Are you a card carrying Cherokee Indian? The Cherokee Nation provides down payment and closing cost assistance for qualified Buyers. You, or your spouse, must be a recognized Cherokee Indian, your household income may not exceed 80% of the median income, and your debt to income ratio may not exceed 41%. (For more information about these income limits, call or email us.) You must not have owned another home in the past 3 years and be willing to purchase a home, with a maximum of 5 acres, in the Cherokee Nation jurisdictional boundaries (ask us for details on this eligible area.) The amount of the assistance is $15,000 and is to be used for down payment and/or closing costs. The $15,000 is considered a "soft second lien," which means that a second mortgage will be placed against the property for $15,000. However there is no monthly payment associated with this lien, and as long as you occupy the home as your primary residence for a minimum of 10 years, the lien will be released with no repayment required. If you decide to move out of the home within the first 10 years you will be expected to repay a prorated portion of the $15,000 depending on the length of time that you stayed in the home. Neighborhood Mortgage Group will carry a first mortgage against the property for the remaining portion of the financing required to purchase the home.
With this combined financing effort between the Cherokee Nation and Neighborhood Mortgage Grouop, Buyers can purchase a home with ZERO money down.
If you would like to find out more information about this program, call (918)246-7100 today.
Monday, January 25, 2010
Friday, January 22, 2010
FHA loans keep getting tougher for Buyers
By Brandi Fugate, Branch Manager
Friday, January 22, 2010
This week was not a good week for potential FHA borrowers. Not only did HUD announce plans to increase the up front Mortgage Insurance Premium (UFMIP) from 1.75% to 2.25%, but HUD also plans to lower the allowable amount of seller concessions (the amount of closing costs that the Seller can pay on the Buyer's behalf.)
In the past a Buyer purchasing a $100,000 home would have financed $98,188 which includes the $1,688.75 UFMIP fee. Now, however, that same Buyer would have to finance $98,681 which includes the higher $2,171.25 UFMIP fee. This doesn't make a HUGE difference for the Buyer, however, as the monthly payment would only raise $2.60 per month, or $936 over the 30 year life of the loan. Since the amount of the UFMIP fee is always added to the loan amount, or "rolled in" to the loan, this change alone does not have an extreme consequence for the Buyer.
What makes a bigger difference for Buyers with this new HUD announcement, is the lowering of allowable seller concessions. Seller concessions refer to the amount of the Buyer's closing costs that the Seller can pay on behalf of the Buyer. Typically closings costs and prepaid items (those charges covering a Buyer's prepaid interest, homeowner's insurance, and property taxes) will cost in the neighborhood of 6% of the sales price, assuming a minimum of $100k sales price (lower sales prices may result in closings costs exceeding 6%, as the dollar amount of the percentage is lowered yet costs remains the same.) In the past the Seller could contribute a total of 6% to cover these items, which generally meant that the Buyer did not have to pay out of pocket for any of their closing costs and prepaid items. The new HUD rule caps the Seller's credit to only 3%.
How does this hurt Buyers? Well, quite simply less Buyers will now be able to qualify for FHA financing. Now, on that $100k home, a Buyer would not only have to save their 3.5% down payment ($3,500) but also save roughly $3,000 in closing costs and prepaid items. That's an estimated $6,500 needed to buy a $100,000 home, up from only $3,500 previous to this week's announcement.
Of course Buyers have another option, not that this option is a great long term decision. Banks typically charge a 1% origination fee or 1 "point" to the Buyer. This fee is generally included in the seller concessions. However now that maximum seller concessions are lowering, the Buyer has the right to request that the bank waive their 1% fee in exchange of accepting a higher interest rate. This will lower the Buyer's closing costs by 1%, or $1,000 for that $100k house. In this example the Buyer would now only need $5,500 to buy that $100k home.
But do the math before you choose this option. For a bank to waive their 1% fee, your interest rate could go up by 0.25%. This would add roughly $15 per month on our $100k home scenario. That's over $5,000 that the Buyer would pay in interest over the 30 year loan term. Is paying more than $5,000 over the next 30 years worth saving $1,000 now?
The good news is that FHA is not a Buyer's only loan option these days. If a Buyer is willing to consider purchasing a home outside of Tulsa city limits, the home may qualify for USDA financing. USDA loans do not require a down payment at all, nor does this loan require that the Buyer pay their closing costs and prepaid items out of pocket. All costs associated with this loan type are allowed to be included, or "rolled in", to the loan amount, assuming that the house appraises high enough that the loan amount (including closing costs) does not exceed the appraised value of the home. To find out if a home that you are interested in qualifies for USDA financing, give your Neighborhood Mortgage Group a call.
