Provided By Trulia.com
It is the most feared phrase in the English language, Ronald Reagan famously said:
"We're from the government, and we're here to help."
If government aid is evil, there are certainly some exceptions. Home mortgages insured by the Federal Housing Administration have helped put more than 34 million Americans into their own homes since the since the 1930s. Millions more have benefited from zero-down VA loans from the U.S. Department of Veterans Affairs and from the Department of Agricultures Rural Development loans. Mortgage guarantees and down payment assistance are also doled out by municipalities and state programs such as California's Housing Finance Agency.
It's hard to generalize about their pros and cons with so many government-enabled loans out there. But when we compare them to conventional (non-government) loans, a few observations arise.
FHA loans normally demand higher interest rates than conventional mortgages because of the increased risk of default. The "spread" between FHA and conventional loans can be as high as a point, or 1 percent, which is a lot. Borrow $200,000 for 30 years at 5 percent fixed and you'll pay $1,073 monthly. Make it 6 percent and you'll pay $1,199. It's an extra $45,360 over 30 years.
Why have so many buyers chosen FHA loans? Not because they like higher interest. It's about lower down payments. An FHA-backed loan today can be had for about 3% percent down, even by someone without stellar credit. The same borrower might be asked for 20 percent down by a lender without the FHA guarantee.
But there are complicating factors. FHA borrowers must pay an upfront fee of 1.5 percent of the loan amount, plus an annual insurance premium of 0.5 percent. That premium is about the same as what's paid by a conventional borrower who must carry Private Mortgage Insurance (PMI).
A higher-interest-rate FHA mortgage may cost less in the long run than a conventional mortgage with PMI, but there is no overarching rule. You have to run the numbers and compare. For many borrowers, the deal "maker" or "breaker" won't be the interest rates or monthly payments. For many, with conventional lenders now demanding 10 or 20 percent down, it's all about down payments.
In theory, it's possible to avoid PMI with a piggyback mortgage structure - by borrowing 80 percent of the property value in one loan and 10 percent on a second for example. (This trick was common in the loose-lending days of old but today (in 2009), it's much harder to find second-position lenders at loan-to-value ratios like these.
Two other brands of government-guaranteed loans are offered by federal agencies. The Department of Veterans Affairs will insure zero-down, 100 percent financing as a benefit to military veterans (even if they served in peacetime). The interest rates are similar to FHA loans.
Zero-down financing is also backed by the U.S. Department of Agriculture under its Rural Development program. The audience for RD loans is limited. They're intended to help low-income people buy, build or renovate homes in rural areas. Houses must be modest in size, design and cost, according to the agency. The interest rates are similar to FHA and VA loans, combined with 100 percent financing. Great terms for the needs of many people if they qualify.
Do you have mortgage questions? Call the experts at 972-772-7000 or email us at frontdesk552@kw.com.
Showing posts with label FHA. Show all posts
Showing posts with label FHA. Show all posts
Wednesday, May 18, 2011
Monday, December 6, 2010
2011 Dallas Real Estate Market Recovery
Provided By Old Republic
Source Buy and Sell Dallas
The Dallas real estate market is showing positive signs with many reports hinting toward a recovery in 2011. Dallas home inventory has decreased to a more balanced level, pending home sales are increasing, and home sale prices are steadily on the rise. These are just a few of the variables needed to bring a wounded real estate market back on its’ feet. The Dallas real estate market is on the right track with consumer confidence increasing and home sales reports showing positive signs of stability. 1st time home buyers, repeat buyers, and investors are jumping off the fence to take advantage of the buyer’s market before interest rates rise and inventory decreases.
Dallas Morning News recently reported Dallas pre owned home sales increased 12.38% in August compared to 2009. Many of the areas surrounding Dallas also experienced an increase in existing homes sales over previous year transactions including Fort Worth at 14.9%, Irving at 20.32%, and Garland at 20.77%.Although home sales are up and confidence has increased, but home sellers are still weary of placing their home on the market. High foreclosure and short sale inventory is still plaguing the entire U.S. market including the DFW area. Home sellers are still unable to compete with low dollar per square foot selling prices on bank foreclosures including FHA, VA and REO short sales and auctions. Sellers are waiting for home values to rise and foreclosure inventory to fall to avoid selling their most valuable investment at a loss.
