- VA loans do NOT have a prepayment penalty and MAY be assumable in certain situations.
- Full income/asset documentation is required
- You can get a VA loan for a new single family residence home, condominium or manufactured home (with or without the lot)
- A VA loan requires a funding fee that can either be paid by the borrower or may be allowed to be financed into the loan. This funding fee may also be waived under disability guidelines established by the VA.
- For the official service requirements and periods of eligibility, go here to see if you qualify.
- Good credit (doesn’t have to be perfect credit, but your credit score is a factor)
- Sufficient income to support a monthly mortgage payment
- Valid Certificate of Eligibility (COE)
- Purchase must be your primary residence
- AMC Arrowhead Town Center 14 in Glendale (85308)
- Cinemark 16 in Mesa (85201)
- AMC Mesa Grande 24 in Mesa (85204)
- AMC Ahwatukee 24 in Phoenix (85044)
- Desert Ridge 18 in Phoenix (85050)
- Scottsdale Pavilions 11 in Scottsdale (85250)
- El Con 20 in Tucson (85716)
- Park Place 20 in Tucson (85711)
- Down payment Assistance: prohibited on decisions on and after 10/1/08, defined as the date we sign the MCAW or – for AUS loans – the date of the last updated AUS run. So even on manual underwrites, the final adjusted numbers must be finalized by 10/1/08.
- New borrower investments will be 3.5% (96.5% LTV, regardless of loan size)
- UFMIP will change; new amount still to be determined, anticipated by 10/1
- The recent risk-based UFMIP will continue thru 9/30 case assignments, with the new ones starting with cases assigned on and after 10/1
- Monthly MIP will continue to be 0.55% for >95% LTV, o.50% for <=90% LTV
- Mortgage limits: $270,050 is the standard limit across the country, with higher amounts allowed county-by-county up to $625,500, not to exceed 115% of area median home prices
- Condo requirements will be streamlined, and will include ability for lenders to do project approvals
- Appraiser roster eligibility – will require appraisers to be state-certified, not just state-licensed.
- Numerous changes on HECMs, including maximum fees, prohibiting cross-selling, and will begin a “HECM for Purchase’ program.
- The home must be your primary residence (no investment properties)
- You must have bought the home between January 2005 and June 2007
- You must be spending at least 31% of your gross monthly income on your mortgage payment
- It doesn’t matter if you are behind on your mortgage or not, you must prove that you will not be able to keep paying the existing mortgage without help and you will have to attest that you are not defaulting on purpose just to obtain lower payments
- You will have to retire any 2nd mortgages on the home or any other line of credit on the home — and you will not be able to take out another home equity loan for at least 5 years except for certain circumstances and even then, you will need approval from the FHA
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Are you a Veteran or Active Military? A VA Mortgage Might Be Right For You.
VA loans were designed to help veterans of the armed services, either currently serving in active duty or in the reserves, as well as their spouses. In order to qualify for a VA loan, a veteran must meet the eligibility guidelines set by the Department of Veterans Affairs. VA Loans enable veterans that qualify to put no money down on a mortgage loan up to $417,000.
VA Loans are guaranteed by the Department of Veterans Affairs (the maximum guaranty is equal to 25% of the Freddie Mac conforming loan limit for a single family home. In 2008 this limit is set at $417,000 for all states except in Hawaii, Alaska, Guam and the U.S. Virgin Islands where the limit is set for 2008 at $625,500).
Some quick information about VA loans:
2008 Funding Fee Schedule:
|
Loan Category |
Active Duty and Veterans Rate |
Reservists and National Guard Pay |
|
Loans for purchase or construction with down payments of less than 5%, refinancing, and home improvement. |
2.15% |
2.40% |
|
Loans for purchase or construction with down payments of at least 5% but less than 10%. |
1.50% |
1.75% |
|
Loans for purchase or construction with down payments of 10% or more. |
1.25% |
1.50% |
|
Loans for manufactured home. |
1.00% |
1.00% |
|
Interest rate reduction loans |
0.50% |
0.50% |
|
Assumption of VA-guaranteed loans. |
0.50% |
0.50% |
|
Second or subsequent use of entitlement with no down payment |
3.3% |
3.3% |
VA Loan Eligibility
With the many upcoming changes to the FHA programs, it makes more sense than ever to find out if a VA loan can save you money when buying your new home. Call me anytime!
