Mortgage rates at new all-time lows....

How many times can we say that? I don't know but let's all take full advantage of it while it's here!

Inquire now about a refinance or new purchase loan.

Here's some brief commentary about what's up:

The European debt crisis is back with a  major sell-off in US and global equity markets, and a move into US treasuries pushing the bellwether 10 yr note and mortgage rates to new historical lows. This week Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund will descend on Greece to review the debt crisis in Greece. There is now concern that Greece will fall into depression similar to the US depression in the 30s, and increasing concerns Greece will exit the EU. It shouldn’t be a shock to markets; there is little chance Greece can survive in the EU.

Nevertheless, after a couple of weeks with not much out of the region it is now back with renewed fears. The reaction is sending US interest rates to record lows and  the stock market down hard this morning.

After euro finance ministers failed to staunch a decline in the single currency with the approval of a 100 billion-euro ($122 billion) aid package for Spanish banks last week, the 3 governing bodies will seek to determine the fiscal state of Greece,  where the crisis began almost three years ago. The euro currency is crumbling, setting new lows against the dollar and the Japanese yen. The euro slipped below its lifetime average against the U.S. dollar at $1.2080. The market consensus now is that  Greece will not be able to meet the requirements set out when it got bail-out money. Over the weekend, Germany said it will not agree to reworking the Greek bailout plan. “If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told the media yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.”

The renewed concerns over the debt crises in Europe will support the bond and mortgage markets this week. However, although this morning the fear factor and concerns are at high levels, we have experienced this many times in the last couple of years. Markets will react on any comments out of the region. While Greece in the wider perspective is finished in the EU, monentary comments from the IMF, the ECB or the EU that sound more optimistic will get traders’ attention with market swings that could be severe, similar to what we are seeing this morning. That said, technically the bond and mortgage markets are increasing their bullish bias. Expect the possibility of volatile markets this week.

Until next time....

Why an FHA loan?

Let us count the ways....make sure you check out the monthly payment info at the bottom of this post...and: Get more info on FHA loans.

FHA
Section 203(b) Mortgage Insurance for One-to-Four-Family Homes

Through this program, the US Dept. of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) insures mortgages made by qualified lenders to people purchasing or refinancing a home of their own. FHA does not make loans; FHA insures loans.

FHA's mortgage insurance programs help families become homeowners by providing qualifying standards that are in many cases easier to meet than for other types of mortgage loans. FHA mortgage insurance also encourages lenders to make mortgages to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements, by protecting the lender against default on mortgages for properties that meet certain minimum requirements--including manufactured homes, single-family and multifamily properties, and some health-related facilities.

Section 203(b) is the centerpiece of FHA's single-family mortgage insurance programs-the successor of the program that helped save homeowners from default in the 1930s, that helped open the suburbs for returning veterans in the 1940s and 1950s, and that helped shape the modern mortgage finance system. Today, FHA One- to Four-Family Mortgage Insurance is still an important tool through which the Federal Government expands homeownership opportunities for first-time homebuyers and other borrowers who would not otherwise qualify for conventional mortgages on affordable terms, as well as for those who live in underserved areas where mortgages may be harder to get. FHA is actively involved currently to further provide assistance through programs like “FHA Secure,” a program designed to assist borrowers that can qualify to refinance out of a loan they have had trouble making payments on. These obligations are protected by FHA's Mutual Mortgage Insurance Fund, which is sustained entirely by borrower premiums. This program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified buyers. Insured mortgages may be used to finance the purchase of new or existing one- to four-family housing, as well as to refinance debt.

Why Choose FHA Section 203(b) loans?

• Get to closing faster – easier to qualify:
• No minimum credit score is required
• Non-traditional credit is acceptable
• Low down payment – 3.5% on 203(b).
• Non-occupant co-borrower is permitted
• Expanded qualifying ratios
• No cash reserves required
• No sales price limits
• No income limits
• Gift down payments OK from family
• Seller paid costs allowed
• No “declining market” issues
• Compatible with industry requirements on:
• Appraisal and repair
• Closing costs
• Lender insurance
• Automated Underwriting Systems (AUS) using FHA's TOTAL Scorecard
• Protections and advantages:
• Fully assumable
• Default assistance
• Non-credit qualifying streamlines refinances
• Competitive interest rates and lower premiums
• Certain liens may remain unpaid
• Now features “risk-based-pricing”
• Similar documentation for comparable products
• No prepayment penalties
• FHA's loan products meet your borrowers' needs:
• Flexible buy and repair with Streamlined 203(k) mortgage
• Reverse mortgage (HECM)
• 95% cash-out refinances
• Manufactured homes
• Multi-unit

Additional information/guidelines/considerations:

Single family loan limits vary by county...get more info on FHA loans.