The Dallas Fort Worth real estate market is on the road to recovery, but there is still a long way to go with many obstacles to overcome. One thing for sure is, the U.S. real estate market is improving, consumer confidence is increasing, and Dallas is one of the top markets leading the way!
Are you looking to buy a home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Source Buy and Sell Dallas
The Dallas real estate market is showing positive signs with many reports hinting toward a recovery in 2011. Dallas home inventory has decreased to a more balanced level, pending home sales are increasing, and home sale prices are steadily on the rise. These are just a few of the variables needed to bring a wounded real estate market back on its’ feet. The Dallas real estate market is on the right track with consumer confidence increasing and home sales reports showing positive signs of stability. 1st time home buyers, repeat buyers, and investors are jumping off the fence to take advantage of the buyer’s market before interest rates rise and inventory decreases.
Dallas Morning News recently reported Dallas pre owned home sales increased 12.38% in August compared to 2009. Many of the areas surrounding Dallas also experienced an increase in existing homes sales over previous year transactions including Fort Worth at 14.9%, Irving at 20.32%, and Garland at 20.77%.Although home sales are up and confidence has increased, but home sellers are still weary of placing their home on the market. High foreclosure and short sale inventory is still plaguing the entire U.S. market including the DFW area. Home sellers are still unable to compete with low dollar per square foot selling prices on bank foreclosures including FHA, VA and REO short sales and auctions. Sellers are waiting for home values to rise and foreclosure inventory to fall to avoid selling their most valuable investment at a loss.
The Dallas Fort Worth real estate market is on the road to recovery, but there is still a long way to go with many obstacles to overcome. One thing for sure is, the U.S. real estate market is improving, consumer confidence is increasing, and Dallas is one of the top markets leading the way!
Are you looking to buy a home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Wednesday, December 1, 2010
Mortgage Rates Settling Above All Time Lows
Provided By Ed Ferrara of Realty Times
30 year fixed mortgage rates are settling at levels significantly higher than all time lows set just weeks ago. Conforming 30 year fixed mortgage rates today are at 4.25% for well-qualified borrowers who pay a standard origination fee (points) of .07 to 1%. Current 15 year fixed mortgage rates today are at 3.75%.
FHA mortgage rates, which are driven by the same mortgage-backed securities prices as conforming fixed mortgage rates, are also up about a quarter percent higher than they were two weeks ago and are nearly identical to conforming mortgage rates today. Today's California 30 year fixed FHA loan rate is 4.125%. MI and other FHA fees make FHA loans more expensive than conforming mortgages.
Jumbo mortgage rates have avoided the spike that has hit conforming and FHA interest rates. Current 30 year fixed jumbo mortgage rates remain at a record low 4.875%.
MBS prices, which move mortgage rates in the opposite direction, have been gaining on low inflation, falling stocks, Euro debt concerns, and tension in Korea, helping to stabilize mortgage rates which had been rising quickly.
Do you have questions about the low mortgage rates? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
30 year fixed mortgage rates are settling at levels significantly higher than all time lows set just weeks ago. Conforming 30 year fixed mortgage rates today are at 4.25% for well-qualified borrowers who pay a standard origination fee (points) of .07 to 1%. Current 15 year fixed mortgage rates today are at 3.75%.
FHA mortgage rates, which are driven by the same mortgage-backed securities prices as conforming fixed mortgage rates, are also up about a quarter percent higher than they were two weeks ago and are nearly identical to conforming mortgage rates today. Today's California 30 year fixed FHA loan rate is 4.125%. MI and other FHA fees make FHA loans more expensive than conforming mortgages.
Jumbo mortgage rates have avoided the spike that has hit conforming and FHA interest rates. Current 30 year fixed jumbo mortgage rates remain at a record low 4.875%.
MBS prices, which move mortgage rates in the opposite direction, have been gaining on low inflation, falling stocks, Euro debt concerns, and tension in Korea, helping to stabilize mortgage rates which had been rising quickly.
