FHFA is the Government body that is in charge of just about everything when it comes to regulating FNMA and Freddie Mac.

One of the suggestions on the table is for FNMA and FHLMC to offer more financing choices for Mobile Homes in as a way that they can meet their “goals” set by the overseeing agency.

The benchmark goals established could be seen as “production goals” your boss or company sets for you. FHFA  expressed these benchmarks as “minimum goal-qualifying mortgage”  percentages  of each type of home purchase or refinance mortgages acquired by the Enterprises.  They are:

• 27 percent for the low-income home purchase goal;
• 8 percent for the very low-income family home purchase goal;
• A percentage to be set annually by FHFA for the low-income/high minority/disaster areas home purchase goal (with a sub-goal of 13 percent to measure acquisitions in low-income/high minority areas only); and
• 21 percent for the low-income family refinance goal.

HERA requires that FHFA consider seven factors in setting the single-family housing goals:

• national housing needs;
• economic, housing and demographic conditions including expected market developments;
• the performance and effort of the Enterprises toward achieving the housing goals in previous years;
• the ability of the Enterprise to lead the industry in making mortgage credit available;
• such other reliable mortgage data as may be available;
• the size of the purchase money conventional mortgage market or refinance market serving each of the types of families described, relative to the size of the overall purchase and refinance markets;
• The need to maintain the sound financial condition of the Enterprises.

Now when you look at HOW FNMA and Freddie are going to achieve this – Mobile Homes pop into my mind! It is very difficult to get a USDA Home Loan or FHA Mortgage Loan on a manufactured home.

If you are considering a home purchase, or want to know if you qualify for a new home, call Steve and Eleanor Thorne, 919-649-5058 we know the market, we know the products and we have the best rates!

I read a TON of Economic Newsletters, watch CNBC, and Congressional hearings

So when the President came on the news this week to announce that the war in Iraq was over, and the pundits started asking why it was only a 15 minute address – I was kinda’ let down, because I had also been expecting that he would take this chance to give folks a “Positive Message” when it comes to the markets.

Without that Presidential Guidance, I’m back to the Economic Numbers for insight.  And here’s what they are telling me:

• “… the public is no longer investing in stocks, but rather in bonds.  So far this year through July, bond mutual funds have attracted $224.4bn in net inflows including reinvested dividends.  ” — Ed Yardeni, September 1, 2010.” Which means a Consumer Spending spree is not going to get the Economy going.
• “The Fed terminated the purchases of $1.25 trillion in GSE mortgages and mortgage-related paper in March.  Simultaneously, the housing-purchases credit subsidy ceased in April.  Housing went into relapse, as most economists expected.  Simply put, subsidize something and you get more of it; remove the subsidy and you find that you have borrowed economic activity from the future, and now you get less of it.” Cumberland Advisors  Which means ANOTHER Tax Credit is not going to get the Economy going.
• Case Shiller Numbers indicate that the Housing PRICEs actually went UP during the 2nd quarter.  “While some may see these price gains from the trough as a sign of bouncing along the bottom, most experts believe home prices nationally will fall again, but not necessarily immediately.”  Which means the Housing Market is not going to get the Economy going.
• Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis…  and today’s non-farm payroll job’s numbers showed 54,000 jobs lost in August (many of those from the Census Jobs that are gone).  So there’s not a surge of Employment to get the Economy going.

So was it just that the President didn’t have any positive news… or does he know something we don’t know? One of my favorite charts is the Four Bad Bears.

As you look at this chart – this “Bear” looks just like the other three. Maybe we ARE heading into a little dip – but it’s not really that’s alarming!  When you stop just looking at the headlines, and you look at the long term trend… things are not sky rocketing up, but they don’t look that bad! We are going to have a slowly improving picture!

Mortgage Interest Rates typically get LOWER when there’s BAD NEWS in the Economy… and they go UP when there’s good news. Believe it or not – the last three days we’ve had higher rates!  The Dow is Happy!

That’s not good news if you are waiting to Refinance!  NOW is probably the time to do it!

If you are considering a Refinance, call Steve and Eleanor Thorne, 919-649-5058  We have the best rates available, we offer FHA Streamline Refinances, Conventional financing, USDA Home Loans and VA Mortgage Loans!