Friday, January 22, 2010
This week was not a good week for potential FHA borrowers. Not only did HUD announce plans to increase the up front Mortgage Insurance Premium (UFMIP) from 1.75% to 2.25%, but HUD also plans to lower the allowable amount of seller concessions (the amount of closing costs that the Seller can pay on the Buyer's behalf.)
In the past a Buyer purchasing a $100,000 home would have financed $98,188 which includes the $1,688.75 UFMIP fee. Now, however, that same Buyer would have to finance $98,681 which includes the higher $2,171.25 UFMIP fee. This doesn't make a HUGE difference for the Buyer, however, as the monthly payment would only raise $2.60 per month, or $936 over the 30 year life of the loan. Since the amount of the UFMIP fee is always added to the loan amount, or "rolled in" to the loan, this change alone does not have an extreme consequence for the Buyer.
What makes a bigger difference for Buyers with this new HUD announcement, is the lowering of allowable seller concessions. Seller concessions refer to the amount of the Buyer's closing costs that the Seller can pay on behalf of the Buyer. Typically closings costs and prepaid items (those charges covering a Buyer's prepaid interest, homeowner's insurance, and property taxes) will cost in the neighborhood of 6% of the sales price, assuming a minimum of $100k sales price (lower sales prices may result in closings costs exceeding 6%, as the dollar amount of the percentage is lowered yet costs remains the same.) In the past the Seller could contribute a total of 6% to cover these items, which generally meant that the Buyer did not have to pay out of pocket for any of their closing costs and prepaid items. The new HUD rule caps the Seller's credit to only 3%.
How does this hurt Buyers? Well, quite simply less Buyers will now be able to qualify for FHA financing. Now, on that $100k home, a Buyer would not only have to save their 3.5% down payment ($3,500) but also save roughly $3,000 in closing costs and prepaid items. That's an estimated $6,500 needed to buy a $100,000 home, up from only $3,500 previous to this week's announcement.
Of course Buyers have another option, not that this option is a great long term decision. Banks typically charge a 1% origination fee or 1 "point" to the Buyer. This fee is generally included in the seller concessions. However now that maximum seller concessions are lowering, the Buyer has the right to request that the bank waive their 1% fee in exchange of accepting a higher interest rate. This will lower the Buyer's closing costs by 1%, or $1,000 for that $100k house. In this example the Buyer would now only need $5,500 to buy that $100k home.
But do the math before you choose this option. For a bank to waive their 1% fee, your interest rate could go up by 0.25%. This would add roughly $15 per month on our $100k home scenario. That's over $5,000 that the Buyer would pay in interest over the 30 year loan term. Is paying more than $5,000 over the next 30 years worth saving $1,000 now?
The good news is that FHA is not a Buyer's only loan option these days. If a Buyer is willing to consider purchasing a home outside of Tulsa city limits, the home may qualify for USDA financing. USDA loans do not require a down payment at all, nor does this loan require that the Buyer pay their closing costs and prepaid items out of pocket. All costs associated with this loan type are allowed to be included, or "rolled in", to the loan amount, assuming that the house appraises high enough that the loan amount (including closing costs) does not exceed the appraised value of the home. To find out if a home that you are interested in qualifies for USDA financing, give your Neighborhood Mortgage Group a call.
Wednesday, January 20, 2010
FHA Raises Fees and Tightens Loan Standards
WASHINGTON - The Federal Housing Administration is raising fees and tightening lending standards to shore up its strapped finances and avoid a taxpayer bailout.
The government agency has seen its losses rise with the foreclosure rate. Its reserves have sunk below the minimum level required by Congress. A healthy FHA is vital for the housing market because it insures roughly 30 percent of new loans, and is the largest backer of mortgages to first-time buyers.
The changes, which will go into effect in the first half of the year, "are among the most significant steps to address risk in the agency's history," FHA Commissioner David Stevens said in a prepared statement.
The FHA does not make loans, but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans only require down payments of 3.5 percent of the purchase price — and that didn't change.
The new policies, to be announced Wednesday, are designed to bring more revenue into the agency, while at the same time keeping loans available.
Under the changes, homebuyers will:
- Pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount, up from the current level of 1.75 percent. A borrower taking out a $200,000 mortgage would pay a $4,500 fee, for example, rather than the current fee of $3,500. Borrowers will still be able to wrap these fees into the total amount borrowed. FHA officials also plan to ask Congress to increase the maximum annual premium that FHA can charge.
- Need a middle credit score of at least 580 to qualify. Many FHA lenders already require a higher score, but there had been no standard requirement across the program. Borrowers with a score lower than 580 will need a down payment of at least 10 percent. ((Neighborhood Mortgage requires a minimum middle credit score of 620 for all FHA loans.))