Do you have questions about the low mortgage rates? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Monday, October 4, 2010
4 Mortgages That Require Little Money Down
Written By Holden Lewis
Source: http://www.bankrate.com/
Provided By Shelley Dudley
Homebuyers with little money for a down payment are finding more home loans available for a low down payment or even no down payment.
These mortgages are becoming more commonplace even as the country recovers from a housing bust made worse by the popularity of low down-payment mortgages during the housing boom.
The Federal Housing Administration insures loans with small down payments. And private mortgage insurers have lowered their down payment requirements.
It's even possible to get a mortgage today with no money down. The nation's biggest credit union offers "zero-down" mortgages. The Veterans Administration and the Department of Agriculture guarantee home loans with no down payments.
Following are a few options for borrowers seeking low down-payment and zero down-payment home mortgages:
No down payment: VA loan
Veterans Affairs (formerly the Veterans Administration) guarantees no-down purchase mortgages for qualified veterans. Private lenders originate VA loans, which the VA guarantees. There is no mortgage insurance. The borrower pays a funding fee, which can be rolled into the loan amount.
The VA funding fee varies, depending on whether the veteran served in the regular military or in the Reserves or National Guard, and whether it's the veteran's first VA loan or a subsequent one. The funding fee can be as low as 2.15 percent or as high as 3.3 percent.
No down payment: Navy Federal
Navy Federal Credit Union, the nation's largest in assets and membership, offers 100 percent financing (up to $650,000) to qualified members for buying primary homes. Credit union eligibility is restricted to members of the military, some civilian employees of the military and U.S. Department of Defense, and family members.
Navy Federal resumed zero-down financing this year after a hiatus of a couple of years. Barbara Sheehan, Navy Federal's assistant vice president for mortgage products, says when members of the military are transferred, they sometimes own houses whose values have fallen, wiping out equity.
"Some people had to take losses to sell their houses, so to have to start over and save the money again for a down payment is really difficult," she says.
The credit union's zero-down program is similar to the VA's. One difference is cost: Navy Federal's funding fee of 1.75 percent is less than the VA's funding fees.
No down payment: Department of Agriculture
The Department of Agriculture's Rural Development mortgage guarantee program is so popular that it ran out of money this spring. Congress is expected to cough up more in time for summer homebuying season.
"That's the cat's meow, my favorite loan program," says Jeff Tufford, mortgage consultant for Monarch Mortgage Consulting, in Grand Blanc, Mich.
Some borrowers are surprised to find that Rural Development loans aren't confined to farmland.
"It's not all rural," Tufford says.
Grand Blanc is a suburb of Flint. There are nearby towns, such as Fenton and Davison, where "no one would walk there and say this is a rural area, but the USDA can do loans there."
The USDA has maps on its website that highlight eligible areas. In addition to geographical limits, the USDA program has restrictions on household income, and it's intended for first-time buyers, although there are exceptions.
The USDA mortgage comes from a bank, and there is no mortgage insurance. Instead, the USDA levies a 2 percent guarantee fee, which can be rolled into the loan amount.
Low down payment: Federal Housing Administration
The zero-down options listed above are restricted to limited groups of buyers. With a minimum down payment of 3.5 percent, the Federal Housing Administration is the low-down option that's available to the most people.
Today, about 30 percent of all home loan borrowers get FHA-insured loans, up from 3 percent during the housing boom. The FHA gained market share after many other low-down-payment options (such as piggyback loans) evaporated in the housing bust.
Losses to the insurance fund compelled the FHA to hike rates. The FHA charges an upfront premium of 2.25 percent of the mortgage amount. On a loan with the minimum down payment, there's an annual premium of 0.55 percent of the mortgage amount, or $550 a year for each $100,000 borrowed.
Another low-down-payment option
There is one more option for borrowers in the "low-down-payment" camp: A standard home loan with private mortgage insurance.
A number of companies offer private mortgage insurance for home loans with down payments of less than 20 percent. PMI is not the same thing as FHA insurance, a form of public mortgage insurance.
Typically, monthly private mortgage insurance costs more than FHA insurance for borrowers who put down 5 percent. However, PMI costs less than FHA for loans with down payments of 10 percent or more.
Private mortgage insurance has another edge over FHA: Under certain conditions, you can cancel PMI earlier -- as soon as two years after you get the loan, compared to a wait of at least five years to cancel FHA insurance.