We’ve talked to several people in the last couple of days who want to purchase homes using FHA’s 3.5% down payment program… and they are trying to purchase some “unusual” properties.

Here are some GENERAL notes:

• FHA 203K loans: These loans are “construction loans” that FHA makes.  If you have a $100,000 property… and you make $30,000 in repairs, you need to make a downpayment of 3.5% of $130,000.  Now there’s more to the program – but the main thing to remember is that FHA IS FOR OWNER OCCUPIED LOANS ONLY.  If you are not going to live in the property – it’s not going to work.
• TRI-PLEX:  An FHA loan on a TriPlex means that there are 3 units TOGETHER on one foundation… not 40 acres with 3 buildings on it.  I know that’s confusing, but that’s the way FHA rules on what a Tri-Plex is.
• Property with more value in the LAND than the house. This probably isn’t going to work.  FHA is in the business of making HOME loans.  They don’t really like deals with more value in the LAND (then they consider it a LAND loan).  I personally refer those folks to their local USDA Home Loan office, to see if they can help them.
• Underground Homes, Log Cabins, Geodesic Domes, Mobile Homes, and Tree Houses:  It’s really hard to get FHA to make loans on these properties.  If you have a NEWER Manufactured Home, in NC BB&T might be a good place to start… if it’s older, and on a permanent foundation – we recommend starting with Wells Fargo.  That’s not to say that you can’t finance any of these kinds of property with FHA… just that you need to be in an AREA where there are recently sold, similar properties for comparable sales.

If you are considering a home loan in NC, and you want to get a FHA Mortgage Loan, Call Steve and Eleanor Thorne, FHA Experts 919-649-5058

When one borrower has most of the income… the other borrower has good credit scores… there ARE options for purchasing a home.

“We want to purchase a home, and I want to know if we can get it.  My husband currently has a mid credit score of 538,  and mine is 678.   He makes about 52,000 and I make 25,000.  I’m still in graduate school full time.  We saved  $4,000 for closing cost so far.  We want the house by the end of October 2010 Can we get a loan?”

Option 1:

Purchase a home using FHA, and have a non-owner occupied co-borrower on the loan with the borrower who has good credit scores. If you know that you can make the payments on your own, then having a parent, or other family member, on the loan will not be a burden to them.  After you’ve made 12 months of payments (and by all account mortgage interest rates will still be low a year from now) you can refinance the loan and take the family member(s) off.

FHA requires a 3.5% down payment. The good news is that in this environment, in our area, we are seeing sellers pay closing costs.  FHA allows sellers to make a 3% contribution towards closing costs.

FHA also allows you to get a gift for your downpayment! (for more information on downpayments, click here).

Option 2:

You can make an appointment to see a mortgage loan officer, and discuss your credit options. We are NOT credit counselors (like the ones you would see if you were considering Bankruptcy) but we “counsel” people ALL THE TIME on how to improve their credit scores.  Often times it can be done in 90 days!

If the borrower has a 538 credit score , and they’ve had 12 months of making all payments on time – the thing most likely keeping their scores down (barring bankruptcy, short sale or foreclosure) is the gap between the balance owed on credit cards and the high credit limit.  Taking the $4000 saved (in the example above) and paying down the balances MIGHT get the scores up 60 points or more immediately!

That’s why I’m suggesting that you meet with a loan officer.  Most of us have a “simulator” available to us that tells us what will happen if you close an account, or pay down a balance, or pay off a collection.  Again, I don’t suggest that you try and do this on your own… because a credit score is like a snow flake, each one is different, and each one is fragile.

So let’s say you take your savings, and work to get your credit scores higher… now you don’t have money for a downpayment! What do you do then?

• FHA Mortgage Loans allow a gift for the down payment.
• Veterans don’t have to make a down payment.  It’s part of your VA Mortgage Loan Benefits!
• USDA Home Loan Program does not require a down payment at all! USDA requires that you live in a “more rural” area.  In North Carolina, we get rural fast, and in many cases, the whole county qualifies for USDA Home Loans!  For a list of those areas where the whole county qualifies for USDA Home Loans, click here.

If you or your family or friends are considering purchasing your first home - please call Steve and Eleanor Thorne 919-649-5058.  We pre-qualify, and counsel borrowers everyday, and we can help you purchase a home!  If you have more questions about Credit Repair, click here.