The changes come as borrowers with loans backed by the agency have increasingly been falling into default. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 14 percent for all loans, according to the Mortgage Bankers Association.
Mortgage lenders "will find the new rules painful but necessary," said Howard Glaser, a mortgage industry consultant and former housing official during the Clinton administration.
There also have been fears that unscrupulous operators have shifted their business to the FHA after the subprime business went bust. Last week, the agency served subpoenas on 15 mortgage companies with suspiciously high default rates for FHA loans, part of a broad crackdown on dubious lenders.
The agency has already taken action against several problem lenders. One of the nation's biggest mortgage bankers, Taylor, Bean & Whitaker Mortgage Co. of Ocala, Fla., was banned from the FHA program in August and filed for Chapter 11 bankruptcy protection. Another mortgage company, Lend America, was kicked out in November.
Tuesday, January 19, 2010
Weekly Rate Indicators Preview
This Wednesday brings on the release of the December Producer Price Index and the December Housing Starts and Bulding Permits reports. Neither are expected to have much of a direct impact on mortgage interest rates.
Thursday brings forth the initial jobless claims for the week ended 1/15, which analysts are expecting to see a drop from 444k to 440k which most likely tend to support steady mortgage rates. Other leading indicators of growth in the economy will likely reflect improved expectations. If so, this report will tend to put some slight upward pressure on mortgage interest rates.
Thursday brings forth the initial jobless claims for the week ended 1/15, which analysts are expecting to see a drop from 444k to 440k which most likely tend to support steady mortgage rates. Other leading indicators of growth in the economy will likely reflect improved expectations. If so, this report will tend to put some slight upward pressure on mortgage interest rates.
Friday, January 15, 2010
Mortgage Rates Hold Steady
Thursday January 14, 2010
Following two days of improving consumer borrowing costs, mortgage rates took a small step back yesterday afternoon. Mortgage backed security prices moved higher early on in the day open which allowed many lenders to issue their best rates in over a month, however the gains did not hold up. Following the 10 year Treasury note auction and the release of the "Beige Book", MBS prices fell and many lenders were forced to reprice for the worse.
Economic data picked up today. First out was the weekly jobless claims report.
This data gives us three readings on the number of Americans who file for unemployment benefits.
1. Initial claims totals the number of first time filers for unemployment insurance
2. Continuing claims totals the amount of people who continue to file because they cannot get a job
3. Extended benefits total the number of people who are receiving emergency benefits beyond the traditional time allowed to collect unemployment insurance
Next we received the monthly Retail Sales report which shows the monthly change in the total receipts at retail stores. Since consumer spending accounts for a large majority of GDP, market participants track retail sales to gauge economic growth. The report indicated retail sales unexpectedly declined in the month of December by .3% following November's revised higher reading of a 1.8% increase. Economists had expected December retail sales to post a .5% increase. When excluding auto sales from the data, sales dropped more than expected by .2% when economists had fore casted a .3% increase. November's ex-auto sales data was also revised better to a 1.9% increase from the first reported increase of 1.2%. Even when excluding auto and gasoline sales, the numbers still disappoint declining .3%. All in all, this report is very disappointing as it was much worse than expectations.
I still favor floating your rate lock over the next few days.
Following two days of improving consumer borrowing costs, mortgage rates took a small step back yesterday afternoon. Mortgage backed security prices moved higher early on in the day open which allowed many lenders to issue their best rates in over a month, however the gains did not hold up. Following the 10 year Treasury note auction and the release of the "Beige Book", MBS prices fell and many lenders were forced to reprice for the worse.
Economic data picked up today. First out was the weekly jobless claims report.
This data gives us three readings on the number of Americans who file for unemployment benefits.
1. Initial claims totals the number of first time filers for unemployment insurance
2. Continuing claims totals the amount of people who continue to file because they cannot get a job
3. Extended benefits total the number of people who are receiving emergency benefits beyond the traditional time allowed to collect unemployment insurance
Next we received the monthly Retail Sales report which shows the monthly change in the total receipts at retail stores. Since consumer spending accounts for a large majority of GDP, market participants track retail sales to gauge economic growth. The report indicated retail sales unexpectedly declined in the month of December by .3% following November's revised higher reading of a 1.8% increase. Economists had expected December retail sales to post a .5% increase. When excluding auto sales from the data, sales dropped more than expected by .2% when economists had fore casted a .3% increase. November's ex-auto sales data was also revised better to a 1.9% increase from the first reported increase of 1.2%. Even when excluding auto and gasoline sales, the numbers still disappoint declining .3%. All in all, this report is very disappointing as it was much worse than expectations.
I still favor floating your rate lock over the next few days.
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