How much down payment is required?

If you figure 3.500% of the sales price as a minimum you will be fine.

What can sellers pay?

Sellers can pay up to a maximum of 6.000% of costs based on the sales price.

Is an FHA loan harder to complete than a conventional loan, as related to processing times, qualifying, documentation, appraisal, or inspections?

Other than the required HUD documentation, and slightly different credit standards the process is not much different than it is for conventional loans. For consideration:

• 18” crawl space required.
• Process for appraisal/inspection now the same as for conventional loans.
• No requirement for water flow test; purity only.
• Pest & Dry Rot inspection is not a requirement.

How do we know what a borrower will qualify for, given all of the new FHA information?
Contact your FHA approved and qualified lender.

As promised, here is some payment information based on a $175,000 purchase price:

Purchase Price                $175,000                            
Minimum Down (3.5%)      $   6,125                                
Monthly P/I at *3.250%     $  775.00
Monthly MI                      $  179.00
Taxes (Est.)                    $  200.00
Insurance (Est.)               $    50.00
Total                               $1,204.00

Need more info? Get it here.

*3.414% APR, subject to change based on market conditions.

Why a VA Loan?

Why indeed!

How about the lowest rates in history?

For our Veterans, rates are as low, comparatively, as they are for other programs. Here's an approximate payment breakdown for a $175,000 home purchase:

Down payment -0- (Yes, you saw this correctly...ZERO down for VA loans)

Monthly principal & interest at 3.250% (Yes, 3.250%, 3.412% APR):      $   762
Estimated monthly property taxes:                                                             $   208
Estimated monthly homeowners insurance:                                             $     50
Total monthly payment:                                                                                $1,020.

Can you say "Cheaper Than Rent?" I think that you can!

Get more info on VA loans.

Here's some VA stuff to ponder:

Why VA?
-100% financing up to the County loan limits established by the FHFA (Federal Housing Finance Agency).
-No bottom line credit score.
-Streamline refinance interest rate reduction loan.
-Fully assumable by any qualified person (does not have to be a Veteran).
-Fixed and adjustable rate mortgages.
-VA funding fee can be added to 100% financing.
-Seller can assist with closing costs.

Breaking it down

VA insures loans, like FHA, but does not make loans. The borrower qualifying standards, like most loan programs, are not that much different than FHA or conventional. VA does like to reward Veterans however (rightly so!), and lenders will do all they can to put a Veteran into a home.

 Allowable vs. Unallowable Costs

There are certain fees Veterans are not allowed to pay.

 VA ALLOWABLE FEES

The Lender may not charge a veteran borrower any fee that is not included in the schedule of fees below. The fee schedule applies only to charges paid by the veteran borrower. The veteran may pay reasonable and customary amounts of the following fees:

PURCHASE TRANSACTIONS / REFINANCE TRANSACTIONS

·         Loan Origination Fee (not to exceed 1% of the loan amount)

·          Loan Discount (reasonable - not to exceed 2% financed)

·          Appraisal Fee

·         Credit Report

·         VA Funding Fee (See Chart below)

·         Flood Certificate Fee

·         VA Compliance Inspection

·         Title Examination/Search

·         Title Insurance

·         Title Endorsement (environmental protection)

·         Recording Fees

·         Recording of Warranty Deed

·         Tax Stamps

·         Release Fees

·         Tax Stamps

·         Survey

·         The portion of taxes, assessments & similar items for the current year chargeable to borrower & initial deposit for tax & insurance

·         Escrow account

·         Pest Inspection

·         Overnight Delivery Fee

·         Subordinate/Demand/Reconveyance Fees

·         Taxes

·         Hazard Insurance

·         The borrower must either:

o   Pay the VA Funding Fee in cash at closing, or

o   Include the entire VA Funding Fee in the loan amount.

 UNALLOWABLE FEES

The Veteran cannot pay these:

·         Lender fees such as Document preparation, processing fees, administration fees, application fee, etc.

·         Escrow or Set-Up fee

·         HOA transfer fee

·         Pre-paid interest on a new loan

·         Title endorsements exceeding $50

·         Early Issue title insurance

·         Compliance Inspections in excess of one

 If you figure about $2500 for a purchase price/loan in the $175-200K range you will be close on what the Veteran cannot pay. Any interested party, other than the Vet, can pay the unallowable fees.

Get more info on VA loans.