Archive for the ‘FHA Loans’ Category

Home Buyers With Less Than 20 Percent Down Need FHA

Saturday, October 18th, 2008

It used to be common that purchasing a home with little to even no money down was acceptable, especially when you were a first time homeowner with decent or better credit. This “used to be” was in fact just a handful of years ago. The problem is now that lenders are not willing to take on that level of risk any more.

As one of the problems of the current credit crunch, people from all walks of life are finding it more difficult to obtain the loan they need and want to buy a home. The only organization offering any type of mortgage loan under 20 percent down is the FHA. FHA loans with low down payment are becoming the best route for those homeowners who just want to find an affordable solution to buying a home.

Why Creditors Just Aren’t There

Over the course of the last two years, many lenders who typically provide home loans have faced a number of foreclosures on their properties. Some continue to lose money on these properties and are facing an incredible decision: risk losing more money or only lend to those less likely to default.  By requiring a larger down payment, the homeowner is less likely to walk away from their loan since they have a stake in the property. Therefore, these loans are less risky to lenders.

Here’s the kicker: in order for the credit markets and financial markets to get better, the housing market must improve.  In order for the housing market to improve, banks have to lend to borrowers so they can purchase the homes. The cycle is quite limiting and stressful.

What To Do If You Don’t Have 20 Percent

The American family just starting out may have a small amount of money set aside, but most do not have 20 percent for a home. They are struggling to find lenders who will qualify them for a home loan. If you are one of those looking for a home loan with a low down payment, one of the best places to look is the Federal Housing Administration, or FHA.

Here’s how you will benefit from an FHA loan:

  • Down payments as low as 3%
  • Low interest rates on home loans
  • Easier qualifications for home loans than most traditional lenders
  • Fixed rates: giving you stability in your repayment terms
  • Help even with less than perfect credit
  • A variety of programs for those who need help or have unique requirements

They are federally backed loans, with a larger amount of flexibility. What is important is to note that the current credit freeze traditional banks are placing on the housing market is unlikely to change right away. But, FHA can help you to get the home you need and want.

Contact a professional to talk about your options. When 20% down is too much, these lenders can help.

The Stocks Are Tanking: Here’s Where To Put Your Money

Wednesday, October 15th, 2008

Today, the stock market fell, again. How in the world will people make money if they keep losing it? The fact is, the financial markets are horrible and they are shaking even the most seasoned professional investors. So, as an individual with money, where should you put it?

One option you do have is to put the money towards a home investment. Buying real estate now just makes sense. In some areas of the country, the value of real estate has fallen 10 percent, 25 percent or as much as 50 percent. The good news is that the homes are still as highly valued (outside of the financial sense.) Buying a home now can help you safely invest your money. Consider the following.

Let’s say that in your area you invest in a home selling at $200,000. You secure a home loan at 6% through the FHA with a fixed interest rate. You put down $6000, which is the minimum 3% investment the FHA requires as a down payment.  You have a $1200 mortgage payment.

Over the next few years, the home continues to rise in value, as many real estate investors believe that this is the bottom and that housing values will continue to rise. So, in 5 years, at just a 3% gain in value per year, you could have a home valued at nearly $220,000. This would be a low gain, but a safe one.

As you can see, socking your money away into a home loan could make you a sizable profit over the long term. But, even as the market stays well priced, your money is safe. It is not going anywhere. Even if property values fall, you will still be making money in the long term. There is no telling what the future of the stock market is today, but there is only so much real estate available.  It is one of the safest loans.

Do You Qualify?

To get into a safe loan, do consider FHA loans. These loans are the most well priced homes you will find in the coming months. They offer a low down payment. They also provide you with a low interest rate that is fixed for the life of your loan. Those with credit scores that may be slightly low may still qualify for these loans. There are just so many options available.

It is your money and no one wants to lose their money. When you invest in real estate, you do not put your money on the line with investors who may or may not be too scared to allow the stock market to grow. Rather, you have a security at a very low rate. That home you bought for $200,000 was valued at $250,000 or even higher just a year and a half back. As the housing market picks up, it could be back at that level in just a few short months.  For most, this is an option for you.

FHA Loan Holders Get Relief From Destruction

Friday, June 6th, 2008

In recent weeks, there has been a lot of destruction.  Much of the south and central portions of the country have been ripped apart by devastating tornados.  Floods, hurricanes, earthquakes and terrifying thunderstorms have left a path of destruction across much of the country.  Homeowners are barely able to find shelter and yet many are fearful of what will happen to their home’s mortgage.

For many people who have FHA insured loans, there is some relief available.  According to the guidelines of most FHA loans, the lenders are not able to press you for payment in such circumstances.  They cannot file for foreclosure on your home until a fully 90 days has past.  This gives you time to get things back into place, at least financially speaking, or to find another option.

If your home had damage or destruction, this type of FHA loan backing can be quite helpful (perhaps yet, another reason to consider FHA loans over other types whenever you qualify.)  Now, not all thunderstorms will qualify for this type of help.  It is meant to be in use in only a handful of the worst situations.  Areas that the President has declared to be a disaster area are those that will qualify for this relief.

