Your source for FHA mortgage information

All potential borrowers have different things that they determine to be most important when searching for a mortgage. Many customers will be driven solely by the interest rate or funds needed to close, while others might be most concerned with less important evaluators like APR. While all of these are legitimate concerns and should always be a piece of the equation, one need that many borrowers fail to recognize is the importance of SERVICE . Borrowers that I close loans for speak to me between 10 to 30 times from start to closing. Do you want to constantly have to leave messages or emails that are not returned? Perhaps, the example presented on CNNMoney.com of Jose Rivera will help explain the importance of service.
Rivera, a resident of Manchester, Connecticut, felt the frustration of poor service immediately as he tried to refinance to lower his monthly mortgage payment. Mr. Rivera, in his search for a lender, never received a return call from Bank of America despite leaving three messages. Then, after finally getting a hold of a live voice, he was told he could not apply yet and given very little explanation for the delay. This was in May. Then, in June once again Mr. Rivera was told to call back in July. Meanwhile, the rates have increased and Mr. Rivera’s ability to finance was taken away from him. Mr. Rivera, 48, said, “this process has been extremely frustrating, with a lack of returned calls, and me having to contact different loan officers.”
Mr. Rivera’s situation is unfortunately not an exception, but is commonplace today. I get calls from endless Americans who have similar frustrations. While a larger bank may be more attractive due to name recognition or constant advertisements, the trade off is often poor service. So while 10 or 20 dollars a month on your mortgage payment may seem important, wait until you experience the frustration that Mr. Rivera has felt. Anyone who has felt this aggravation in regards to the biggest purchase of their life will most certainly agree with my belief. So before you commit to a mortgage company based on an eighth of a point on your interest rate or 200 hundred dollars in costs, be sure you will be serviced well.

A perfect example of why dawdling with your mortgage decision can cost you valuable money came directly through a customer of mine. This customer called in a few weeks ago and was looking to refinance his FHA loan, in order to consolidate some debt and lower his monthly mortgage payment. This customer agreed to a deal in principle that would save him nearly $500 a month as well as pay off a chunk of his credit card debt. When the customer and I first discussed the FHA refinance, his rate would have been 6%. All it took was the submission of six pieces of information and we could lock in that rate. Unfortunately, instead of accumulating the files that night as I had advised, the customer took his time gathering the required documents. By the time the documents were sent to me, the rates had moved over 6.25%. The customer just cost himself about a hundred dollars a month. If the customer had just gathered the documents that evening in an efficient manner, he would have saved almost $500 a month. Instead, the customer is still gathering his last pieces of information and is at the mercy of the market. While the borrower will still be able to save himself a sizeable amount on his FHA mortgage payment, his inefficiency will have cost him close to a hundred dollars a month over thirty years. I do not need to do the math for you to realize that is a sizeable chunk of change.
The moral of the story here is to get your documents into the hands of your lender. If you choose to waste time, you could potentially be costing yourself anywhere between a few weeks of groceries to a car payment each month.

As we enter the summer, many questions still remain regarding the $8000 tax credit for first time home buyers. While many queries have been left unanswered, there are a few things that have been made a bit more clear.

1. If there is going to be the ability to use the $8000 tax credit at the closing table, it is going to have be an FHA insured loan. So, no matter what The U.S. Department of Housing and Urban Development(HUD) decides in the upcoming days, if the tax credit is allowed to be used at closing, it will apply only to loans insured by the Federal Housing Administration(FHA).
2. There are two chances that the $8000 will be able to cover the minimum 3.5% down payment that FHA requires. Slim and none.
3. If FHA-approved lenders decide to allow the tax credit to be used for closing costs, lenders will be charging a fee to advance the borrower the money and will be expecting the money to be repaid shortly after the borrower’s tax refund is received.
4. There is a good chance that this will be done on a state by state basis.
5. If the tax credit funds are made available, they will be allowed only for closing costs or a down payment exceeding the 3.5% minimum.

While potential first time home buyers eagerly await programs that will help them take advantage of the current housing market, the government and investors continue to try to reach agreements on how to make the tax credit more helpful for those who fit the first time home buyer profile. Stay tuned to whatisFHA.com for your $8000 tax credit information.

 In today’s economic climate, Americans find themselves in need of any extra money they can stumble upon.  With the nation’s current fiscal state, finding ways to save a few dollars is a must for many U.S. citizens.  One solution to the current financial situation is lowering one’s monthly mortgage payment.  While some Americans are unable to take advantage of the historically low interest rates due to credit issues or plummeting property values, others have been placed into a situation where they can save a few hundred dollars or more a month by simply refinancing their current home loan.  This financial information has been advertised everywhere including newspapers, on the internet, and even by the President of the United States.  Clearly, there is little question that those with high interest rates should prepare to refinance.  The real query is whether the rates are going to get lower or are we at “rock bottom.” Furthermore, if we have not reached the floor of interest rates, should you wait to refinance or act now?