1. I’m paying $1250 a month in Rent, can I keep my house payments at that same dollar amount? Great News!  When you buy a house, you can get a raise!  (for more info click here).
2. Can I buy a house if I’ve had some credit Boo-Boos? Okay this is tricky – but the answer is YES!  It’s just a matter of how long it will take to get your scores up to 620.  We have a TON of information on Credit Scores, and how to get them higher!  Click here!
3. Do I have to have 5% downpayment plus all of the money for closing costs saved? No.  If you are a Veteran, you qualify for a 100% mortgage.  If you are willing to live in more Rural Areas of our state (like Holly Springs or Johnston County), then you might want to consider USDA Home Loans, which is also a 100% mortgage loan program. If you purchase using FHA as your mortgage program – you can make a 3.5% downpayment.  The down payment for FHA can be a Gift, it can come from 401K money, you can sell an asset (like your husband’s Bass Boat)… lots of options!  Click here for more details!
4. Can the Seller pay all of my closing costs? If you are asking me, can I purchase a home with NO MONEY out of my pocket – the answer for ME is… why would you put yourself in that position?  If you have NO MONEY for an Inspection, or an appraisal, or an earnest money check?  Would it be better to wait a couple of more months and save some money up?  Okay – if you are asking if the Seller can pay MOST of your closing costs yes.  FHA recently made an announcement that Sellers can only pay up to 3%.  USDA and VA still allow Sellers to pay up to 6%.
5. Should I lock my mortgage interest rate in? Mortgage interest rates change daily… actually, they are traded just like a stock, so they REALLY change every few minutes.  If you are SHOPPING for a home, there are programs that allow you to lock in an interest rate while you are shopping.  Most lenders, including us, have a FLOAT DOWN policy.  This means that if you lock in an interest rate with us for 30 days – and 10 days later, rates drop through the FLOOR, and you want to take advantage of that WAY lower rate – you can.  Ask about this policy UP FRONT.
6. Should I let 5 different Mortgage People pull my credit while I’m trying to decide who I want to work with? Here’s some basic info on Credit Inquiries. In general, I would talk to the lenders, figure out who you “relate to” let them pull your credit… then get a COPY Of that report and send it to other lenders for quotes.

Here are some other basic questions to ask your lender.  It’s NOT just about the mortgage interest rate… it’s about how much it’s going to cost you, is this person going to really work on your behalf to get your loan approved (these days, it’s almost like hiring an attorney!  It’s NOT easy for a loan officer to just slam a loan through!), can you talk to this person, do you understand how their process works?  This is going to be an amazing journey – being able to communicate with your loan officer is going to make that journey EASIER!

Please call Steve Thorne, FFSi 919-649-5058.  We like working with First Time Home Buyers in NC.  We have the best mortgage interest rates!

For about the 5th time in the last 36 months FHA is changing the way it charges Mortgage Insurance.  While this is a pretty major shift in the Way Mortgage Insurance is calculated for FHA, it’s only about a net $20 per $100K borrowed difference.

HISTORY of FHA’s PMI (Mortgage Insurance)

First off, it’s not called PMI. FHA doesn’t MAKE mortgage loans, they insure them.  The mortgage insurance that they charge is referred to as MIP (cleaver I know, Mortgage Insurance Premium).  I refer to it in my blog posts as FHA’s PMI... well because from a Consumer’s standpoint it works just like PMI, and most people are familiar with that term.

MIP has been charged TWICE to borrowers for YEARS. FHA collects an UpFront Mortgage Insurance Premium that’s gone from 1.5 to 1.75 t 2.25 to 1% of the loan amount.  In years past they’ve refunded part of this UpFront Premium… so if you took out a loan in say 2002, and then you paid that loan off through a refinance in 2004… you received a substantial chunk of that premium back.

Then the Economy went south, and with the changes they made in 2008, they did completely away with the refund…

The other way FHA collects the premium, is in the MONTHLY MIP premium.  In year’s past, that MIP collected on a monthly basis for loans with less than a 5% downpayment was.55%.  For loans where the borrower made more than a 5% downpayment, the MIP was .50%.

How These Changes Compare to the new October 2010 MIP Rates

Okay, because I can pretty easily do the math in my head, let’s compare the “old” rates for FHA Mortgage Insurance to the “new” rates based upon a $100,000 sales price with a “fictitious” mortgage interest rate of 4.25%.

