Is there USDA money or not?

What a great question.  When USDA (Guaranteed Rural Housing) ran out of money suddenly, without much notice in September, there was speculation from many people when they would be getting more funding from the government.  Many speculated that it wouldn't be until after the November presidential election.  Others had been told that the money hasn't run out.  I can tell you that there is new money available and is funding as we speak.  We will have plenty of funds available through the beginning of 2013.  Rest easy, because when you call I will have plenty to lend. 

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

No more Harleysville Bank

As many of you know, I have been doing business with a small local bank in Bucks County named Harleysville Savings Bank for many years.  They have always accommodated my customers by doing loans that didn't quite fit the mold of a saleable loan.  This means that what Fannie Mae and Freddie Mac deemed unworthy, Harleysville gladly accepted.  They didn't sell their loans and , in many cases, couldn't sell these loans.   They financed homes on many acres, log homes, non fannie mae approved condos, land loans, loans with mobile homes attached, 80% 1-4 unit investor financing, cash out refinances requiring no seasoning, and residential mortgages for LLCs.  Although their rates are extremely high and unattractive compared to the rest of the market, they still found a niche to finance the unique buyer.  Because of their desire to begin selling their loans on the secondary market, they have informed me that they no longer wish to do business with Brokers.  Effective September 30, 2012, I can no longer originate loans for them.  If you have had anyone pre approved by me prior to this date and I told you that I would be using Harleysville for the financing, I will no longer be able to honor this request.  I will have to take the mortgage application by the end of the coming week September 29, 2012 in order to finance it with them. I'm sorry for this inconvenience, but I'm currently seeking new lenders to fulfill this void. 

Andrew Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

Ask the "Mortgage Man": Rehab Loan Made Easy

Ask the "Mortgage Man": Rehab Loan Made Easy: Is there an easy way to finance the repairs into a home purchase?  I can't find a home for a good price that doesn't need tons of renovation...

Rehab Loan Made Easy

Is there an easy way to finance the repairs into a home purchase?  I can't find a home for a good price that doesn't need tons of renovations! Due to the high volume of foreclosed homes being sold on the market, anything in my price range is usually a foreclosure.  These are common responses I hear from potential home buyers in their search for a home.  I have a program that makes it easy and financially attractive for the buyer to finance the repairs with their home purchase.  It is called a Rehab Loan. 

The Rehab Loan is where a buyer adds the cost of needed repairs to the selling price of the home they wish to purchase.  For as little as 5% down, they can finance all the repairs into their loan.  Here is how it works. 
The buyer makes an offer on a house, they get estimates from a contractor, builder, Lowe's, Home Depot, etc. and adds it to the sale price of the home.  This combined total is what we call the Acquisition Cost.  We can finance up to 95% of the acquisition cost.  The buyer settles and takes possession of the house and that is when the work begins.  We will hold the money for repairs in escrow after closing and during the construction/ rehab period.  This means that we will release the monies to the person doing the work in stages or Draws, which are no more than 3 during the construction period.  As each stage of the work is completed, the bank will release the money to the builder/ contractor paying them as they go.  It is that simple!

These types of loans are now available with FHA under the 203K program.  Some banks offer the Fannie Mae Homepath renovation mortgages, too.  But for many, these two programs have distinct disadvantages that this loan doesn't have.  For instance, both the Homepath  and the FHA 203K programs offer higher than market rates (as much as 1% ) on these loans costing the buyer many tens of thousands over the life of the loan.  The FHA 203K charges a much higher Mortgage Insurance Premium ( both up front and throughout the life of the loan )- this is 50% higher than our program.  You have to choose an approved builder/ contractor, which takes away the ability to shop around for the lowest bid.  Our program offers the most competitive rates, most often at below national averages for current conventional fixed rates. 

To qualify for this loan, you must have a credit score of at least 680, and be purchasing a property located in the following counties: Lehigh, Northampton, Carbon, Pike, Wayne and Luzerne, PA.  The next time you are looking for yourself or to refer clients for renovation mortgages, please give them my name and number. 

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

Is USDA Going the way of FHA?

