs
• 2 years of recent W-2s
• 2 months bank statements, checking and savings
• 401K/IRA statements
• Bankruptcy filing and discharge, if applicable
• Divorce decree/separation agreement, if applicable
You may need additional documentation, especially if you are a first-time homebuyer, self-employed, or a veteran applying for a VA loan. Your mortgage consultant will advise you specifically in those cases.
Some of these items you may not have readily available, so you may have to contact previous employers, banks and others to obtain this information. This may take additional time. Also, some banks charge for reprints of bank statements.
Just remember that you will need to keep track of any new pay stubs, bank statements and anything else your mortgage consultant asks for during the loan process, so don’t throw anything away – and stay away from the shredder!
If you would like a more detailed list of documentation that is specific to your situation, please contact me at bahale1@gmail.com or (513) 520-6044.
Monday, January 4, 2010
What To Expect When Applying For A Mortgage Part 1
Happy New Year to All! I'm glad to see the holiday season behind us, and I'm ready to plunge right into 2010!
Here is my first installment of a four part series -
What To Expect When Applying For A Mortgage Loan
Part 1 – Check Out Your Credit
When you’re ready to take the plunge into the mortgage arena, whether you’re purchasing a new home or refinancing your current home, you may be surprised at how the process works. It is very important to put your personal financial picture in the best possible light, so that you can qualify for the most available loans programs and preferred interest rates. It helps to be prepared before you make the call to your mortgage consultant.
A good rule of thumb is to annually review your credit report with the 3 credit agencies: TransUnion, Experian and Equifax. You can do this easily by accessing www.annualcreditreport.com. You can review all three credit bureaus through this one website. It’s free and available to you every 12 months, so take advantage. When accessing the website, make sure you have plenty of time and paper (and ink!) in your printer, to print out your reports. Also, be aware that the website will initially question you about specific creditors that you have used or previous address information to prove your identity before it will let you gain access to your information. This can catch you off-guard if you don’t have a good memory or the proper information in front of you.
Once you receive your credit information, review thoroughly, and if appropriate, dispute derogatory items immediately. It can take up to 30 days for a dispute to be corrected. It most likely will take over 60 to 90 days to impact your credit score once the derogatory item is corrected or removed, so make sure to follow up diligently on any disputes.
Keeping your credit in good health is critical and will ensure you the best loan programs and rates. If you need more information on credit scoring, disputing credit, or would like to review sample dispute letters, please contact me at bhale@cinci.rr.com or (513) 520-6044.
Look for the second installment of this three part series in the upcoming days!
Here is my first installment of a four part series -
What To Expect When Applying For A Mortgage Loan
Part 1 – Check Out Your Credit
When you’re ready to take the plunge into the mortgage arena, whether you’re purchasing a new home or refinancing your current home, you may be surprised at how the process works. It is very important to put your personal financial picture in the best possible light, so that you can qualify for the most available loans programs and preferred interest rates. It helps to be prepared before you make the call to your mortgage consultant.
A good rule of thumb is to annually review your credit report with the 3 credit agencies: TransUnion, Experian and Equifax. You can do this easily by accessing www.annualcreditreport.com. You can review all three credit bureaus through this one website. It’s free and available to you every 12 months, so take advantage. When accessing the website, make sure you have plenty of time and paper (and ink!) in your printer, to print out your reports. Also, be aware that the website will initially question you about specific creditors that you have used or previous address information to prove your identity before it will let you gain access to your information. This can catch you off-guard if you don’t have a good memory or the proper information in front of you.
Once you receive your credit information, review thoroughly, and if appropriate, dispute derogatory items immediately. It can take up to 30 days for a dispute to be corrected. It most likely will take over 60 to 90 days to impact your credit score once the derogatory item is corrected or removed, so make sure to follow up diligently on any disputes.
Keeping your credit in good health is critical and will ensure you the best loan programs and rates. If you need more information on credit scoring, disputing credit, or would like to review sample dispute letters, please contact me at bhale@cinci.rr.com or (513) 520-6044.
Look for the second installment of this three part series in the upcoming days!
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