     A look at the history of 30 year fixed interest rates answers the question of whether gambling on rates is in the best interest of a borrower.  With an analysis of the past, one cannot help but notice that there has not been a single time in the last forty years where interest rates have been lower.  It does not take a thorough investigation of mortgage interest rates since 1971 to notice that today’s rates are historically low.  While there were periods of time from 2003 to 2005 where rates dropped below six percent, never has the nation seen the average rate drop to its current mark. While most Americans have been squeezed out of the conventional mortgage market due to the revised strict guidelines put forth over the past year, the FHA (Federal Housing Authority) has seen a record number of loans over the past three months. FHA insured mortgages, while attractive for a number of reasons including lower down payments and more leniencies for those with credit issues, have seen rates reach all time lows in 2009.  Despite fluctuations in rates over the past few months, FHA mortgages have seen record volume.

     What does this all mean to someone assessing whether to refinance now or wait a little while?  Despite self proclaimed experts from all over the globe professing they can foresee the future of interest rates, the truth is that no one really knows for sure and that only time will tell.  Yes, of course interest rates could drop further tomorrow or next month, but why gamble?  Today, one can lock into a rate that is as low as ever without any headaches or heartbreak.  Why worry about the ups and downs of the marketplace when there are so many other issues to be concerned with.  Refinance into an FHA mortgage today and you will never need to be concerned about your interest rate again.

We have been receiving a lot of questions from customers wanting to know more about the $8000 tax credit that was included with the Stimulus bill sometime back.  I figured to hopefully get rid of some of the confusion by posting the most common questions and answers.  If I have missed any questions please feel free to leave a comment and I will be happy to add to my post. 

Can I use the $8000 tax credit as my down payment?

As of now the answer is no.  Apparently there is some real confusion here because last week there was a mortgagee letter from HUD that said this would be allowed by FHAonly to have the letter taken down a few days later.  This would be a great thing to happen since the down payment is often the biggest hurdle for first time home buyers but as of today- this is not an option.  In order to do an FHA mortgageyou will need 3.5% of your own money (either savings or a gift) as a down payment. 

What happens if I purchase and then decide to move out and rent my property after 2 years?

Here is the catch- the property you have purchased must remain your primary residence for the next 36 months.  If that property no longer remains your primary then you will be subject to pay back the monies.  After 36 months you are free to do as you please.  Make sure that you have a plan in place to remain in the property- Uncle Sam doesn’t give away money for free often and you do not want to have to give it back. 

I bought a property in 2009 and I would like to amend my taxes so that I can tax advantage of the tax break this year- how do I do this?

Ladies and gentlemen- I am not a CPA or a tax preparer.  I am a branch manager for a mortgage company and I use this site to offer out information regarding FHA mortgages and topics regarding the mortgage and real estate industry.  I would recommend that you seek the advice of a certified professional who handles taxes on an everyday basis.  If you need to find one in your local area I would recommend that you Google one for your local area. 

What is the definition of First Time Home Buyer?

A first time home buyeris anyone (including your spouse) who has not owned a principal residence in the last 3 years ending on the date of purchase.  I brought up the part about your spouse because I have received multiple calls from people wanting to buy a home in there spouses name because they want to take advantage of the free money the government is giving away.  I cannot disagree with you for trying- I am a home owner already and I would love to get access to $8000 for buying a home but currently Uncle Sam is only giving away free money to first time home buyers and there is no way around it!

Are there any income restrictions regarding the tax credit?  Is it possible that I make too much money?

As I am sure there are not many of us who would venture to say that we make too much money- there is a cap to what you can make and still qualify for the $8000 tax credit.  The amount of the tax break gradually starts phase out for taxpayers whose adjusted gross income is above $75,000 individually and $150,000 for joint filers.  It is completely phased out when your adjusted gross income exceeds $90,000 for an individual and $170,000 for joint filers.  So the bottom line is that for you to enjoy the maximum benefit of the $8000 first time home buyer tax credit you must make less then $75,000. 

Can I buy a property from a family memeber and still get the credit?

Simply No.  The tax break specifically has rules in it to prevent people from trying to buy a house from a family member just to take advantage of the tax credit.  The IRS defines a family member as:

I am sure that there will be more questions that will come up as we receive calls on the tax credit daily.  Please feel free to ask your questions below and I will be happy to answer them as they come in.

