New Mortgage Help from Gov’t

Nov. 11, 2008 09:48 AM
Associated Press

WASHINGTON – In the most sweeping effort so far to help troubled homeowners, the federal government and the mortgage industry on Tuesday will announce a plan to streamline the assistance process for hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, scheduled a press conference for 2 p.m. EST. Scheduled to attend were officials from the Treasury Department, Wells Fargo & Co., the Department of Housing and Urban Development and Hope Now, an alliance of mortgage companies organized by the Bush administration last year.

An industry official who worked on the plan said the new approach will allow lenders to modify more delinquent loans by establishing broad criteria to speed up the process. The official spoke on condition of anonymity because details had not been announced.

The new initiative will likely have tremendous importance because Fannie Mae and Freddie Mac own or guarantee about half of U.S. home loans.

To qualify, borrowers would have to be at least three months behind on their home loans, and would need to have home loans worth at least 90 percent their house’s value. The interest rate or principal amount of the loan would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses, the industry official said.

The announcement comes as major banks are stepping up their efforts to curtail losses from souring mortgages. More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

Three Big Mortgage Loan Changes effective Jan. 1, 2009

Potential Home Buyers:

BE AWARE that several loan programs will change on January 1, 2009.  The FHA minimum down payment goes up from 3% to 3.5%.  The FHA maximum loan amount goes from $346,250 down to around $318,550 (in Arizona).  Once a buyer has a purchase contract, a mortgage lender can establish an FHA case number which is the date used for cutoffs.  So if the max loan amount and downpayment amounts matter to you – get those contracts written in 2008!

Also, the USDA “Rural” Housing Program will eliminate some of the areas that are currently still eligible for 100% financing.  Right now Buckeye, Maricopa (the city), and parts of Anthem and Queen Creek are all still eligible for 100% financing on this program.

Most of my clients are doing FHA loans with 3% downpayments (which is $7,500 on a $250,000 house).  The closing costs associated with buying a home (another 2-3% of the price) can be paid for by the seller!  Let a Realtor help you negotiate for this!  It costs you as a buyer NOTHING to have me as your Realtor, full-time, looking out for your interests. Call me at 480-383-9209 or email me at Becky@BeckyWyattOnline.com – Becky

What is PMI? Is it tax deductible?

The federal government’s Private Mortgage Insurance legislation is great news for the Real Estate Industry! Enacted on January 1st, 2007, the bill makes Private Mortgage Insurance (PMI) tax deductible for new borrowers whose personal adjusted gross income is $100,000 or less. For millions of home buyers, the bill creates an amazing opportunity to finance a more expensive home or potentially obtain a lower payment for the same-priced home, while reducing annual income taxes by hundreds of dollars. 

What is PMI?
Designed to protect lenders from defaults and foreclosures, Private Mortgage Insurance is required for loans exceeding 80% of the property’s value or sales price. Prior to the new legislation, PMI was generally viewed with contempt by homebuyers because of its perceived high cost and the fact that it was not tax deductible. For many borrowers, PMI was the only means available for financing their mortgage. 

It wasn’t until the 1990s, when lenders began allowing “piggyback” financing, that homeowners and home buyers had an opportunity to finance a home without PMI. Under this scenario, buyers would take out two loans to cover the total amount borrowed. The first mortgage accounted for a minimum of 80% of the purchase price or appraised value of the home; and the second mortgage, or “piggyback”, covered the remaining amount required to fund the transaction. 

Need to Refi but have no Equity?

Q: What if I need to refinance but have no equity?

Well, this is when you call the mortgage company that gets your monthly check and ask for mercy. Mercy usually looks like one of the following:  a portfolio refinance, a loan modification or a hardship adjustment.  Basically, these are just different ways of improving the terms of your existing loan. 

While each of these has its advantages, the bad part about any of the options is that you usually have to call your lender three or four times before you get someone on the phone who even knows what you’re asking for.  Often customer service representatives won’t know what you want or how to help you.  Don’t be surprised if you get passed around or if you seem to hit a dead end—be diligent and call back. 

Eventually, you will get someone who knows what you are talking about.  Just remember: Don’t sign anything without reading it completely.  Because of pressures from the market and the government, most banks are on the up and up right now, but there’s still a chance that the language could be misleading or that a prepayment penalty has been added. 

If you need help interpreting the paperwork, don’t hesitate to send it to me for review—this is what I am here for.

Carrie Neidorf

Loan Officer

Sun American Mortgage Company

4140 E. Baseline Rd., Suite 206

Mesa, Arizona 85206

Phone:  480.467.1036

Fax:      480.924.6759

Mobile: 602.770.8977

Email:   carrie.neidorf@sunamerican.com

New Housing Bill Signed into Law

The Housing and Economic Recovery Act
Last week, President Bush signed the “Housing and Economic Recovery Act of 2008″ into law. This $300 Billion rescue plan is aimed at helping struggling homeowners avoid foreclosure, as well as boost confidence in the housing market. Although the bill is several hundred pages long and contains a number of far-reaching provisions, here are a few of the major provisions in the legislation that impact homeowners and homebuyers:

1. Tax credits. First-time homebuyers who purchase their primary residence on or after April 9, 2008 and before July 1, 2009 are eligible for up to $7,500 in tax credit, provided they haven’t owned a home in the last three years and fit certain income parameters. The credit is generous, but it is actually an interest free loan, paid back over 15 years at $500 per year when taxes are filed.
Special note: Some types of seller-paid down payment assistance programs are being eliminated as of October 1st as well – so purchasing a home before then may gain you a double benefit of tax credits AND seller-paid down payment assistance while it is still available.
2. Larger loans at lower rates. There have recently been provisions in place that have allowed loans larger than $417,000 to qualify for better financing rates than normally would be available for “jumbo” loan amounts of that size, thanks to Fannie Mae and Freddie Mac.

