Sometimes an assumable loan can be the deciding factor in someone buying your home. As the FHA interest rates rise, the demand for assumable mortgages will rise significantly. FHA continues to be one the last home loan program that offers an assumable mortgage for new home buyers. Conventional mortgages and are not assumable and in most cases, neither are sub-prime loans. In most cases, conforming loans have a clause that requires the mortgage lien to be paid in full before it can be sold. The only home loans that offer an assumable option are the VA and FHA mortgages. Read the original article FHA Assumable Mortgage.
There continues to be a lot of talk about FHA mortgage lending in the news. The housing sector continues to sputter and interest rates are rising. FHA home loans are government-insured mortgages that have supported much of the mortgage industry since the sub-prime mortgage crisis, may not be as affordable in the near future. FHA has pledged to raise insurance premiums in April and many approved FHA lenders are reporting higher closing costs and 3rd-party lending fees.
FHA loans are very popular with first time homebuyers and borrower who are unable to qualify because of 10-20% down-payments that are common with traditional loans. FHA is also the go-to loan for borrowers with less than perfect credit. The FHA loan requirements have always been more flexible than conventional mortgages until recently. Many lenders have announced minimum credit scores for borrowers seeking FHA home loans.
FHA requires at least 3.5%, while in most cases conventional mortgages typically require 10 to 20% more. Last November, lenders implemented minimum credit score of 500 and for borrowers that had credit scores below 580 would have to come up with a 10% down-payment.
Many non-prime and bad credit mortgage programs have been discontinued, but for many struggling consumers, FHA is the only chance to qualify for mortgage rate refinancing or home buying because of the flexible credit criteria. Wells Fargo recently lowered its minimum required credit score for a FHA loan to 500 from 600. The National lender also lowered their required debt-to-income ratio to 43%. For FHA borrowers with less than perfect credit, the Wells Fargo increased their minimum down-payment requirements to 10%.
Since the sub-prime mortgage crisis began in 2008, “FHA has been the only haven for borrowers,” said Sean Welsh, a senior loan officer at Campbell Financial Services in West Haven, Conn. But the agency’s capital reserves have fallen below levels mandated by Congress, which is why the rise in the annual insurance premium was authorized. Mr. Welsh said the increase, while “not too bad,” was still “additional pain” atop the November change.
The FHA Loan Pros suggested that former Treasury Secretary Hank Paulson was in favor of limiting FHA mortgage lending to lower income Americans that were seeking with reduced home loan amounts. They believe he wants to keep the price of the insurance commensurate with the risk being taken on the FHA loans. In other words, take FHA back to where it was only a few years ago, when private lending was as attractive or more attractive to most borrowers and FHA had a relatively small part of the market. Today, most FHA lenders are willing to take on the kind of risk FHA does would have to pay its investors a lot more to make those loans than FHA currently pays its investors. The playing field must be leveled and our infatuation as a society with home ownership must end.
Filed under FHA Mortgage Articles, FHA news, Published Articles · Tagged: 1st time homebuyers, FHA loan programs, FHA mortgage financing
The Federal Housing Administration has been insuring home loans for 1st time homebuyers since 1934. The government created the FHA loan programs to promote homeownership and to ensure fair lending for all Americans.
FHA mortgage interest rates are fixed and there is never a pre-payment penalty with a FHA home loan. Buying a home can be a costly experience, so first time home-buyers have the ability to preserve capital with FHA loans because borrowers can finance up to 96.5% loan to value. That means that a new home buyer can get into a home with only a $3,500 down-payment.
There is a lot to consider with FHA mortgage financing, but an experienced FHA lender or licensed loan officer should be able to shed some light on the pros and cons of a FHA mortgage. The $8000 first time home-buyer tax credit expired April 30th, but the record low rates should be enough of an incentive to become a homeowner. Read the original FHA mortgage advice article online > FHA Home Loan Options for 1st Time Homebuyers.
Filed under FHA Articles, FHA Mortgage Articles, FHA Mortgagee Letters, FHA news, FHA refinance, Mortgage Reform, Mortgage Rescue Articles, Published Articles · Tagged: FHA mortgage relief, FHA refinance guidelines, mortgage relief companies
FHA borrowers have refinance options that enable struggling homeowners to avoid going the loan modification route. There is nothing wrong with getting a loan modification, but you can expect the process can take 6-12 months and you risk you losing your home in the process. Just last week, the New York the state attorney general, Andrew Cuomo, has sent cease and desist letters to more than 200 loan modification companies. The FHA loan Pros published an article that discussed how FHA customers could get relief without getting tangled up with mortgage relief companies. They pointed out that laws for mortgage relief companies vary by state but Cuomo reached out to homeowners with FHA mortgage relief insured by HUD.
