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