PMI has become easier to get. From the start of the housing bust until just recently, mortgage insurers slapped a "declining market" label on the worst-hit housing markets and required minimum down payments of 10 percent or more, instead of the traditional minimum of 5 percent.
Now, at least some of the insurers have relaxed the requirements, even in hard-hit states such as Arizona, California, Florida, Nevada and Michigan.
"We'll do 5 percent down across the country," says Chris Antonello, senior vice president of marketing for Genworth, a mortgage insurer based in Raleigh, N.C.
Do you have real estate questions? Give the professionals a call at 972-772-7000 or email us at rockwall@kw.com.
Source: http://www.bankrate.com/
Provided By Shelley Dudley
Homebuyers with little money for a down payment are finding more home loans available for a low down payment or even no down payment.
These mortgages are becoming more commonplace even as the country recovers from a housing bust made worse by the popularity of low down-payment mortgages during the housing boom.
The Federal Housing Administration insures loans with small down payments. And private mortgage insurers have lowered their down payment requirements.
It's even possible to get a mortgage today with no money down. The nation's biggest credit union offers "zero-down" mortgages. The Veterans Administration and the Department of Agriculture guarantee home loans with no down payments.
Following are a few options for borrowers seeking low down-payment and zero down-payment home mortgages:
No down payment: VA loan
Veterans Affairs (formerly the Veterans Administration) guarantees no-down purchase mortgages for qualified veterans. Private lenders originate VA loans, which the VA guarantees. There is no mortgage insurance. The borrower pays a funding fee, which can be rolled into the loan amount.
The VA funding fee varies, depending on whether the veteran served in the regular military or in the Reserves or National Guard, and whether it's the veteran's first VA loan or a subsequent one. The funding fee can be as low as 2.15 percent or as high as 3.3 percent.
No down payment: Navy Federal
Navy Federal Credit Union, the nation's largest in assets and membership, offers 100 percent financing (up to $650,000) to qualified members for buying primary homes. Credit union eligibility is restricted to members of the military, some civilian employees of the military and U.S. Department of Defense, and family members.
Navy Federal resumed zero-down financing this year after a hiatus of a couple of years. Barbara Sheehan, Navy Federal's assistant vice president for mortgage products, says when members of the military are transferred, they sometimes own houses whose values have fallen, wiping out equity.
"Some people had to take losses to sell their houses, so to have to start over and save the money again for a down payment is really difficult," she says.
The credit union's zero-down program is similar to the VA's. One difference is cost: Navy Federal's funding fee of 1.75 percent is less than the VA's funding fees.
No down payment: Department of Agriculture
The Department of Agriculture's Rural Development mortgage guarantee program is so popular that it ran out of money this spring. Congress is expected to cough up more in time for summer homebuying season.
"That's the cat's meow, my favorite loan program," says Jeff Tufford, mortgage consultant for Monarch Mortgage Consulting, in Grand Blanc, Mich.
Some borrowers are surprised to find that Rural Development loans aren't confined to farmland.
"It's not all rural," Tufford says.
Grand Blanc is a suburb of Flint. There are nearby towns, such as Fenton and Davison, where "no one would walk there and say this is a rural area, but the USDA can do loans there."
The USDA has maps on its website that highlight eligible areas. In addition to geographical limits, the USDA program has restrictions on household income, and it's intended for first-time buyers, although there are exceptions.
The USDA mortgage comes from a bank, and there is no mortgage insurance. Instead, the USDA levies a 2 percent guarantee fee, which can be rolled into the loan amount.
Low down payment: Federal Housing Administration
The zero-down options listed above are restricted to limited groups of buyers. With a minimum down payment of 3.5 percent, the Federal Housing Administration is the low-down option that's available to the most people.
Today, about 30 percent of all home loan borrowers get FHA-insured loans, up from 3 percent during the housing boom. The FHA gained market share after many other low-down-payment options (such as piggyback loans) evaporated in the housing bust.
Losses to the insurance fund compelled the FHA to hike rates. The FHA charges an upfront premium of 2.25 percent of the mortgage amount. On a loan with the minimum down payment, there's an annual premium of 0.55 percent of the mortgage amount, or $550 a year for each $100,000 borrowed.
