Homepath - What Makes it a Great Deal?

When you are in the market for a home and find a Fannie Mae foreclosure that is in the HomePath program, why aren't you better off using other mortgage programs to buy the home?  The answer is simple - Fees and Payment!

HomePath homes are properties that are owned by Fannie Mae and have been foreclosed which means Fannie is incurring costs of carrying the home each month that goes buy.  To encourage a buyer to purchase the home that is on their books, Fannie provides the following benefits to the buyer -

• No appraisal is needed - why would they need one? It's a property already on their books that is not being paid for.  Also, they have already had an estimated value to set the list price done.
• No Mortgage Insurance is needed - Huge savings to keep your monthly payment lower.
• More flexibility with credit score qualifying.
• Expanded seller contributions are available to keep the cost to acquire lower.

By selecting a mortgage product such as FHA to purchase a HomePath home, you will pay the hefty mortgage insurance premiums.  Currently, FHA MI is 1.75% upfront at closing and 1.25% for the annual renewal.  Even though the FHA interest rate is lower than the HomePath financing option, the cost to close and the monthly payments are much less.

If you'd like more info on the HomePath program, click here.

To see what HomePath homes are avilable in your area - HomePath homes.
HomePath guidelines and price adjustment matrix - https://documents.efanniemae.com/sf/ns/hpreo/pdf/mortmatrix.pdf

FHA Streamline Refi's Date Matters!

I received a call from a past client this week that wanted to know about the new FHA streamline mortgage program that has lower mortgage insurance premiums.  It seems they received a direct mail piece (can we get enough of those??) that told them they qualified to have lower  mortgage insurance and the lower interest rates that exist today.

They were all fired up and called immediately to save hundreds of dollars per month.  They filled out the info and they submitted an application.  The process went relatively quick for a large mega-bank to get the loan approved.  However, seven weeks is an eternity if you deal with Envoy.  This is where everything went awry for the clients.  Even though they received an application stating the lower mortgage insurance premium and the lower interest rate, the approval came out with much higher mortgage insurance in their monthly payment.

They called to ask me why I thought this happened.  Here's what the bank did not ask or research which would have saved them a bunch of time and un-necessary work - when was their current FHA loan endorsed by HUD?  Even if you closed prior to the magical date of May 31, 2009, the loan has to be endorsed by May 31 of that year.  Many loans that closed in March and April of 2009 were still not endorsed in time to take advantage of the lower mortgage insurance premiums that are available.

How do we insure that we do not get client's excited about a program that may or may not be available?  We do the research before taking the mortgage application.

If you do have an FHA mortgage that was closed and endorsed (call me to look it up for you) prior to May 31, 2009 you can take advantage of keeping the monthly MIP at the.55% renewal rate and have the minimal .01% upfront MIP tacked on.  With rates as low as they are, you can definitely save money if you haven't refinanced since the beginning of 2009.  And the best part of this program?  You do not need an appraisal on the house and we can may the majority of your closing costs which keeps your mortgage balance the same...why increase it?

Call me today if I can help!

Read the HUD mortgagee letter announcing the change

Envoy Introduces the Full K

Envoy Mortgage recently rolled out the full 203k offered through FHA.  Envoy is one of a limited mortgage lenders that are offering this great program.  As a mortgage bank, Envoy will process, underwrite, close, fund and administer the work post-closing which will make the program run more efficiently.

The full 203k allows both buyers and current home-owners to rehabilitate, repair and add additions to properties that they currently own or would like to purchase.  The program works very well for people looking to buy a foreclosure in need of repair, people looking to add on to a property that has limited equity, if any or for people looking to freshen up a property if their funds are limited.  With foreclosures and short sales being a large percentage of the properties available for sale, the 203k program is a great program to consider.

A tremendous percentage of the housing stock in the state of Connecticut is over thirty years old which makes the 203k program a very important product to consider.  However, through the years the program was not used due to time constraints and bankers, lenders and brokers not specializing in the program.  Many transactions went poorly or fell apart due to the time it would take for companies to get through the process.

