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

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

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

Is This Real Estate Market Similar to 1991?

When I got into the Mortgage Business in January 1991 the real estate market in Eastern Pennsylvania had died. We had gone from a crazy frenzied high of 1988 to a low in only 3 years. The heightened craze was caused by in influx of people moving in from New Jersey and New York because we built a new major highway (I-78), which made commuting much easier. The less expensive housing prices were possible for these commuters. This time we had a much longer frenzied period of increasing prices topping out in 2007, this time hitting a low in 2010-2011. The main catalysts for this crazed market were the event of 911 and the completion of a connection between I-78 and Route 33. These are some similarities to our current situation.

There are some distinct differences between these two housing markets. I remember doing a mortgage for a couple in October 1991, who were moving into the Pocono Area from Seattle Washington. They had lived in Seattle for 9 months and made a 30% profit on their home before moving to our area. Another gentleman sold his house in Las Vegas in 2 days before moving into the Lehigh Valley. Three other buyers had sold their homes in Boston, Atlanta and Orlando, respectively with little or no trouble. They each had made significant money on their sales and experienced a prosperous housing market. There were pockets of areas throughout the country doing extremely well, while our area, and other parts of the United States were doing poorly.

Today, the entire United States is in a bad housing market. It seems that values are down significantly, with some areas (Detroit, Las Vegas, Florida, California) being hit harder than most. Most of these areas are dependent upon one major industry feeding their economy, such as the Auto Industry in Detroit. The one good thing for our region is that we don't seem to be hit as badly as some of these other areas, and this time our Corporate Diversity will keep our region from being as greatly affected as other parts of the U.S.

WHY ARE THE LINES SO LONG AT DORNEY PARK'S WILD WATER KINGDOM?

Have you ever been to Camelbeach in Tannersville, the Great Wolf Lodge in Scotrun, or Wet and Wild in Orlando? What do these three water parks have in common? They all move the lines much faster than Wild Water Kingdom. On one particular ride at WWK they have a roped off gate at the top of the stairs which keeps you from entering the main deck. This deck is where several slides begin. Only after the riders are completely out of the water and safely outside of the exit does the attendant come over to unchain the rope and allow the next set of riders to walk up to the slide. This takes several moments, between the unlatching of the hook, the riders walking over to the slides unsure of which one to choose, looking over to the attendant to make sure that they are allowed to go down the slide, all of which is another 60 seconds or so. Meanwhile, the lines build and get longer and longer. This creates a logjam on every ride causing wait times of over 60 minutes on most rides. This is completely unnecessary as witnessed by attending these other water parks. The others use a system of waiting until each rider has crossed a midway point on the three slides. At this point they allow the next set of riders to get set at the beginning of each slide. Upon the safety of the last of the current riders exiting the pool, but not yet outside of the exit, the attendant allows the next set of riders to start their ride. This simple yet still safe way of moving the line saves dramatic total times and cuts the wait times in half. Boy, its amazing how making a simple and subtle change can dramatically make it more enjoyable for everyone. My advice is to avoid WWK and go to one of the other water parks. You will get much more of your money's worth!