When purchasing a home or refinancing your current residence, there are many questions a potential mortgage customer must ask in order to arrive at the best possible option for financing.  While many Americans focus on the interest rate or the total estimated funds needed to close when determining their lender of choice, this is not usually the best advice.  While there is no simple equation that allows one to settle on the home financing that is most optimal, one important differentiation can be made with an examination of each company’s closing costs.  Only a proper analysis of the relevant information will provide information that will aid the customer most in their decision making.

     The most important step in investigating closing costs is distinguishing between expenses that are actually charged by the lender and those that are not.  It is imperative to remember that not all costs are charged by the lender.  Instead, many of the funds listed as potential closing costs are just estimates and are not determined at all by the mortgage company.  When discussing estimated funds to close or reviewing a good faith estimate (GFE), the value of making proper evaluations is paramount.   The reason for this is simple.  The charges actually charged by the lender are those that can be compared in a meaningful fashion.  These charges range from loan origination fees to application fees to credit report costs.  If one wishes to determine the company with the least of out of pocket expenses, only an assessment of these lender charged fees will aid the potential borrower.  Comparing costs unassociated with the lender will result in an unjust comparison.

     The bottom line is that any lender or broker can provide what appear to be the lowest estimates of title charges or reserves.   At the end of the day though, these figures are just approximations and should not be used to determine the lender with the least out of pocket expenses.  Instead, focus on the costs of the lender and your principal and interest payment.  These are the only items that a mortgage company or bank control.

www.whatisyourrate.com

The Federal Housing Authority (FHA) was created during the Great Depression with the goal of improving housing standards and conditions, providing financing through insurance of home loans, and stabilizing the housing market.  Despite the structural and technological changes the United States has gone through in the last three quarters of a century, the FHA has continued to assist the average American.  While the FHA’s accomplishments are hard to question, most Americans are either unaware of its advantages or are told that a conventional loan will better suit them.  What is the truth regarding FHA loans and why might this type of loan work best in our current economic climate?

Most potential borrowers are informed that the FHA is just another lender, but they are incorrect.  Instead, the FHA acts as insurance for the investors who actually make the loans.  Therefore, in the case of a defaulted FHA loan, the lender is guaranteed a mortgage insurance claim. During the first part of the twenty first century, FHA loans became a less favorable option for homeowners because most lenders were offering products that were almost impossible for buyers to refuse.  With little concern over the consequences of no- money down loans or adjustable rate mortgages, lenders pushed these programs on individuals without analyzing the future economic consequences.    The result of this is the current loan crisis that exists today.

Then, why does FHA make so much sense for a potential 2009 borrower?  Other than the solidity an FHA insured loan offers, there are several other reasons to choose this type of loan.  First, the FHA used to cap their loan limits.  This made it impossible for those looking for slightly expensive homes to use the government sponsored program; but this has changed. The stimulus program recently announced by President Obama has significantly increased the loan limits to $625,000, making an FHA loan practical for almost all prospective borrowers.

In addition to the escalation of loan limits, FHA loans have become more desirable because not only do they allow the borrower the option of putting as little as three percent down, but they also are less rigid regarding credit history.  Furthermore, the FHA has repetitively proven they are willing to do what it takes to keep a home from foreclosure.  As the amount of foreclosures continues to increase in the United States, the FHA has continued to rework programs making it easier for those having trouble managing their monthly payments.

So while many brokers or lenders may attempt to criticize FHA programs because of extensive paperwork, fear of forced expensive repairs, or their inability to offer the government programs, do not let this alarm you or scare you into a loan that will not best suit your financial state of affairs.  If your bank or loan officer does not offer FHA purchasing or refinancing options, shop around.  It quite possibly is the type of financing that is best for you. 

With the United States involved in one of its worst housing crisis ever, many Americans find themselves wondering how they were misled by their current mortgage lender. Even more importantly, many of the same innocent citizens are wondering what they can do to solve financial issues and who they can trust today.  With the newly-elected President Barrack Obama committed to providing a solution to the housing crisis, one of the more pertinent questions is where can I turn for honest help?

     Much of the blame for the current housing predicament has been placed directly on mortgage lenders and brokers, but are these loan officers honest enough to trust with such enormous financial dilemmas.  The answer is a simple YES.  Much like any other profession, there are poor, fair, good and the best in the mortgage lending business.  While all loan officers obviously profit through their sales, some are truly offering quality service, while the poor ones are just seeking to cash in on innocent, unaware victims.  How can a potential borrower find a trustworthy lender to help lower their monthly mortgage payment or elevate some of their financial burden?