The full 203k allows for the client to use the future value of the property in consideration for the loan to value.  This allows for someone to add space to the property which would increase the value thereby allowing the financing to take place.  Unlike it's baby brother - the 203k streamline, the 203k allows for structural work and landscaping and allows the rehabilitation costs to exceed $35,000 up to the county loan limit.

Because it's an FHA product, it only requires a 3.5% down payment and the seller can still give the buyer a credit towards to closing costs and pre-paid expenses up to 6% of the purchase price.  This allows for buyers to purchase a home with a minimum of 3.5% down payment.

At Envoy, we suggest using an Envoy Certified 203k Realtor who will help guide you through the process and act as an advocate for the client when working with the listing agent and seller.  If you'd like to receive more information about the 203k or the 203k Certified Realtor Program, please contact Vin Biscoglio.  The home's before and after pictures would all be eligible utilizing the 203k program through Envoy Mortgage.

How much longer will Rates stay LOW?

I grabbed this off of Mortgage Market Guide.  Seems that interest rates are probably not going to stay low forever.  Who would have thought?? 

Unemployment Initial Jobless Claims numbers came in better than expected on Thursday.  More positive news for the markets will lead to increased pressure on the long term bonds/mortgage backed security yields.

MMG has a locking bias - but that can change with future negative economic data.  My opinion - take advantage of the lowest rates in the last 50+ years and lock in.  The downside is minimal, while an uptick will cost you thousands over the years or the opportunity to save some money will be lost.

Who's stopped paying their mortgage at a rate that greatly exceeds the rest of the population?  You'll be suprised - http://www.cnbc.com/id/38163917

Have a great day!

8 Ways to Land more Clients

Realtor partners - I found this article online from Realtor Magazine.  Click to learn 8 creative ways to get in front of new clients.

Hope this helps.

FHA Annual MI renewal to Increase?

The House of Representatives voted and passed 406 - 4 the ability for the Federal Housing Administration to increase the annual renewal for the mortgage insurance charged on an FHA loan.  Read the article here - FHA Changes Article..

Earlier this year, FHA raised the upfront Mortgage Insurance Premium from 1.75% of the loan amount to 2.25%, costing a homebuyer an extra $1500 on a typical $300,000 mortgage amount.

The vote would allow FHA to increase the annual renewal to a maximum of 1.55% of the unpaid balance.  The annual renewal is paid on a monthly basis with the mortgage payment by dividing the amount due by the twelve monthly payments.  How much of a change would this be to the home buyer?  On a $300,000 loan balance the consumer would pay $137.50 per month for mortgage insurance.  In the worst case scenario of 1.55% it would cost the same home buyer $387.50 per month.

A recent study that asked people hat bought homes over the past year what relevance the tax credit had on their decision to purchase.  65% said it had no bearing on their move to home ownership.  The majority of these same people stated it was the low interest rates that enticed them to buy.  I'll take this a step further and suggest what they really mean is they bought because of the affordability or the low payments due to the low interest rate environment.

An increase in the mortgage insurance at these levels would effect the affordability of homes in the market thereby decreasing the values of housing stock.

HUD Secretary Shaun Donovan made a statement regarding passage of HR 5072 - Click for statement.

If you are on the fence about when the right time to buy is, I would jump off asap.  Rates are low now and if FHA goes to the max allowed for MI, it's the same result to your payment as if interest rates jumped 1.25%!  For a calculation comparing this, email me and I'll return it to you.

USDA Rural Development Loan is Back

We received word this week that the USDA Rural Housing loan is back on the market.  This loan program does have property and income eligibility requirements that you must meet.  If you do meet these requirements, you may be able to purchase a home with no down payment!

Imagine buying a home with today's low house prices without needing a down payment.  Many times your rent payment may be more than what it would cost to buy a home due to the combination of the lowest rates and lowest housing prices in years.

For more info on this great loan program, visit http://www.usdaloaninfo.com/.