In addition to this, if your place of employment has been damaged or destroyed at the hands of such weather occurrences or manmade events (like wildfire for example) you too may qualify for such protections even if your home hasn’t been damaged at all.

The FHA insurance on your home is there to help protect you from losing your home, but you still need to talk with your lenders and get into the necessary programs.  Because most lenders are more than willing to keep a good paying customer in their current mortgage, they are likely to have some solution for you.  This can drastically help them save you as a customer and the FHA programs are there to help provide reassurance.

If you believe you may qualify for this type of backing, contact your lender today.  Find out if your particular situation qualifies.  You can also contact your local HUD offices to learn more about the help that is available to you here.  Chances are, there is protection available o you through your FHA loan.

Home Ownership Hardship

Thursday, March 27th, 2008

There is so much going on in the housing industry that it is time for me to catch up so that our readers will not feel as if we have forgotten about them. It appears that every day for the last few weeks that I have been slammed with various projects, more and more has happened in the housing industry on many levels. I want to almost dedicate this first blog to those who are homeowners that are facing hardships. You have to understand when things begin to get tough; you might not believe you have anyone that you can reach out to. It is not true.

First and foremost, do not let your pride keep you from seeking help or answers because you think no one will understand. What I am about to share is something that I am hearing too often and it sickens me to think that people are this callous when it comes to someone asking for help. Let me explain what I mean. I have heard more than once of a person who knows they are going to have a few difficult months contacting their mortgage company saying I am going to have a few difficult months and I want to be able to pay a partial payment because I know that I am not able to make the full payment. Is there anything you can do to work with me? Then the person at the mortgage company basically saying, we cannot help you out.

Is it me or is some money better than no money? Instead since the customer believes they are no better off, they end up not making any payment because the mortgage company will not work with them and they are on the verge of foreclosure. What happened to working with the customer instead of being part of the problem? If the person did not contact the mortgage company and things started happening, I would be of the mindset maybe something is happening. In the above situation, the customer (who has had a perfect on-time record) of paying their mortgage payment contacted to say I know there is a situation can you help. What good does it serve a mortgage company to be cold-hearted?

When this family is facing foreclosure, you better believe they will share the story of how they contacted their mortgage company and they turned their back on them. They became more of the problem instead of being a part of the solution. Imagine if the mortgage company had said, yes here is what we can do to work with you. Would this client be telling everyone they know about how their mortgage company became an ally versus an enemy? With a move like they made, they became an enemy. Only thinking of themselves and not looking at the overall picture.

This truly saddens me that this is happening to people all over the United States because no doubt it is. Hmmm maybe we should stop and look at the ones that are under investigation and maybe this is part of the reason. I encourage you if you are in a situation and have contacted your mortgage company and the person on the other end seems to be a roadblock, keep calling until you get someone that will listen and take action on your behalf.

Dr. Taffy Wagner

Tightening the Reins on Mortgage Lending

Monday, March 17th, 2008

Is this supposed to be a surprise to anyone seeking to get a loan in this housing market? Seriously because almost day after day we are reading increasing stories on the number of foreclosures, the mortgage rate and even lenders. Maybe the actual fact the guidelines are being tightened is not a surprise but what they are saying is. I must admit I was stunned to find out this was happening.
I read a story that came out of Ohio that shared how the guidelines are being tightened on mortgage lending. It shared that basically due to the sharp increase in foreclosures nationwide, Fannie and Freddie are implementing tighter underwriting guidelines on approving a family for a home loan. Some changes are significant and have begun to take lenders, real estate agents and prospective homeowners by surprise.
I want to share a few of these that I know will affect homeowners: one of the biggies I would believe would be the Appraisal Guidelines. Why, because with the market being soft there is not in my opinion any way that your home could appraise at the same value today in 2008 that it might have appraised for at the end of 2006 or beginning of 2007, especially with homes in your neighborhood or area that have been foreclosed on. Foreclosure affects home owners that are not facing foreclosure because the number of foreclosures in the neighborhood brings down property value.

I remember when we were selling our home, we had the standard walk through appraisal. Now it seems, in addition to the standard walk through appraisals by a licensed appraiser, lenders now are requiring an automated valuation model which is statistical data from all the real estate sales that have taken place in that specific area. The rule now says whichever value comes in less will be the true market value. It goes on even further to say if the assigned appraiser declares your home to be in a declining market or should the new automated underwriting track your property as an area deemed to be in a declining area, the buyer cannot get 100 percent financing. I know that will affect some people.
We know that one of my favorite subjects is credit. Apparently it is one of the topics of discussion here as well.