     A basic decision will assist those Americans in their search for a responsible lender.  Unlike shopping for a mortgage like it is an object, one is better served to shop for a company that will provide quality service.  While most individuals shop lenders based on the best rate or the lowest closing costs, the truth remains the same.  The differences between most company’s rates and costs are minimal at best.  The true distinction between a trustworthy lender and one that is only seeking their best interests is the advice they give.  For example, any lender can quote a low interest rate in the newspaper or online.  While this may attract consumers, the rates they cite have no real meaning because the rate sheets can change as often as five times daily.  Therefore, by the time a potential borrower has called a bank or lender, a higher rate can be given and simply blamed on changes in the market.  Instead of being concerned with what may amount to a few extra dollars in closing costs or ten dollars a month in principal and interest payments, a serious mortgage shopper should focus on the service they will receive throughout the process.  This is just one example of the multiple avenues mortgage companies can take in an attempt to reel in a potential customer.  Knowing the basics of the lending process can help alleviate potential pitfalls that may arise when in contact with a less than dependable company.

     In conclusion, advice to a potential borrower is to get referrals from friends, family, or real estate agents that have had positive experiences.  Every lender is not seeking what is in your best interest.  A truly trustworthy mortgage company will not only answer your questions and concerns, but they will answer them with honesty.  It is this integrity that is a must in today’s economic climate.

     Between lowering interest rates to near- historic lows and opening FHA refinances too many who previously were not qualififed, Obama plans to stabilize the housing market and help responsible homeowners stay in their houses.  With the ability to maintain a loan at the current “rock bottom” rates, President Obama instructed the nation that at least forty percent of Americans were eligible for a refinance.  The idea behind the President’s plan is to halt banks and lenders from freezing their funds.  Currently even the most creditworthy borrowers are having difficulty in obtaining mortgages or other types of loans.

     While President Obama’s strategy to deal with the housing crisis is great news for Americans who have made their housing payments despite drastic drop-offs in home values, the time to act is now.  Not only is it doubtful that interest rates will remain this low, but many economic experts are predicting that credit will be severely restricted in the near future.  Therefore, the time to act is now.  Refinancing now may give current homeowners the potential to free up funds needed for other household bills or sending children to college.  However, it is imperative to contact a lender now to find out whether one qualifies for an FHA refinance.  Do not make the mistake of assuming your credit or income will prevent you from lessening your financial burden.   Take advantage of the situation the United States government has created for those who have remained able and willing to make their housing payment.  Refinance today!

At a business meeting earlier this week I was seated beside another guest. Unknown to each other we introduced ourselves. The question that followed was the inevitable: “What do you do for a living?” 
He is an attorney in general practice. I explained that I am a Senior Advisor for reverse mortgages. Upon hearing that he paused reflectively then said, “Hmm, that’s an expensive way to go.”
 
It’s not an uncommon response.
 
What was uncommon was his silent reaction to my follow-up question: “Compared to what?” 
When speaking with a client who is considering a reverse mortgage I always suggest a couple of essential steps for them to take early in the evaluation process:
1)      Define your objective
2)     Look at every alternative
3)     Review your financial situation with a professional or trusted advisor
 
Let’s evaluate these steps: 
Defining your objective
While it may seem obvious, it’s important to identify the specific goals you want to accomplish with your reverse mortgage. For some it’s a matter of simply paying off debt to free them from monthly payments. Others want the security of available cash to cover any contingency that might arise in these volatile economic times.
 
Look at every alternative
Ask yourself a fundament question: “Do I want to stay in my home?”
If the answer is no a then a reverse mortgage makes no sense. That said, the longer you intend to remain in your home the more sense a reverse mortgage makes from an economic standpoint.
 
Cast a wide net by making a list of every conceivable alternative to the reverse mortgage. Do you have alternative funds to draw on to meet your needs? Dwindling 401K’s and diminished stock portfolios have changed many people’s thinking on this question.
 
Is there a family member, such as a son or daughter, you would feel comfortable moving in with?
 
How about downsizing your home? Would moving to smaller quarters address your needs? (A reverse mortgage to purchase is a relatively new and woefully misunderstood option where a reverse mortgage can still play a central role. More on that in my next post.)
 
As for the expense, the costs associated with a reverse are similar to closing costs of other loans. But you are not going to pay a realtor’s commission, moving costs, or dealing with any of the other distress which comes with moving.
 
Seek a Trusted Advisor
I can not emphasize enough the importance of financial advice from someone you trust. Most of us have someone we believe has our well being as their priority. Even if the need for a reverse mortgage is obvious, having a trusted advisor to assist you in the process can be reassuring.
Oh, and as to my new attorney friend? Well, he couldn’t provide a single lending alternative to a reverse mortgage which provides cash liquidity, no repayments for as long as you remain in your home, and no income or credit requirements.
I may have made a convert out of him.