FHA Streamline: How to Qualify
Posted On: June 4th, 2011 by James Posted In: FHA Mortgage • Financial Health • Government Actions • Mortgages • Refinancing
I should have subtitled this post: “Why you might NOT Qualify”
The FHA mortgage continues to be one of the most popular mortgages in Portland. The reason for this is undoubtedly its FLEXIBILITY. The FHA loan is the easiest to qualify for, requires the least amount of cash, has the lowest credit requirements, allows for gift funds on the down payment, allows for non-occupying co-borrowers to fully count towards the DTI, the list goes on. But once you’ve GOT the FHA loan in place, the flexibility continues!
For one, the FHA loan is always “Assumable”. This means that when you want to sell your home, you can also offer your mortgage to be assumed by the buyer (provided they qualify with the lender, etc). Imagine how much value that might have in 5 or 10 years when rates are at 7%… or maybe the 30 year fixed mortgage won’t even EXIST in a decade?! Continue Reading – FHA Streamline: How to Qualify
Mortgage Loan Officer Compensation after April 1st 2011
Posted On: March 22nd, 2011 by James Posted In: Government Actions • Mortgage Programs
Big changes coming in a few weeks… Seismic changes, in fact (for this mortgage broker and blogger). Many of you have heard about so called “sweeping financial reforms” for a while now, and guess what — residential mortgages are going to be included in these reforms in the name of consumer protection. I can’t decide if it is going to be a big deal for mortgage borrowers, but it really might, and if it does influence the market significantly, I can’t imagine any other result for borrowers than a more expensive loan: higher rates and higher fees. The main thing that is changing is the nature in which I will be compensated for originating mortgages starting April 1st, 2011. Up until now, my compensation was very simple: every time a new mortgage is identified and funded, a single fee is created. Now, my company (that provides all manner of support and guidance) and I split this fee. But here is another fact about my current compensation: my fee is NEGOTIABLE for my clients. Continue Reading – Mortgage Loan Officer Compensation after April 1st 2011
Mortgage Rate Volatility and the End of the Refinance Boom
Posted On: December 2nd, 2010 by James Posted In: FHA Mortgage • Financial Health • Government Actions • Mortgage Rates • Mortgages • Refinancing
Kind of feels like an epic hangover. The low low rate party that seemed like it would never end, has come to a decidedly abrupt change in direction. The sunlight is streaming into the windows, our clothes are all wrinkled, and there are spilled drinks and confetti everywhere. We’ve seen a handful of days in the bond market this month that have been extremely precipitous in speed and size of the deterioration. Since April of 2010, every time I have locked a loan it has been a bittersweet and slightly regrettable experience. Of course every loan must be locked at some point in the process, but it was a strange new frustration to see rates improve so steadily and relentlessly. We would lock and fund, and then within a day or so rates would just get better. I got in the habit of floating everyone for as long as possible to capture as much of the improvement as we could. Continue Reading – Mortgage Rate Volatility and the End of the Refinance Boom
First Time Home Buyer Programs in Portland, Oregon
Posted On: November 2nd, 2010 by James Posted In: FHA Mortgage • Financial Health • Government Actions • Local Interest • Mortgage Programs • Mortgages • Portland Real Estate
I was recently made aware of an OLD program called the “MCC” (Mortgage Credit Certificate). The MCC Program is a special benefit for the first time home buyers in the Portland, OR market. If you are a first time home buyer (defined by not having owned a home in the previous 3 tax years) AND you qualify for the income threshold* AND are purchasing a home in the city of Portland, OR the MCC program can provide a significant discount to the cost of your mortgage.
*INCOME REQUIREMENTS TO QUALIFY:
- Families of 1-2 must make less than $71,200/year
- Families of 3 or more must make less than $81,880/year
Here is how it works:
Continue Reading – First Time Home Buyer Programs in Portland, Oregon
The Difference Between New & Old FHA Rules
Posted On: September 27th, 2010 by James Posted In: FHA Mortgage • Government Actions • Mortgage Insurance • Mortgage Programs • Refinancing
Just recently for Portland Home Loan, I prepared an analysis for 4 purchase scenarios on the same property. It is a purchase of $300,000 here in Portland, OR, and the 4 options are:
- 5% down conforming
- 10% down conforming, and
- 2 FHA options
One FHA option is the current FHA cost structure, which has been in place since April of 2009. The other option is the new FHA cost structure, which becomes unavoidable after October 4th of 2010. FHA mortgage insurance has always been paid in two places on the loan:
- The monthly premium (which is discounted based on a large upfront lump sum), and
- The Upfront Mortgage insurance Premium (which is 2.25% of the loan amount and automatically added to, and financed into the life of the FHA mortgage.
The major change starting Oct 4th 2010 is a shift of the mortgage insurance cost away from that “financed upfront premium” and more towards the monthly premium.
In short — FHA loans are about to become a little bit more expensive.
I have prepared an interactive FHA loan report that shows the breakdown more clearly.
The new Upfront FHA mortgage insurance premium will be reduced from 2.25% to 1% of the loan amount. However, the monthly mortgage insurance cost will almost double — being increased from 0.55% annually to 0.90% annually. In my example above, this shows up as a jump in payment of $69 per month on the same $300k mortgage.
Ultimately, FHA loans are still going to be amazingly popular, and continue to make a lot of sense for borrowers as we move forward. They still have the smallest available down payment requirement (at 3.5%) as well as the most flexibility around borrower credit history.
But I do think that this change will make a loan with 5% down and private mortgage insurance more attractive to borrowers with top credit scores. Additionally, the FHA streamline refinance will become much less attractive for many borrowers. I am scouring my client list and the wider community for last minute FHA streamline refinances! Last call for the good stuff!