I.O.U.S.A. Opening In Arizona August 21
On October 21st, Fathom Events is opening a new movie titled “I.O.U.S.A.” in a select group of theaters in Arizona and around the country.
Following the movie, there will be a live discussion with with Warren Buffett, Pete Peterson & Dave Walker about America’s economic crisis and what we can do to change course.
This one night event will be shown LIVE at 8:00pm ET / 7:00pm CT / 6:00pm MT / and tape delayed at 7:30pm PT.
The theaters in Arizona where you can see this movie on the 21st include:
You can also see a complete listing of all theaters across the US here.
Fed Leaves Fed Funds Rate at 2%
From the Federal Reserve:
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.
Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.
Always Use Multiple Vendors
I was reminded last week to always have “a bunch of friends in the business” — aka — use more than one appraiser, more than one title company, more than one home inspector, etc.
On Thursday last week, I received an email indicating that the following title companies had ceased operations and we had quite a few deals with one of these companies…
American Heritage Title Agency, Inc.
Arizona Title Agency, Inc.
Financial Title Company
First American Heritage Title Company
Guardian Mortgage Documents, Inc.
Investors Title Company
Lender’s First Choice Agency, Inc. (dba Lenders Choice Title
Company in California)
Mercury Exchange, Inc
Mercury Settlement Services, Inc.
Mercury Settlement Services of Utah
Mercury Transaction Services, Inc.
Security Title
Guaranty Co.
Title America, Inc.
Title Guaranty Agency of Arizona, Inc.
Title Guaranty Agency of Colorado, Inc.
United Title Company, Inc.
United Title of Texas
USA Digital Solutions, Inc.
When I got the email, my first thought was “THAT MANY title companies shut down in the SAME WEEK?” and my second thought was “I’m glad that we use more than one title company so we can easily switch from one to another!”
It is now more important than ever to remember that if you put all of your eggs in one basket, you may end up sorry.
FHA Conference Call Regarding HR3221
I just received an email from the Risk Manager at our company and he was part of a conference call today with FHA regarding HR3221. Here is a rundown of the biggest issues raised on the call today with some of the answers to questions people are having.
To quote our Risk Manager “…Expect numerous Mortgagee Letters as these are implemented…”
More to come — and beware — the below information is uber-mortgage-geek-speak!
Normally, I don’t like to include uber-mortgage-geek-speak on the blog, but with so many changes coming out between now and 10/1, I thought I would pass them along as I see them.
The Housing and Economic Recovery Act of 2008 — Hope for Homeowners Program
Following up on my post yesterday about The Housing and Economic Recovery Act of 2008 and what it means for people… today I thought I would talk about the changes in the FHA programs where there is a $300 billion set aside to help homeowners refinance their troubled mortgages into an FHA insured mortgage. This program is also called the Hope for Homeowners Program and was written into the bill by Senate Banking Committee chairman Christopher Dodd (D-CT).
Dodd has been meeting with HUD officials to make sure that HUD will be ready for the program to begin October 1, and according to the Hartford Courant, everyone is confident that the program will be able to begin helping homeowners on (or possibly before) October 1, 2008. For their part, HUD is adding 300 more employees to help FHA handle the additional loan refinancing it expects from the Hope for Homeowners Program — which could be as many as 400,000 families according to estimates.
Who is Eligible?
In order to be eligible to refinance your unaffordable mortgage into an FHA-insured loan, you must meet the following criteria:
How Does the Process Work?
You can contact any FHA approved lender for help with the application process (Hint, contact us or you can see a list of other FHA approved lenders here).
As part of the application process, you will get a new appraisal on your home to determine it’s current value.
The program is a voluntary program, so your current lender will have to agree to participate. It is currently somewhat unclear on exactly how this “participating lender approval process” will work (getting approval from your current lender), so look for more information about that coming later.
If participating, your current lender will write down the value of your current loan to 90% of your homes current value according to the appraisal. In Maricopa county, where prices have fallen by more than 20%, this will mean a substantial amount of money will be written off by the lender.
If the original lender agrees to the writedown, the new lender then underwrites the loan (don’t forget the eligibility criteria above that must be met), makes a new FHA-insured loan and “short pays” the payoff according to 90% of the appraised value.