From what I can gather, Fannie Mae and Freddie Mac’s major changes take place in March 2008 affecting how conforming mortgages are priced with an interest rate. The new guideline will (not optional) require lenders to review credit scores and down payment information before a mortgage rate can be offered. New interest rate adjustments will apply to high loan to value, low scores, cash out refinances and investment properties. Once again, credit score is important. A point that I found interesting was at the end of this story it said these changes have not affected programs from The Federal Housing Administration. In an FHA mortgage loan, the mortgage insurance is provided by the borrower and included in the loan. As I have said in previous blogs, do your research. Talk to a lender and see what your options are. If you are strictly seeking an FHA Loan, know that all lenders are not FHA approved. I cannot stress doing your due diligence enough.

Dr. Taffy Wagner

Can I Refinance my FHA Loan?

Friday, December 28th, 2007

With all this talk in the news and media about foreclosures lately and different programs to help those facing foreclosure, I began wondering about refinancing. So many times people refinance their loans and I thought someone is probably asking themselves this very question – can they refinance their FHA home loan? While they are thinking about this question to themselves and not asking a person, they begin to become anxious about their housing situation. Not knowing the answer to questions can lead one to a path of wrong decisions and stagnant path, not taking action which can be detrimental. Read the below information slowly and carefully because this could be the answer you are looking for.

An FHA streamline refinance is a mortgage refinance of an existing FHA loan with limited amount of documentation and qualifications which streamlines the process. I have to admit when I think back to the loan processing for purchasing a house or car, it takes up some time. Sitting there going through pages and pages of information, terms, and more making sure nothing is left out. I applaud the fact they have streamlined this process. These times made me feel as if I was enlisting in the military again. Now that you are aware of what a FHA streamline refinance is, let me share regarding the cost. This is always going to be important. There are many types of interest rate and fee combinations for FHA streamline refinance. Check with your lender for what the parameters are.

You know that I could not let you guys think that is all there was to this loan. Of course not, there are qualifications. You should not even be surprised because you have to qualify for most things today. Seems there are only two qualification requirements which are (1) must currently have a FHA loan; and (2) must be current on mortgage payments. I ask you if you were not current, why would you be applying for an additional loan? It does amaze me sometimes watching the news hearing what people are saying.

For those that were preparing to ask this question, is there a difference between a normal refinance and an FHA streamline refinance, the answer is a strong yes. The difference from what I surmised is qualifications and documents required to qualify for the loan. The benefit to me is streamlining. If this limits the amount of documents and qualifications, this could be the one for you. A big one before I forget is that with a typical refinance loan the loan cost will be higher than an FHA streamline. Oh another huge benefit to this is FHA does not require an appraisal for a FHA streamline. How many of you know the costs of an appraisal can sometimes get you? For that reason alone, you should be doing your homework and researching what you think is best.

The main concern I have is that you go to a loan officer and have not fully done your research on the type of loan you are seeking and then get turned down. You can never have too much knowledge. Take the time to research all types of loans and decide on what works best for you.

Taffy Wagner

Different types of FHA Loans

Thursday, November 15th, 2007

FHA Home Loans have many options that anyone can consider. The purpose of writing on this particular topic is to share with you what is available. I was not aware of all the different types of loans that FHA had to offer. Sure you will know about some of the ones that I talk about it, but there might be others that fit your situation better. So before you run right out and say you want a specific type of loan, read this thoroughly. Do additional research if necessary and choose what works best for you.

I heard you guys say, you are always saying research, research – couldn’t I have done enough research by now. Not necessarily and research aids in making informed decisions versus impulse decisions which lead to error, owning the American nightmare versus dream and even imposed tension in a marriage because someone did not research thoroughly before signing on the dotted line. I can’t tell you how many times I have heard that and have even witnessed something happening once or twice in my own marriage because all the information was not received up front. Don’t leave it up to the mortgage banker, broker or realtor to give you all the information. Do your own homework and research. At the end of the day, you are responsible for the mortgage payments and all that is involved with home ownership.

Let’s get to the different types of loans which I am going to talk about over two or three days. If it takes two days to cover it, then that is what it will take; otherwise it will be three. First we have the FHA 203(b) Loan – from what I read it is the most commonly used, offers a low down payment, flexible qualifying guidelines, limited lender’s fees and a maximum loan amount.

I believe one of the biggest benefits of any loan is having a loan with a low down payment. If you have a low down payment that alleviates more of a pressure of attempting to manage a higher down payment when you know you don’t have the money. When I was reading about this loan, it said this loan enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. This meaning it is divided with a portion being used to pay off the seller’s existing mortgage and the remaining is placed in an escrow account and released as rehabilitation is completed.

Correct me if I am wrong, if it has to be rehabilitated isn’t it a pre-existing foundation? I would believe if it wasn’t pre-existing that this type of loan would then not be available for this particular buyer and the buyer would have to begin his or her search all over again. Definitely send me some comments on this, help my understanding of the 203(b). I am always looking for information that I believe has not been shared on a larger scale to share with my readers.

We have discussed the 203(b) – send me your comments and thoughts about this type of loan. Even if you have had this type of loan, what do you think the benefits are or what is the downside?

Dr. Taffy Wagner