These numbers, at $100,000 Sales Price don’t look that dramatic…  Let’s take the same format, and change the Sales Price so that we can take advantage of the maximum Loan Amount for Wake County, NC $295,000.

So with a Sales Price of $305,000 the numbers look like this…

Well… what do you know?  It’s STILL not that dramatic a difference.  I know my peers are on Facebook, and sending around video saying that this is a “Tax” on home owners.  It’s not.  It’s a way for FHA to get the cash flow they need, while mortgage loans are defaulting.

HERE’s what I think is interesting! You can buy a house with 2723 square feet, in Raleigh, 4 bedrooms, with a 2 car garage built in 2009 for $219,000. With these new FHA calculations, and with today’s interest rates, your down payment is $7,665 (this can be a GIFT) and your TOTAL monthly payment, including Homeowner dues, and taxes and insurance and EVERYTHING is still less than $1050 a month!

If you have pretty good credit (scores above 620) and not more than $350 a month in debt – a family making only $38,000 a year qualifies for this house! Now THAT my friends, is something to get excited about!

If you are considering a FHA mortgage loan in NC, and you want more information about qualifying for a FHA mortgage loan in Cary or Raleigh NC  - please call Steve and Eleanor Thorne, FFSi 919-649-5057.  We know FHA Mortgage Programs, and we have the best Mortgage Rates available!

FHA Mortgage Loans are generally easier to qualify for than a more Conventional Home Loan from Fannie Mae or Freddie Mac.  

Specific income qualifications we use to qualify borrowers for mortgage Loans:

•  FHA allows us to “count” part time income if you have more than an 18 month history of working 2 jobs. 

We can also count tips, as long as you report them! 

Many people in North Carolina working in the IT field are working on long term contracts, they are not actually the employee of the company where their office is.  If you’ve been working on contract for over 18 months we can generally get the loan approved (takes some extra work!).

If you are laid off every year at the same time, we can still get your loan approved.  We just got a loan approved for a guy who works at a local University in their food services department.  Every year, right after graduation in May, he’s laid off.  In August, he is rehired.  He’s done this for 5 years.  Once he receives his August paycheck (in a few weeks) we will be able to close his loan!  We could count his unemployment AND his regular income from the University / State to qualify him!

Using Rental Income to qualify for a FHA mortgage Loan can be tricky – if this is the situation you are in, please click here for details.

One of the first questions we will ask when we speak with you… is how much of your total income you feel comfortable spending on housing. This ratio of Gross Income to Housing Expense helps the lender decide whether you can comfortably afford a home.

When you are qualifying for a loan, a we will use your gross income. That means all the money you earn before taxes, including overtime, commissions, dividends and any other sources. Again, we are looking for the income BEFORE insurance and any money goes out to 401K. If you receive Social Security or Pension income – we will gross that income UP for qualifying!

Your total monthly housing expense as a percentage of your monthly income is called the housing expense (a.k.a.: front-end) ratio. FHA wants a ratio of about 29% of your income to your house payment (including the mortgage, property taxes, mortgage insurance, hazard insurance and any Home Owner Association Dues).

Calculate what your new monthly mortgage payment should be by using the formula:

Gross Monthly Income multiplied by 29% = Maximum TOTAL Mortgage Payment.

Especially in situations when someone is just entering the job market the 29% of gross income just doesn’t “buy” the house of your dreams!  That’s one of the benefits of easier qualifying guidelines for FHA home loans! To qualify, you’re allowed to spend up to 34% of your income on your house payment, as long as everything else in your application shows that you can handle the “stretch.” (READ, as long as you don’t have a ton of other payments, like a $500 car payment!) 

Another thing the FHA Mortgage Underwriter will look at in considering your loan for approval is the difference in your housing expense now to the expense you’ll have if you buy a home. The smaller the increase, the stronger your application looks. So if you are paying $1000 now and your new payment will be $1400, that’s probably okay if your housing ratio is not too high.  If you are paying $1000 a month now, and your new payment is going to $1800… and you have a fairly high housing ratio… we are going to look and see that you have been SAVING money every month at $1000.  We can use that information as a reason to make the loan!