Lastly, your old lender is required to pay FHA an up-front premium of 3% of the mortgage principal — which means that not only is your old lender going to have to write off a loss, but also pay FHA a fee to get you a new loan!
Are There Any “Strings Attached” For Homeowners?
Yes.
Your new FHA-insured loan will have the normal closing costs and Up-Front-Mortgage-Insurance (UFMIP) and you will also pay a 3% “exit fee” of the mortgage balance to FHA when you sell your home or refinance the loan.
You will also agree to share any profits from future appreciation with FHA. If you sell your home or refinance within 5 years, you will share the price appreciation with FHA accordingly:
Years 0-1 — 100% of the appreciation is paid to FHA
Years 1-2 — 90% of the appreciation is paid to FHA
Years 2-3 — 80% of the appreciation is paid to FHA
Years 3-4 — 70% of the appreciation is paid to FHA
Years 4-5 — 60% of the appreciation is paid to FHA
Years 5+ — 50% of the appreciation is paid to FHA
Is It Worth It?
It depends.
Each situation is different, so it is important to talk to a mortgage professional and understand what you are committing to. The main factors to consider are:
The terms of your current loan (if you are in an Option ARM, this may help you more than if you are in a 30 year fixed rate loan already)
The current value of your loan vs. how much you currently owe
How long you plan on being in your home
My guess is that for many people in Maricopa county who have seen the seen the value of their home go down by 20% (or more) and are currently in an adjustable rate, it will make sense.
But be sure to do your homework first!
The Housing and Economic Recovery Act of 2008 — Down Payment Assistance Programs Eliminated
I have been traveling this week and am just now playing “catch-up” with the current housing bill that was passed. I blogged about some of the highlights here, but thought I would go into more detail for people who are interested in what this means if they looking at buying a home with “no money down”.
What the bill means to you If you are looking at buying a home using down payment assistance money
With the passage of the bill, effective 10/1, down payment assistance programs are going away. This means that if you were planning on using a program like AmeriDream or Nehemiah to buy your home, you need to make sure that you close before 10/1.
As Jamie Geiger pointed out here, it is up to the lenders if they would like to discontinue this program prior to 10/1, so be sure to double-check with your lender to make sure they are still offering the program if you are planning on closing before 10/1.
With the seller-assisted down payment assistance programs gone, some people will still be able to use the Maricopa county bond money programs or other rural county bond money programs for down payment assistance, but as Shailesh pointed out — it is available on a first-come, first-serve basis and these funds are usually gone fast.
Lastly, I received an email from the rep at AmeriDream today that said:
Congress to REAUTHORIZE Down Payment Assistance
August 1, 2008
Last night, Congress introduced bipartisan legislation, H.R. 6694 that would reauthorize and reform charitable downpayment assistance. This bill would remedy a harmful provision in the new housing law which limits homeownership opportunities for low and middle-income Americans. The legislation, sponsored by U.S. Reps. Al Green (D-TX), Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) reauthorizes and reforms charitable downpayment assistance funded in part by sellers, which has helped over one million families and individuals become homeowners since 1999. The program was eliminated by legislation signed by President Bush on July 30, 2008.
The Green-Miller-Waters-Shays plan would re-authorize and reform non-profit downpayment assistance and secure it as an allowable source for FHA borrowers. The bill seeks to ensure that providers of the downpayment assistance operate in a transparent manner to guard against conflicts of interest. The bill also includes language to ensure that FHA maintains its financial stability by permanently authorizing the Secretary to assess higher premiums to higher risk borrowers.
It is important that you contact your elected officials in Congress and tell them that you support downpayment assistance and urge them to support H. R. 6694. To reach your elected officials, please call the US Capitol Switchboard at 202.224.3121.
To learn how you can support it, visit http://www.supporthomeownership.com.
AmeriDream continues to be your trusted advisor, bringing timely and accurate information when you need it most.
Will down payment assistance come back? I don’t know. But if you are planning on buying a home and getting a loan, either close before 10/1 or plan on having at least 3.5% of the purchase price for a down payment.
Oh, one last thought on this topic — someone asked me the other day — “Can I get a gift from my parents for my down payment?”
Yes.
And if your parents need to adopt another kid, I am available.
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