USDA announces changes a 33% increase to their monthly Mortgage Insurance Premium


With the recent change in the monthly Mortgage Insurance Premium, USDA is creeping up closer to the FHA threshold.  Don't get me wrong USDA is still the way to go, but it just seems odd that the government first imposed a monthly amount, and now for the second year in a row has increased it.  The latest changes doesn't effect the up front Funding Fee, which remains at 2% of the sale price.  This fee can still be financed into the loan.  FHA has a 1.75% fee.  The annual premium has increased from .3% to .4% of the loan amount.  Broken down into monthly installments it doesn't seem to imposing compared to FHA's 1.25%, but it still is creeping up.  All in all,  USDA remains the better option of the two given their 100% financing as opposed to the 3.5% required down payment by FHA.  Hopefully,  this is the last increase for both types of loans for a while.

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972

Who is the King of 15 Year Mortgages?

If you have been living under a rock or on a deserted island you may not know about the historic low mortgage interest rates.  Since statistics have been kept in 1933, never before have mortgage rates been this low in our nations history.  The lowest fixed rates of all are the 15 year variety.  They are below 3 and quite possibly dropping further.  A little know fact about 15 year mortgages is that only 1% of the population actually obtains a 15 year mortgage.  Most people want the comfort of the lowest payment available to them, thus they choose the 30 year option.  I am drawn to the fact that the interest rates are as much as .75% lower for a 15 year than a 30 year mortgage.  You would think that the payments would be comparable to each other, but they are not.  The payment is roughly
$ 200 higher for a 15 year mortgage for each $ 100,000 borrowed.  It scares most borrowers to death. But if you compare the current rates of people who have purchased their homes in 2007 and are still making payments based on interest rates in the 6% range, the 15 year payment at today's rates are comparable to what they are currently paying. If you can afford the payment now you should be able to afford the new payment at 15 years in the future.  Most borrowers can shave off 10 years on their mortgage and still be at a comparable payment to what they are currently paying.  Since I show this analysis to most customers, I have seen a dramatic increase in the number of borrowers obtaining 15 year mortgages.  My percentage of customers getting 15 year mortgages is 600% higher than the national average.  Did you know that there is no credit score requirement for a 15 year mortgage other than the minimum 620.  There is no effect on the interest rate charged.  Maybe you should consider a 15 year mortgage.  Come to the King of 15 Year mortgages for your next loan.

Andrew Williams
NMLS # 118317
Abacus Regional Mortgage
484 695 5972

FHA Streamline Refi NO DOC ?

FHA Streamline refinances are available to anyone who has a current FHA mortgage, though not everyone is eligible to partake in them.  First of all,  the interest rates currently offered must be signicantly low enough to save the customer at least 7.5% on their monthly payment.  Second, with the ever increasing Monthly Mortgage Insurance Premiums added to the loan, the monthly savings from the lower interest rates must more than make up for the higher insurance premiums, as well.
Third, borrowers must be current with their present mortgage payments for at least the past 12 months.  In addition, most lenders are requiring a minimum score of at least 660-680.  Some require as much as 720.  If you are one of the fortunate ones who fit all of these criteria, you may still not be eligible based on some other factors.

What if you have recently changed employment? I have had borrowers turned down by many lenders because they have become newly self employed?  They don't have a 2 year track record of earnings for their new business endeavor, thus they don't qualify to get any kind of a mortgage, let alone a streamline refinance through FHA.  What do these people do for a loan? In the past, we had mortgages for the self-employed borrower who couldn't produce the needed income necessary to qualify.  These loans were known as NO DOCS ( No documentation required ).  They came in many forms of loans.  They were called NIV ( No income verification), Stated, No Ratio, SISA ( Stated Income, Stated Assets) and NINA ( No income , No assets ).  All of them were a form of a NO DOC in some way or another.  Many economists felt that these types of loans were the main reason our economy took such a tumble.  These loans allowed un qualified people to buy homes that couldn't afford them.  Many are the foreclosures you see today.  In March of 2009, the governor of Pennsylvania Ed Rendell signed a bill outlawing these types of mortgages in any form.  All loans require some form of verification of assets and employment.   

I do have a lender that doesn't require any documentation regarding employment other than stating it on the mortgage application.  Even if someone is newly self-employed, they can qualify for the FHA streamline refinance as long as all of the above criteria are met.  The income section of the application is left blank.  All current and previous employers must be listed on the application going back two years.  A bank statement showing the money needed for closing is required from the borrower. 