If you have questions about qualifying for a FHA Mortgage Loan in NC, and you are looking for the BEST Mortgage Rates – please call Steve and Elaenor Thorne, 919-649-5058.  We are Professional Mortgage Planners with over 20 years of experience closing FHA Home Loans in NC!

Earlier this year, FHA clarified who was qualified to perform an appraisal.

In the fall of 2009, it was not at all surprising for an appraiser from Burlington, NC to be “assigned” a FHA appraisal for a property in Raleigh, NC!  In the Mortgagee Letter 2009-28, FHA clarified the following for the “management” companies:

An appraiser who is primarily experienced in appraising detached, single family dwellings in one market may lack the knowledge, experience and/or sources for obtaining market data that will enable the appraiser to perform quality appraisals on condominiums or manufactured homes in the same market or detached, single family homes in another market a short distance away.

The valuation principles for appraising all residential properties are essentially the same no matter the market in which a property is located, however not all appraisers are knowledgeable and experienced or have access to sources of data for all markets. A lender must not assume, simply because an appraiser is state-certified, that the appraiser is qualified and knowledgeable in a specific market area. It is incumbent upon the lender to determine whether an appraiser’s qualifications, as evidenced by educational training and actual field experience, are sufficient to enable the appraiser to competently perform appraisals before assigning an appraisal to them.

If you are considering a purchase or refinance in NC, please call Steve and Eleanor Thorne, Certified Mortgage Planners, 919-649-5058.  The good news is that Fannie and Freddie just made a similar ruling about appraisals, for more information please click here.

Okay – so I’m being tongue and cheek here.  I think the sales are good for the buyers, the sellers an the Economy.  But I’m just not buying that the chart below shows the REAL picture in what’s going on in the Housing Market.

It is my estimation that once we look at May and June Housing Pricing numbers and activity we will see a SHARP drop. In fact current data indicates that SHOWINGS were way down in May, 2010 after the Tax Credit ended.

While I am fortunate to live in a high growth area (Cary, NC) and this chart shows we are in pretty good shape… I’m still very CAUTIOUSLY optimistic. My concern comes from the Realty Trac numbers in the last 2 weeks that indicates a “Shadow Inventory” of 3.5 years in North Carolina.  Shadow Inventory takes current properties on the market, plus the property banks currently own, plus the homes that are CURRENTLY 4 months past due.  Again, in Charlotte (which is the closest City we have data on) the “TOTAL” Inventory shows a 3.5 year supply.

The Triangle is blessed to have JOBS.  We have tons of people moving here…  so our little corner of the market might be okay… but in general, I fear that the “hoopla” over the April housing numbers is just that, “hoopla” – not a genuine indication that we are on a path of full housing market recovery.

We’ve lived in the Triangle since 1969.  If you are looking for an informed, local consultant to help you with a purchase in this area, call Steve and Eleanor Thorne, FFSi 919-649-5058.  We have the best mortgage rates available.

Maybe you just graduated from College – or maybe you have been out of work and are so excited because you finally got a job!  YEAH!  You have a new job, and now you want to get a new house!

Well – go ahead and buy a house.  If you are getting a FHA Mortgage Loan, you will need to have at least 30 days of paystubs before you can close.  So if you have a change in employment of any kind… this applies. (read don’t change jobs while you are in process!)

For most loan programs, we just need ONE paysub, but for FHA we need a full 30 days of paystubs… this really doesn’t make sense sometimes. We have a customer that just graduated from Vet School, she’s worked as an Intern for 2 years (so it’s not like it’s her FIRST job)!  She wanted to purchase her first home, and close for the tax credit.

Well, her new job doesn’t start until July 1st.  If she could get a “non-revocable” contract, then I think the underwriter would have allowed it to close… but who is going to give someone a “non-revocable” contract!?!?  I mean we didn’t just find this out, we knew it within 3 days of taking the loan application, but still, I’ll  bet there ARE tons of people who are trying to close in time of the Tax Credit, and for some small little reason they can’t.

If you are ready to purchase a home in NC, and you are looking for a FHA loan – give us a call!  We know the FHA guidelines, and if there’s a way to make your situation work, we’ll help you get closed!!  Steve and Eleanor Thorne, FFSi, 919-649-5058.  We answer First Time Home Buyer Questions!