Profile of 2009 – 2010 First Time Home Buyer

November 9, 2010 By Leave a Comment

The National Association of Realtors released information about First Time Home Buyers last week that showed some interesting trends!

  • 93 percent of those surveyed in 2009 – 2010 reported that they purchased using one of the first-time buyer tax credits. (Who’s surprised??? Nope, we’re not surprised either!)
  • Ninety-five percent chose a fixed-rate mortgage.
  • The median age of first-time buyers was 30 and the median income was $59,900. (This part was a little surprising!) The typical first-time buyer purchased a 1,540 square foot home costing $152,000 (bet they were keeping their total payments under the $1000 mark)
  • First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 38 percent received a gift (or a loan) from a friend or relative, (READ:  their parents) Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.
  • Women accounted for 1 in 5 purchases, and single Males made the largest leap in the survey ever – which was attributed to the tax [Read more...]

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FHA and VA Mortgage Loan Guidelines Waiting Periods

October 25, 2010 By 2 Comments

If you’re like millions of American’s the last couple of years have been tough.  People who have lost their jobs, or their houses, or their business didn’t just wake up one morning and say, “Oh, instead of making my payments, I think I’ll take a trip to Belize!” They never imagined they would be one of “those people” with bill collectors and “dings” on their credit.

Well, the good news is that your credit score is really just a snap shot of the last 24 months. Yes, missed payments will stay on your credit file for 7 years – but their IMPACT on your credit is greatly diminished after 24 months. (If one person on the loan has good credit, and one person has “poor” credit click here). [Read more...]

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FHA Adding Capital Fast Enough?

September 27, 2010 By Leave a Comment

David Stevens, the head of FHA answered questions last week about weather or not his agency would need a “Bailout” from taxpayers. FHA doesn”t make loans, but they insure them, and with so many people without jobs, and properties being foreclosed on… that insurance fund has been tapped into pretty hard.

That’s one of the reasons FHA requested a change in the way MIP is charged.  Those latest, changes go into effect next week.

“If the fund has not gone negative and continues to remain positive it will be thanks to the quick actions of this committee and Congress giving us more authority and actions of this administration,” Commissioner David Stevens said in response to a question at a hearing of the House of Representatives Financial Services Committee.

He went on to tell the Committee:

The FHA is “running on its own. It is financially sound. It is below the minimum capital requirement, so we need to increase that capital but it is not (now) requiring a bailout. We will know more when the actuarial study is complete,” later this fall.

If you are considering a FHA Mortgage Loan in NC, call Steve and Eleanor Thorne, NC FHA Experts 919-649-5058  These changes could definitely make a little less attractive for some folks considering a FHA Streamline Refinance

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Is It Time To Refinance?

September 18, 2010 By Leave a Comment

Many of the people we are talking with WANT to refinance – but they figure it’s probably not worth it. Generally those sentiments run from two different camps, either the homeowner is concerned that they have no equity in the home to refinance (and don’t want to pay closing costs out of pocket), or they just figure they have a pretty good rate now, and don’t see a big difference from 5.75 to “whatever the mortgage rates are down to now.”

So let’s talk about what you SHOULD consider with a refinance…

The most fundamental consideration in whether a homeowner should refinance an existing mortgage is the break-even point, which means how soon the cost of the refinance will be recaptured through lower monthly payments. In general, most homeowners are looking for a three year recapture period.  If you are not going to recouperate in that time period… it might not make sense.

CHECK OUT INFORMATION ABOUT THE NEW HARP 2.0 REFINANCE PROGRAM

FOR UNDERWATER HOME OWNERS in North Carolina!  AVAILABLE MARCH, 2012

[Read more...]

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Are Mobile Homes Back on the Radar?

September 3, 2010 By Leave a Comment

FHFA is the Government body that is in charge of just about everything when it comes to regulating FNMA and Freddie Mac. They set out new guidelines and goals for the Agencies this week.

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!

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Does Obama Know Something We Don’t About the Economy?

September 3, 2010 By Leave a Comment

I read a TON of Economic Newsletters, watch CNBC, and Congressional hearings… I’m an economic junkie who misses Louis Rukeyser!  I’m always looking to see if I can figure out which way rates are headed.

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.

Permission from D Short

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!

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Property Requirements on FHA

August 26, 2010 By Leave a Comment

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. (Click here for more on 2010 Appraisal Requirements)

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

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One Borrower Has Income One Borrower Has Credit Score

August 18, 2010 By Leave a Comment

When one borrower has most of the income… the other borrower has good credit scores… there ARE options for purchasing a home. Look at the question we had yesterday:

“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. [Read more...]

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First Time Home Buyer Raleigh NC FAQs

August 14, 2010 By 1 Comment

We work with a TON of First Time Home Buyer’s, and we often find that they need the same basic information to avoid costly mistakes:

- 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).

-  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 (OR 580 if you qualify for NC Housing Finance Agency Money!).  We have a TON of information on Credit Scores, and how to get them higher!  Click here! [Read more...]

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FHA PMI Changes 10/4/2010

August 13, 2010 By 2 Comments

FHA Continues to make changes to their PMI Rates.  Because of the number of defaults – the monthly rates and the upfront rates for FHA Mortgage Insurance continues to change.  We keep this information on the site for folks who received a FHA Mortgage loan on, or around October of 2010.  We do have the most up to date information on the rates – in the event you are CURRENTLY looking for a FHA mortgage loan and want to know what the FHA PMI rates are today.

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%.

DownPayment Upfront MIP Monthly MIP Loan Amount
With Upfront MIP		 Total Payment
with MIP		 Difference
NEW Method of Calculating MIP
3.5% 1% $75.75 $97,465.00 $555.22 + $24.60
5% 1% $67.96 $95,950.00 $539.97 + $21.64
OLD Method of Calculating MIP
3.5% 2.25% $45.22 $98,671.00 530.62
5% 2.25% $40.47 $97,137.00 518.33

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…

DownPayment Upfront MIP Monthly MIP Loan Amount
With Upfront MIP		 Total Payment
with MIP		 Difference
NEW Method of Calculating MIP
3.5% 1% $222.95 $297,268.00 $1685.33 + $66.93
5% 1% $210.56 $297,268.00 $1672.94 + $67.08
OLD Method of Calculating MIP
3.5% 2.25% $137.93 $300,947.00 $1618.40
5% 2.25% $125.39 $300,947.00 $1605.86

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, Mortgage Banker in Cary 919-649-5057.  We know FHA Mortgage Programs, and we have the best Mortgage Rates available!

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