In some cases, we as the lender can pay most of the closing costs for the borrower.  If you are one of the individuals who purchased your home in the height of the market prior to May 29, 2007, you are eligible to receive the discounted monthly mortgage insurance and no up front premium.  In addition, the streamline refinances don't require an appraisal of the property, so even if you have little or no equity in your current property, you will still be eligible for this loan. 

For more information please go to www.abacusmort.com and use the link "Full Application".

Andy Williams
President NMLS #118317
Abacus Regional Mortgage
484 695 5972

3 Great Reasons for Selling Your Home Now!

Even if you, as the seller, are taking a loss from what you paid , you are still making out.  Here are three great reasons why:

1. You may be losing as much as 20% of your value on the sale of your home, but the owner of the home you are buying is doing the same thing.  Because you are buying, the savings for you is larger than the loss.  For example, you sell your house for $ 160,000 which originally cost $ 200,000,  this is a $ 40,000 loss ( 20%).  The home you are looking to purchase is $300,000, but the owner paid $ 375,000 when they originally bought it.  They too lost 20%, but their loss is more since it is based on a much more expensive home than the one you are selling, because they originally paid $ 375,000.  They lost $75,000 and you lost $40,000.  Your net gain is $ 35,000.

2. The interest rates are again at New historic lows, so you will get the lowest interest rates ever!  Not only will you buy a home for much less money than the same house cost a few years ago, but the monthly payment will also be significantly lower, too.

3. The level of selling activity has picked up in the past 8 months.  The National Association of Realtors has seen a steady rise in the number of homes sold since the fourth quarter of 2011. This is making it a great time to find a buyer for your home.  Why not take advantage of all these factors and buy a new home now...even if it means taking less money to sell your home.

Andy Williams
President NMLS #118317
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Have any of you purchased your home between 2005-2008?

Many people have bought during the height of the market.  Did you purchase your home with an FHA mortgage, or with some sort of combination mortgage ( 80/20 )?  Perhaps you found 100% financing at the time of the sale.  Either way, I have a mortgage refinance to lower your monthly payments.  The government allotted many billions of dollars toward the HARP program.  Up until now, you may have been told that your home doesn't have enough equity to qualify, or they can't do anything for you due to the combination mortgage attached to your house. This program allows homeowners who have paid their mortgage faithfully, but who haven't been able to refinance and take advantage of the lower interest rates, to refinance into the current interest rates.  They estimate over 45,000 families in the state of Pennsylvania are eligible for this program.  While rates are low, you should contact me for a free consultation and we'll see if the HARP loan is right for you.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Can this be the turning point in this Real Estate Market?

      There has been a definite up tick in the level of volume not seen for many years.  Starting in mid-October, the level of new phone calls, pre-approvals, mortgage applications, and closings has increased, for me.  All of the real estate offices I visit weekly have seen a dramatic increase in the number of sales and closings within this same time-frame.  Since the vast majority of my business comes from realtor referrals, I have been the recipient of this influx of new business.  From time to time, throughout the past several years, there are short bursts of activity, only to wane and have home buyers go back into hibernation.  But this time, there is a certain sustenance to this market, the likes of which appear to be just like old times. 
      Each of the past six months, I have seen my personal loan volume increase dramatically from last year, but in most cases, I haven't had this kind of volume in many years.  This reminds me of the mid-90's when we were coming off of a bad market, and things were starting to turn around ever so slightly.  Hopefully this is the bottom of the market.  Although foreclosures and short sales continue to dominate the market, it appears that many other homes are selling too, with multiple offers occurring on some properties.  Perhaps we are over the worst of this.  Better days are yet to come!

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

CAN YOU REFINANCE EVEN IF YOU DON'T HAVE ANY EQUITY?

The answer is YES!  The government just rolled out the new HARP loan.  This program allows people with Good Credit, but no equity in their home, a chance to refinance and take advantage of these low rates! 