Another low-down-payment option
There is one more option for borrowers in the "low-down-payment" camp: A standard home loan with private mortgage insurance.
A number of companies offer private mortgage insurance for home loans with down payments of less than 20 percent. PMI is not the same thing as FHA insurance, a form of public mortgage insurance.
Typically, monthly private mortgage insurance costs more than FHA insurance for borrowers who put down 5 percent. However, PMI costs less than FHA for loans with down payments of 10 percent or more.
Private mortgage insurance has another edge over FHA: Under certain conditions, you can cancel PMI earlier -- as soon as two years after you get the loan, compared to a wait of at least five years to cancel FHA insurance.
PMI has become easier to get. From the start of the housing bust until just recently, mortgage insurers slapped a "declining market" label on the worst-hit housing markets and required minimum down payments of 10 percent or more, instead of the traditional minimum of 5 percent.
Now, at least some of the insurers have relaxed the requirements, even in hard-hit states such as Arizona, California, Florida, Nevada and Michigan.
"We'll do 5 percent down across the country," says Chris Antonello, senior vice president of marketing for Genworth, a mortgage insurer based in Raleigh, N.C.
Do you have real estate questions? Give the professionals a call at 972-772-7000 or email us at rockwall@kw.com.
Wednesday, June 25, 2008
Texas leads nation in FHA-backed home loans
10:49 PM CDT on Thursday, June 19, 2008
By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com
Texas continues to lead the country in the volume of home loans insured by the Federal Housing Administration.
And Fort Worth and Dallas still have some of the highest volumes in the country, FHA Commissioner Brian Montgomery said Thursday while visiting Dallas.
"Dallas is the No. 3 county for FHA volume in the entire country," he said.
"Tarrant County is the No. 1 county for the whole country for FHA."
With the shakeout in the mortgage industry, federally backed FHA loans have dramatically increased in volume.
These mortgages provide consumers with long-term, fixed-rate financing insured by the government.
FHA market share has jumped from about 3 percent in 2005 to about 12 percent.
"Our volume in Texas for the first quarter of calendar year 2008 was up almost 90 percent from the previous one," Mr. Montgomery said.
"This is the state with the largest FHA volume, which we thought was a pretty amazing statistic."
He was in Dallas to tour Bank of America's regional government lending center.
Since 2005, Bank of America has increased its FHA and Department of Veterans Affairs loan business from around $800 million annually to an anticipated $5 billion this year.
Fundings from the Dallas office – which employs about 150 – were up 35 percent in May compared with the same month last year, according to Bank of America.
Bank of America is the fourth-largest producer of FHA-backed loans in the country, according to bank officials.
"I certainly see that the FHA market is going to be strong for 18 to 24 months," said Allen Jones, who heads the bank's government lending program.
"We will look to continue to grow our FHA capacity."
Bank of America early this year converted a wholesale loan operation it had in downtown Dallas into the FHA-VA loan-processing center.
Dallas was chosen because the bank identified Texas as a key market for FHA-VA lending, Mr. Jones said
He said the FHA will continue to be a major player in the U.S. loan market until credit conditions stabilize.
"At a point in time those who are sitting on the sidelines today will gain comfort and come back into the market," Mr. Jones said.
The overall U.S. housing market still has a long recovery period ahead, Mr. Montgomery said.
"I don't see it getting dramatically worse, but I still think it's 2009 or maybe 2010 before you see it mostly stable," he said. "In Texas and parts of the South, you are seeing things start to get a little better."
As much as 45 percent of the loans the FHA insures are people refinancing from mortgages – including subprime loans with rising interest rates, causing the payments to increase.
"FHA has been there for them and softening the crash," Mr. Montgomery said. "Unfortunately, we are not going to be able to save everyone.
"A lot of these loans should have never been made in the first place."
The FHA currently insures almost 5 million U.S. home loans.
Since September 2007, the FHA has provided more than $76.1 billion in mortgages.
The number of FHA-based refinancing loans is up threefold from the same time last year, he said.
"We've had 230,000 new FHA refi customers since last October," Mr. Montgomery said.
"The vast majority of those were subprime."
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