USDA Rural Development Loans: Out of Money???

USDA announces today that funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

They are not certain at this piont when additional funding will become available. In the past RD would issue conditional commitments "subject to appropriation of funds" but this will not be happening this time around given the uncertainty of the date of funds availability.

If you are not a Veteran, the only "no down payment" loan avaialable today is the Rural Development loan. If you are not already pre-approved and have not recevied your Rural Development commitment of funds your are in grave jeopardy of losing this loan. The next best option for you will likely be to switch to the FHA loan program which requires a down payment in the amount of 3.5%.

My advice to you potential buyers on the fence? Do not delay another moment! Call us today to get pre-qualified.

100% Financing on FHA Loans: A thing of the past? Not anymore!

Neighborhood Mortgage Group has partnered with a local non-profit agency to provide second mortgages covering Buyer’s down payment and/or closing costs up to $5,500. Unlike other down payment assistance programs that we currently offer, this new program has no income or geographical restrictions. Buyers also need not be first time buyers in order to qualify for this program. Sound too good to be true? It isn’t! Call us today for more information… Funds will run out fast. Don’t miss out. (918) 246-7100

Less Income, More Options

Tulsa offers several programs assisting its First-Time Homebuyers. With more and more families feeling the financial strain of the economy, education for where to turn is a must. Whether you’re in need of credit repair assistance or the down payment, help is out there.


Neighborhood Mortgage Group offers a wide range of services for its soon-to-be home owners, including financial assistance with down payments and closing cost. To be eligible for assistance, you must be a first time homebuyer, your household income must not exceed program limits and you must purchase your home within Tulsa city limits.

Because many low to moderate income families are still unable to save enough money to cover their down payment and closing cost, we offers our clients the opportunity to qualify for up to $5,000 in assistance. To see if you qualify for one of these programs call us at 918-246-7100, or we would love for you to stop by at our new location in downtown Sand Springs.

Gloomy news about the future of interest rates

The government reported this morning that the economy grew at a stronger-than-expected 5.7% clip in the last three-months of '09. That was the strongest overall growth in more than six years. It was a nice finish to an otherwise bleak year. The economy contracted 2.4% in 2009 - its worst overall performance since 1946. Inventory rebuilding contributed more than half of the power behind the blistering fourth-quarter growth rate - a pace that no one expects to be sustainable. With business and consumers still operating on the assumption that the economic glass is half empty the pace of overall economic growth through at least the next two quarters of 2010 will likely remain very slow - a condition that will tend to support mortgage interest rates at relatively low levels.


Mortgage interest rates are unlikely to move dramatically lower from current levels even as the pace of economic activity cools a bit over the coming months as the impact of the Fed concluding their direct purchase of mortgage-backed securities becomes more apparent. In their latest week ended yesterday, the Fed bought $12 billion worth of mortgage-backed securities - roughly matching what they bought last week. They have approximately $90 billion left of their original allocation of $1.25 trillion. At the current "burn-rate" the governments low mortgage interest rate support initiative will expire during the third week of March - slightly ahead of schedule. The broad consensus view is that 30-year conforming mortgage interest rates will climb at least 25 basis point higher before money managers with pent-up demand swoop in to buy mortgage-backed securities. Under current conditions there is little chance the Fed will extend or expand their direct mortgage-backed securities purchase program. The Fed's position may change "down-the-road" if the housing sector falls off of a cliff again or if private sector investors abandon the mortgage-backed securities market in droves. While such an outcome is possible - at this juncture it is not very probable.

Mortgage investors were relieved this morning as news agencies reported that Ben Bernanke has been confirmed by the Senate to serve another four-year term as the Chairman of the Federal Reserve.

Looking ahead to next week mortgage market volatility will likely increase as mortgage investors brace for the release of the January nonfarm payroll figures on Friday, February 5th, at 8:30 a.m. ET. Most analysts believe the headline payroll figure will show the economy created 5,000 more jobs than were destroyed during the month while the jobless rate held steady at 10.0%. The numbers continue to show a very slow and halting progression in the labor market statistics. If the consensus expectation proves accurate, this data will tend to be supportive of steady mortgage interest rates. In order to spawn a mortgage market rally favoring lower rates the headline payroll figure will need to post a loss of 10,000 or more and/or the national jobless will need to climb to 10.2% or higher. Don't hold your breath that one or both of those conditions show up in Friday's report.

$15,000 Cherokee Nation Down Payment Assistance

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.

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.

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.