Category Archives: Loan Programs

Why aren’t more renters buying?

In our market, Boise Idaho, the cost of renting a house is more than the cost of a mortgage for a similar home. It would seem that everyone would be buying a home.

The Wall Street Journal did a survey on why, and here it is:

http://realestate.msn.com/blogs/post–why-more-renters-arent-buying

The top three reasons are directly related to our economy and job market, not worries about values dropping or other reasons.

What do you think? Comment below:

New Changes to the FHA Home Equity Conversion Mortgage, aka Reverse Mortgage. Great News for non borrowing spouses!

New rules go into effect on new Reverse Mortgages originated after August 4th that protect a non-borrowing spouse from foreclosure.

One of the criticisms of the Home Equity Conversion Mortgage is when a younger spouse, who cannot be on the loan if they are less than 62 years of age, looses their older spouse, the loan becomes due and payable.  Many times they are not able to qualify for a new refinance loan, and the home eventually gets foreclosed upon.

Recent case-law has established that the non borrowing spouses cannot be foreclosed upon, so HUD has written new guidelines that prevent the non borrowing spouse from facing foreclosure.

As a result, HUD has published new principal limit factor tables that run from ages 18-90 that give an approximate percentage that a married couple could borrow using a Reverse Mortgage.

The new principal limits are based on the age of the youngest spouse, generally.  This has the effect of lowering the amount that a Reverse Mortgage can provide but protects the younger, non borrowing spouse.

I think it’s a pretty good and fair tradeoff.  The Home Equity Conversion Mortgage is a life changing program for those who choose it but was a potential housing nightmare for non borrowing spouses prior to August 4th.

There are requirements on the non borrowing spouse, too many for a single post, but generally if they continue to live in the home as their primary residence, pay the taxes and insurance and maintain the property, they can stay in the home.

If you have questions about the Home Equity Conversion Mortgage, aka Reverse Mortgage, feel free to contact me and I can answer any questions for you as well as run custom quotes for your individual situation.

 

How to increase your credit score, FAST!

Outstanding credit card balances can impact a large portion of your total credit score.

Look at the available credit line vs what you owe.

If you have accounts that are being utilized over 50%, pay them down to under this amount.

If you are actually over the available balance, pay that down first.

The credit card companies usually report new data every month, and that will impact your next credit score when factored into the overall credit report.

 

Got a credit Question, ask below!

 

USDA increases its mortgage insurance fees in October

The Rural Development loan program offered through the US Department of Agriculture is increasing its monthly mortgage insurance fees starting 10/01/2014.

Right now, the Rural Development loan program charges a monthly mortgage insurance fee equal to .4% of the loan amount per year.  This will increase to .5% starting 10/01/2014.

What is the difference in payment?  On a $135,000 loan the monthly mortgage insurance goes from $45.00 per month to $56.30 per month.  This may not sound like much, but it wasn’t that long ago that RD loans didn’t have a monthly mortgage insurance fee.

RD loans in addition, still have the 2% up front Mortgage Insurance, called a “funding fee” that is typically financed on top of the loan.  That would be an extra $2700 added to the above mentioned $135,000 loan, a typical loan size for the RD eligible areas such as Star, Middleton, Kuna, Idaho.

To qualify for the additional $56 per month, a borrower would need to earn an extra $130.23 per month.

Are there alternatives to using the USDA’s Rural Development loan?  Yes, there are.  To determine if they are the best loan program for your situation, you need to call a local lender you trust and discuss your mortgage needs.

Should you not have a lender, you can always call me at 861-7579 and I will go over your individual situation and find the best mortgage program for your needs.

10 Misconceptions about VA Loans

  1. You can only use them once:  The VA loan program allows subsequent use of the loan program up to the full entitlement.
  2. Only a Veteran can be on the home loan; Spouses can and should be on the loan.  Widows of veterans can qualify in some instances.
  3. You can’t have more than one at a time.  Subject to the limits of your entitlement, you can have more than one VA loan at a time.
  4. You can buy a rental property or vacation home.  Sorry, the VA loan program is for primary residence use only.
  5. The loan is from the Government.  The VA loan program is funded through private lenders but guaranteed by the US Government in the case of default by the homeowner.
  6. You have to have unblemished credit.  The VA loan program allows for bankruptcy and foreclosure after a short waiting period, usually 24 months.
  7. There is mortgage insurance if you don’t have 20% down payment.  The VA loan program does not have a monthly mortgage insurance requirement like the FHA and Conventional loan programs.  It does have a “funding fee” which is added to the loan balance.  This fee ensures the long term viability of the VA loan program
  8. They are an expensive loan-Dave Ramsey says they are but he doesn’t realize that the last few years the rates on Conventional loans have been higher.
  9. The VA does a home inspection; you should hire your own inspector if you have concerns about the property condition.  An appraiser will inspect the property according to the minimum property standards that the loan program requires, but it is not a comprehensive home inspection that a consumer would order.
  10.  I need my original certificate of eligibility or DD214 to qualify; nowadays, we can obtain them online in a very short time.