Here's how it works: Any homeowner can take advantage of this program if they:

1. Have purchased and settled on a home before June, 2009,
2. Have a Fannie Mae (FNMA) or Freddie Mac (FHLMC) held mortgage,
3. Don't owe more than 105% of the home's value (If home is a Row or a Twin),
4. Don't owe more than 150% of the home's value if the subject property is a (Single),
5. Have not been 30 days late on any mortgage payments,
6. Have a minimum of a 660 credit score.

If you or anyone you know meets all of the above criteria, you or they can take advantage of this program.
The interest rates for this program are slightly higher than normal rates, so you need to make sure that this program will work for you.

If your loan has PMI insurance included in the monthly payment, we need to determine who the PMI insurance company is just to make sure that they are participants in this program.  Participating PMI companies have special rates for these loans where their premiums won't increase over what you are currently paying on your existing mortgage.

Many of the loans acquired during the years of the peak housing prices are combination loans such as: 80/20s, 80/10/10s or 80/15/5s.  As many of you know, this meant that you were given a 1st mortgage, as well as a home equity loan, in order to avoid having to pay PMI insurance.  This refinance WILL NOT include the payoff of any junior liens ( Home Equity loans, Lines of Credit or 2nd Mortgages ).  These secondary lenders will have to agree to Subordinate their liens.  This means that they will have to allow the current 1st mortgage to get paid off with the refinance.  They will have to step back into a 2nd lien position on the property, once again.  Most lenders are willing to do this given the circumstances surrounding the current state of the housing market. 

This loan offers a chance for someone, who were told they can't take advantage of these low rates, to refinance their mortgage and either reduce their monthly payment, or reduce the remaining term of their loan.   You can't borrow any additional money to do any repairs or consolidate bills.  This program is only for those looking to get a better interest rate.  Closing costs can be rolled in to the mortgage to a maximum of 4% of the total loan amount.  This should cover most if not all of the closing costs. 

Please contact me for more details regarding the specifics of this program.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Why don't more people listen to me?

I have told you before that you can't believe what you read, unless it comes from what I write, of course.  The word has been going around that FHA would be lowering the amount the seller can pay toward the buyer's closing costs.  Doing this would have a http://blog.american.com/2012/01/five-reasons-president-obamas-mass-refinance-plan-deserves-to-be-a-non-starter-and-two-modest-alternatives/catastraphic effect on the entire housing market.  With the government doing everything they can do to jump-start the housing market, they realize that a change like this could be detrimental to an improving economy.  They aren't stupid!  Just last year there was talk that the President was proposing changes to the conventional mortgages where they would finance only 70% of a home purchase price.  In other words, they were going to require a 30% down payment.  I read this too, but I have been in the business long enough   (4 decades ), that I knew that this would never come to fruition.  This too has little chance of happening.  Rest easy, better days are here, and they will continue to improve.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Is this the beginning of the end?

Interest rates rose this past week for the first time in months. With no real apparent reason, we received higher rate increases, sometimes multiple times throughout the day. Whatever the reason, I sure hope this trend doesn't continue. Friday they got better, so I hope with this being an election year, they stay low for at least the next 9 months. Already, there has been an increase in activity, with many more sales compared to last year at this time. The amount of housing inventory, even with the short sales and foreclosures, is shrinking. Good bargains
are going quickly, with multiple offers on some houses. Since the housing
market is showing some signs of improving,we need to keep this momentum going!

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

IMPENDING FHA CHANGES

There are three major changes being proposed with FHA Mortgages. First, they are proposing changing the up front MIP, which is financed into 99% of FHA mortgages, from 1% to 1.75% of the loan amount. Second, they are increasing the monthly Risk Premium (equivalent to PMI on a conventional loan) from 1.15% to 1.25% of the base loan amount. These two changes are subtle with minimal impact on the borrower's monthly payment. The third, and most significant change, is they are reducing the allowable seller's assistance toward the buyers closing costs. It is currently 6% of the selling price, and now it will be reduced to 3% of the selling price or $6,000, whichever is greater. Since many of the closing costs are fixed costs, it will help the low-end buyer be able to cover more of their closing costs. For example, if a buyer purchases a home for $60,000, they may have closing costs as high as $ 6,000. Under the current system, the seller may only pay $ 3,600 (6%), which means the buyer will have to come up with the difference. Now the $ 6,000 rule will cover all of the buyers closing costs at settlement. Lets use another example for a high-end transaction. Lets use a $ 300,000 purchase. With closing costs being $ 15,000, the old rule allowed too much seller's assist ($18,000). Under the new rule where they are allowed only 3%, the seller is limited to giving $ 9,000. The buyer will have to come up with an additional $ 6,000 to close in addition to their 3.5% down payment. These changes will benefit the low-end buyers, and help stimulate the economy, or so they say. It remains to be seen.

