FHA Mortgage Changes - Effective April 5th, 2010

New Year brings some minor changes to the FHA Program. FHA =(Federal Housing Administration).

What is FHA?

FHA loans have been helping people become homeowners since 1934.

How do they do it?

The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.

Low down payments
Low closing costs
Easy credit qualifying

CHANGES FOR 2010:

FHA Currently Collect a premium of 1.75%

Effective April 5th, 2010 FHA will now collect an upfront mortgage insurance premium of 2.25% for the following:

Purchase Money Mortgages and Full-Credit Qualifying Refinances = 2.25 percent
Streamline Refinances (all types) = 2.25 percent
HOPE for Homeowners (Delinquent Mortgagors) = 2.00 percent
Home Equity Conversion Mortgages = 2.00 percent

This might seem like a hit to the housing market. To buyers this will be a small increase in your monthly payment.

Is it too soon? You be the judge!

Please contact a HUD approved Lender for details!

CLICK HERE to Visit HUD's Website and Learn more!

New Year - New Bank Guidelines!

Ringing in the New Year seems like just another day, but 2010 will bring some changes to the lending guidelines. Below are some significant change that would affect a buyer's approval or the type of property you may purchase.

Change #1: Conventiaonal Loan Debt to Income (DTI)
2009 - DTI was 55% for Conventional
2010 - DTI is NOW 45%

**FHA will still allow DTI to be 55%

Definition for DTI: The ratio of monthly debt payments to monthly gross income. Lenders use a housing DTI ratio (house payment divided by monthly income) and a total DTI ratio (total debt payments including the house payment, divided by monthly income) to determine whether a borrower's income qualifies him or her for a mortgage.


Change #2: FHA Approved Properties
In order for FHA (Federal Housing Administration) to lend money on a property it first must be "FHA Apporved". As of February 2010 all properties that are FHA must get approved again.

What does this mean for you the bueyer?

This Process could take over a month to obtain an approval. Expect Longer escrow times in 2010 due to this change.

*** I do know of a Lender/Bank that once they approve a few of these properties FHA will allow them to administrate the approval process without getting the FHA Approval. Please feel free to contact me with further information.

2009-2010 Real Estate - What we had what to expect!

2010: The year of Growth

If 2009 was the year of economic recovery, 2010 will be the year of growth.

Existing-home sales in 2009 rose to an estimated 5 million units for the year, a 2 percent increase over the 4.9 million sales in 2008. For 2010, NAR *National Association of Realtors are forecasting sales of 5.7 million units, a 13.6 percent increase.

The key to recovery in 2009 was the lower end of existing-home market. Fueled by the huge number of distressed sales - which drove down prices and returned buyers to the market looking for bargains. Also helping were continuing low interest rates and the extension of the first time home buyer credit.

A look back at 2009 and a glance into the Future: (2009 Estimated & 2010 are projected numbers.)

Economic Indicators:
Inflation Rate 2009: -0.4% 2010: 1.6%
Unemployment rate 2009: 9.3% 2010: 9.8%

Housing:
Existing-Home Sales
Sales (in millions) 2009: 5.011 2010: 5.694
Prices: 2009: $172,600 2010: $178,800
Change (in price) 2009: -12.9% 2010: 3.6%

New Home Sales
Sales 2009: 397,000 2010: 549,000
Prices 2009: $211,100 2010: $219,900
Change (in price) 2009: -9.0% 2010: 4.2%

Affordability Index 2009: 166 2010: 147

Inventory:
Housing Starts 2009: 564,000 2010: 752,000
Month's supply 2009: 8.5 2010: 8.0


Please keep in mind that the San Francisco/ Bay Area is a different market. We have seen home prices rise in the past 6 months in the San Francisco Area. We are seeing multiple offers on properties well priced, good condition and great locations.

5 Questions to ask before you purchase a home!

The following 5 questions may help you decide if right now is the time to buy a home.

Questions & Answers:

#1) Why are rates so low?

Since early January, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac & Ginnie Mae in an effort to stabilize the housing market. The bank plans on purchasing $1.25 trillion of securities allowing rate to be more affordable to consumers.

#2) Are rates expected to stay this low?

It's hard to tell, but don't count on it because lending landscape is likely to change next year. The Fed said it would wind down the purchase program by March 30, 2010.

#3) Why do different mortgage surveys come up with different average interest rates?

It depends on which lenders are in their sample, when the survey was taken and whether the rates quoted are the posted rate, the application rate or the commitment rate. Some surveys take points paid by the buyer to the lender into consideration.

#4) What else does the consumer need to know?

The lowest rates are offered to the most credit-worthy customers who can make sizable down payments. The lowest down program is FHA with 3.5% still comparable to a 30 years fixed!

#5) So is now the best time to buy a home?

It all depends on personal situations. Home buyers certainly have a lot of factors working in their favor right now - low interest rates, plenty of marked-down homes for sale and an extended and expanded federal tax credit that will expire in spring.

THE REAL ANSWER! If you can afford the monthly payment and have the ability to put down at least 3.5%. NOW would be the time to buy. Are you willing to bet that even if home prices continue to fall that interest rates will continue to remain the same? *We have seen home prices rise in San Francisco and the Bay Area over the past 6 months. You be the judge!