No More Downpayment Help from Sellers

The new housing rescue  bill President Bush is expected to sign this week will really change things for buyers needing help with their down-payment.  Currently, there are FHA loan programs out there that allow the seller to contribute to the buyers down-payment (providing instant equity for buyers, and less out of pocket costs for buyers).  That ends October 1st, 2008.  All loans approved after that date CANNOT have the seller pay for the down-payment that is required for an FHA loan (currently 3% of a sales price).  This bill will also adjust the minimum FHA down-payment requirement from 3% to 3.5% which means you’ll need to have more money saved up if you are interested in buying a home.  There are many other details to this bill but these two features will effect many potential homebuyers.  Personally, three of my recent clients have used programs such as Ameridream, Genesis, Nehemiah that allow for the seller to pay the buyers down-payment. If you are considering buying property, and were interested in some type of zero down loan program where the seller would help with your down-payment then you must hurry and get pre-qualified for a mortgage loan NOW and start shopping for property.  Please feel welcome to post comments or questions. – Becky Wyatt

Mortgage Interest Rates Up

By Holden Lewis at www.bankrate.com

Mortgage rates took a big jump this week, to their highest point in a year. There’s no single explanation for the rise.

The benchmark 30-year fixed-rate mortgage rose 35 basis points, to 6.77 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index was almost the same, at 6.75 percent. Four weeks ago, it was 6.62 percent.

The benchmark 15-year fixed-rate mortgage rose 37 basis points, to 6.32 percent. The benchmark 5/1 adjustable-rate mortgage rose 43 basis points, to 6.48 percent. The 30-year fixed jumbo, for big mortgages, rose 4 basis points, to 7.68 percent.

The last time the 30-year fixed was higher was the week of July 18, 2007, when it was 6.82 percent. Six weeks after that, the 30-year fixed was below 6.5 percent. Circumstances are different now, and there’s no guarantee that we’ll see a repeat of an August rate swoon.

New ‘08 Loan Pricing & Your FICO score

TODAY’S RATES ARE AS FOLLOWS

30 YR FIXED @ 5.625%
30 YR INT ONLY @ 6.625%
30 YR BOND PROGRAM @ 6.55%
30 YR FHA @ 5.75%

Did you know…starting in 2008 Fannie Mae and Freddie Mac have started to implement loan level pricing adjustments based solely on FICO scores.  Here is the following breakdown if your credit scores fall into these ranges:
For all loans with a Loan-to-Value greater then 70%:
FICO Scores below 620 add 2% to the rate
FICO Scores between 620 – 639 add 1.75% to the rate
FICO Scores between 640 – 659 add 1.25% to the rate
FICO Scores between 660 – 679 add .75% to the rate
To give you an idea of how this affects payments…on a $200,000 loan a borrower with a FICO score of 685 with a rate of 5.625% is paying $1,151.31 a month principle and interest.  If that same borrower has a FICO score of 620 and the rate jumps 1.75% higher (7.375%) and now they are paying $1,381.35 a month for the same house!  That is over $230.04 a month higher and more than $82,800 over the life of the loan!  For information on how to improve your FICO score, click the highlighted link.

-Brett Collin, Mortgage Lender 602-330-5521

www.metrograndmortgage.com

Increase Your Credit Score by 100 points in 45 days!

Your credit score is used by lenders to determine if you can get a mortgage loan and what interest rate they will charge you.  It is also used to obtain a car loan, cell phone contract – even employers and landlords check it!  This is a precious 3 digit number you should try your best to protect.  My clients often ask me about ways they can easily improve their credit score.  I’ve put together a list of the top 6 things that you can do that will help raise your credit score. 

  What’s In Your FICO^® Credit Score

Ways to Increase your Credit Score!
1 – Pay Past Due Accounts
(does NOT include judgments or collection accounts)
2 - Have Late Payments Removed or Have Mistakes Corrected
Phone your creditor and request it – always get a letter that documents it with name/address/account #, specific late or mistake to be corrected, on company letterhead, signed by employee – BE PERSISTENT!
3 – Increase Credit Limits
Every 6 months request an increase to credit limit (do NOT allow them to pull credit)
4 – Become an Authorized User
Ask a relative or friend to add you to a credit account in good standing (current balances below 10% of limit + good payment history)
5 – Do NOT Close Accounts
Closing accounts with a long credit history will hurt your credit score!
6 – Keep Balances-to-Limit Ratio Low
Below 40% is ideal.  If you have charged $5,000 on a card with a $10,000 limit – that is hurting your score.  If you have $2,000 on a card with a $10,000 limit – that is not harming your credit score.

Savings Example

The higher your FICO^® scores the less you can expect to pay for your loan. For example, on a $216,000 30-year, fixed-rate mortgage:

If your FICO® score is	Your interest rate is	…and your monthly payment is
760 – 850	5.74%	$1,259
700 – 759	5.96%	$1,289
680 – 699	6.14%	$1,314
660 – 679	6.35%	$1,344
640 – 659	6.78%	$1,405
620 – 639	7.33%	$1,485

As you can see in this example using today’s national rates, a person with a FICO^®score of 760 or better will pay $226 less per month for a $216,000 30-year, fixed-rate mortgage than a person with a FICO^® score of 620 – that’s a savings of $2,712 per year. You can see how essential improving your credit scores can be if they are low, and also how important it is to keep them high if they are good. - source www.myfico.com

www.AnnualCreditReport.com
* * * By law, you are allowed to review your credit score – for FREE, once a year.  Check it out! * * * 

 If you would like more detailed information how to make your Credit Score shine, please email or call me and I’ll gladly get you more helpful information!  Becky@BeckyWyattOnline.com