The NY attorney general’s office said “Mortgage relief companies target homeowners facing foreclosure by promising to restructure their home loans with an affordable loan modification. Cuomo accused these mortgage relief companies of operating in deceptive practices that lure distressed homeowners to pay them for mortgage relief services, yet they often fall short to modify the mortgage.
The FHA Mortgage Solution
First of all FHA has been helping struggling homeowners since 1934. With their flexible FHA guidelines, HUD has been a leader in the foreclosure prevention arena. FHA has solidified a good reputation for rectifying FHA loans in default. In 2009 the FHA annual report says that “82.7% of the FHA mortgage loans that were 90 days or more delinquent were brought under control.”
To get FHA mortgage relief, you need to contact a HUD foreclosure avoidance counselor at http://www.hud.gov/offices/hsg/sfh/hcc/fc/. There is no fee for their mortgage relief services so you have nothing to lose. FHA refinance guidelines remain more flexible than conventional loan programs. For borrowers who don’t have much home equity, they may still qualify for a rate and term FHA refinance at 96.5%.
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In a recent article, FHA Home Loan Refinancing posted an interesting perspective of FHA’s future. The FHA loan publisher considers the risks that FHA lenders pose in addition to each FHA loan program as well. The article reviews the following FHA programs: cash out refinance, FHA streamline, and the infamous, FHA home purchase product. They noted that the FHA Commissioner and HUD had tightened the FHA guidelines for the streamline by not allowing borrowers to finance the lender closing costs. When borrowers come out of pocket to pay their closing costs you can bet they are less likely to default on the loan. Read the original article online at > Are FHA Home Loan Programs at Risk?
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FHA has not been immune to mortgage loan defaults, late payments and foreclosures. FHA loan programs have supported a majority of home financing portfolios for purchase and refinancing. The FHA is also in need of additional capital after an actuarial report found the agency’s secondary reserves have fallen below the required 2%, to 0.53%, as losses from borrower defaults rose. The housing agency insures nearly 30% of all purchase mortgages and 20 % of refinanced loans, according to HUD Secretary Shaun Donovan.
The proposed FHA lending changes or new FHA guidelines include:
* HUD will increase “up front” cash required on a home purchase loans, giving the buyer more “skin-in-the-game.” FHA said it can tap several options, and analysts say it will mean some increase to the current minimum down payment of 3.5%. About 31% of purchase loans done in the first eight months of 2009 had the maximum 96.5% loan-to-value. Another 55% had 95% to 96.5% LTVs for FHA mortgage options.
* The FHA will raise the minimum credit score for new borrowers. The FHA has yet to determine the minimum “FICO” and may factor in the down payment.
* HUD will increase compliance and hold FHA lenders accountable for losses associated with loans that do not meet FHA standards. As of Dec. 8, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.
* HUD might increase the 1.75% up-front premium and/or annual mortgage premiums. It is asking Congress to raise annual premiums since that would raise capital with the lowest borrower impact, Donovan said.
* HUD cut allowable seller concessions to 3 % from 6 % in a move to limit incentives to inflate appraised values. The move reduces the money the seller can contribute to a buyer’s closing costs, discount points and other concessions without impacting the buyer’s mortgage.
* It will boost enforcement and hold FHA lenders accountable for losses associated with loans that do not meet FHA requirements. As of December 8th, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.
In 2009, FHA home loans became the new trend for borrowers who had the income and job stability. FHA loans have become a good financing choice, at least for people who planned on staying in their homes long term. The FHA 203k also enables borrowers to finance the costs of your home remodeling in your loan.
With FHA 203k loans, borrowers could purchase or refinance a home that needs improvements and include all the modification and construction costs in the loan. FHA loans also encouraged borrowers to make their home more energy efficient. The FHA enabled people to finance energy efficient upgrades into their home refinance loan. If you need more HUD advice for home buying with little or no credit, take a look at FHA mortgage refinance. Read the original FHA loan article written by Bryan Dornan.