Andy Williams
President
Abacus Regional Mortgage (NMLS# 113984)
484 695 5972
NMLS # 118317

NO PMI insurance on Conventional Loans with only 5% down

The program is what is known as LPMI. This stands for Lender Paid Mortgage Insurance. The lender pays a Single Premium Up-Front charge, and the buyer is exempt from paying any monthly Mortgage Insurance for the life of the loan. The borrower must still go through the formal approval process through a participating PMI company, but they won't have to pay anything toward this program. This is offered by a few lenders for buyers who desire not to pay PMI or the FHA monthly risk premium. It is offered only on conventional loans with a minimum down payment of 5% and buyers with at least scores of 680 or higher. The higher their credit score is, the lower the interest rate that is offered to the buyer. Their is a cost to this in the form of a higher interest rate. The average add-on to the interest rate is .25%, but the actual hit can vary based on the borrower's credit score and the amount of the down payment. Obviously, a person with a 800 credit score and 15% down payment will pay less than a borrower with a 680 score and only 5% down. The best part is that the overall monthly payment goes down substantially for the customer - at least by 5%.

Please call me with any questions or additional details.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972
andrew.williams@abacusmort.com
www.abacusmort.com

COULD THIS BE THE BEGINNING OF A NEW MARKET?

I don't want to jinx myself, but the Real Estate market seems to have opened up. I had my best months in newly originated loans in the last quarter of 2011. It reminds me of 1997. Normally after Thanksgiving, things slow down as we go into the holiday season. It is a time to reflect on the year's acitivites. Yu can regroup and work on year-end reports and tax returns. Instead of getting ready for 2012, December was extremely busy in new loans. I had hoped for some momentum going into the new years. Well, I had my best January in 18 years and there doesn't appear to be any sign of slowing down. Is this is a sign of things to come, or an anomaly in the market? One can only hope it is the former.

Andy Williams
President
Abacus Regional Mortgage

Do Some Buyers Think the Interest Rates Are High ?

I have heard more than one buyer state that the interest rates are too high. I can't even fathom that kind of talk. With interest rates at their historic lows right now they can't go much lower. They have no where to go but up! When I was in college studying business in 1981, the interest rates on conventional mortgages got as high as 18%, Fha/VA 16.5%. When I started originating mortgages in 1986 the interest rates had just fallen to as low as 10%, sometimes dipping as low as 9.5%. These rates are a gift and a temporary phenomenon to boost the economy. Buyers should seize this opportunity, especially those who've yet to purchase a home, because they won't last. The home prices are down significantly from their highs. The combination of these two opportunities make it a must for every willing and able buyer to buy a home now!

Andy Williams
President
Abacus Regional Mortgage
484 695 5972

Aren't interest rates supposed to increase at the beginning of the year?

As long as I've been doing mortgages ( 21 years and counting ), I have witnessed interest rates climbing after the new year. There is always a rush of new business after the holidays with many new buyers calling to get prequalified to purchase a home. The powers that be from Wall street and Washington DC have come back from their two week vacations, and they are ready to get back down to the business of controlling the housing industry. As the market improves, the interest rates start to rise. This year is a little bit unusual in that the activity has increased, but the interest rates have had an inverse effect. They have dropped further from their already historic lows of 2011. Hopefully they will stay low for the short term so we can see some increase in real estate activity throughout 2012.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972

ARE THINGS IMPROVING WITHIN THE ECONOMY?

This past month, lenders have been allowing Long-term rate locks. They are now allowing interest rates on new loans to be locked-in (guaranteed) for up to 120 days. These lock terms were changed to allow up to 60 days only, a few years ago. This is another sign of some softening in the mortgage market.

Andy Williams
President
Abacus Regional Mortgage nmls#118317
484 695 5972