Tag Archives: Hud

Not so fast….FHA Mortgage changes rescinded!

Within hours of President Donald J. Trump being sworn in as President, HUD has rescinded the proposed reduction of Mortgage Insurance Premiums on new FHA loans.  The reduction of Mortgage Insurance Premiums, called MIP on an FHA Loan, was supposed to be reduced by 25 bps per month on new loans at the end of this month.  This would have saved the FHA home loan borrower about $50 per month on a loan of $250,000.

While this is not great news for new FHA home loan seekers, I prefer to look at the re examination of FHA Mortgage Insurance Premium funds and see what can be done to reduce the monthly mortgage payments for FHA home loan seekers.

Possible changes include the life of the loan provision currently on FHA Mortgage Insurance Premiums.  It would be less costly for home owners with a FHA Mortgage if the FHA MIP would drop off automatically in later years.  Currently, for the life of the loan, FHA will collect Mortgage Insurance Premiums.  On a conventional loan with Private Mortgage Insurance, the PMI can be dropped when your equity reaches 20%, or when by normal amortization schedules, you reach the 78% of the original loan to value.

Right now, the only way to drop the FHA Mortgage Insurance Premium is to pay off the loan, most likely with a refinance or sale.

If you are in the Treasure Valley, we have seen massive home appreciation. Someone with a home loan from 2013 or 2014 might have enough equity in 2017 to refinance into a conventional loan without PMI or MIP, and save that money every month.

To see what you can save, contact me here.

 

 

 

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.

 

 

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