Are you buying a home next year and need an FHA loan? Better check with your lender first.

Next year the loan limits for new FHA loans has been lowered in our area.

The new loan limits are $271,050 for new FHA loans reserved after 1/1/14.

Previously, the loan limits for the Boise are was $303,750.

If you have found a home and are in the process of obtaining a home loan but plan on closing in early 2014, make sure your lender gets the FHA case file # before the end of the year.  By doing this, you get “grandfathered” in with the current, higher loan limits.

 

FHA’s back to work program requirements

The changes to FHA’s back to work initiative have opened up the housing market to many potential home buyers  who otherwise would have to wait another year.

The Back to work guidelines allow for a home buyer to purchase a home after 12 months from the date of a Foreclosure, Bankruptcy, or short sale.  Until now, the guidelines required 24 months or longer after those events.

Its not without its qualifications, here they are:

  • Borrower(s)      must have a FICO score of 640 and above.
  • Borrower(s)      experienced an “economic event” such as job loss, loss of income, or combination of both which caused a foreclosure/pre-foreclosure, deed-in-lieu, or short sale.
  • “Economic event” resulted in at least 20% decline in household income and      lasted six months or more.
  • A   minimum of 12 months has elapsed since “economic event”.

Borrower(s) must receive HUD-approved counseling.

 

I’m not sure how I feel about the changes, on one hand it gets people into homes earlier than in the past.  On the other hand, I didn’t feel than 24 months after a bankruptcy and 36 after a foreclosure was too long to sit out of the home ownership market.

Bottom line is, some people will be sufficiently motivated to go through the counseling, gather documents proving the economic event and have made efforts to get their credit straightened.  Those people are probably the ones who will be ok buying a home sooner than later.

 

 

What is a VA Mortgage?

In many instances, younger people who return home from serving their country would like a home to call their own. Not having built up a vast credit rating in the community, it is quite possible that this would be denied to them. One thing that they can do is to avail themselves of a Veterans Administration home loan, part of the perks attached to being a veteran.

 

A Veterans Administration home loan helps veterans, surviving wives or husbands, or service men and women to become home owners when they may otherwise not be able to do so. The mission of the Veterans Administration and the home loans is to bring home ownership into the hands of those who have served our country. In Idaho a VA mortgage can assist you in gaining access to a home more rapidly.

The VA can help you to buy a home, to repair a home, to retain your home, to adapt a home if necessary in order to make it ready for your personal use. In some cases, as veterans who have been injured come back to the United States they require some adaptation of their homes in order to be able to use them well. The VA mortgage can help with that too.  VA home loans are  home loans which are provided by private lenders but which are guaranteed by the United States government so that the monies are more easily attained by the veteran and the lender can offer terms for your Idaho VA loan which are much more favorable to you.

 

Changes to FHA loan program waives the 3 yr waiting period after a foreclosure or short sale!

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Borrowers who lost their homes through foreclosure or short sale will no longer have to wait three years to get a mortgage to buy another home.

The Federal Housing Administration has changed the rules to help buyers whose credit was tainted due to the loss of a job or income reduction. They will now be able to get a mortgage to buy again after a one-year waiting period through the FHA’s new lending program, dubbed Back to Work. The FHA previously required these buyers to wait three years before applying for a mortgage.

Buyers who can document they lost their home to foreclosure or filed for bankruptcy because they were laid off or because their income was reduced by at least 20 percent will be eligible to apply for a loan after paying their bills on time for a year, according to the instructions the FHA sent lenders last week.

The change is effective immediately until September 2016.

Some of the qualifications:

Borrowers will be required to provide documentation showing the loss of income or employment, including termination notices, tax returns and W-2s.

The program is designed to help potential buyers who went through a period of financial distress but have been able to get back on their feet and can afford a home again.

The program is especially helpful to borrowers who went through bankruptcy and foreclosure simultaneously. Often, the lender doesn’t take title of the property until years after the discharge of the bankruptcy, which has delayed the start of the waiting period for many potential buyers.

During the one-year waiting period after the foreclosure sale, bankruptcy discharge or short sale closing, the borrower should have:

  • No late housing payments (rent/mortgage).
  • No more than one 30-day late payment on all other      accounts.
  • No accounts in collection.

Borrowers will also be required to go through housing counseling prior to being approved for the loan-I expect Idaho Housing to offer this and be a leader in this program.

As you can see, it’s not simply a wipe the slate clean and start over program, it will take some preparation to get requalified.

If you need a lender who will do the hard work, call me.

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