TAG | fha refinance
FHA Home Loan applications surged dramatically last month to 246,406. That figure increased from 163,467 for the month of February. These figures were released by HUD on Wednesday. The increase in FHA Loan applications is believed to be a result of the $8000 home buyer tax credit expiration at the end of this month. The FHA endorsed 132,301 mortgages in the month of March. The delinquent FHA Mortgage rate also declined in March to 8.8%, which is down from 9.8% in February. If you are looking to purchase a home using an FHA Loan in the near future, you had better hurry. To be eligible for the $8K tax credit you must have a signed purchase agreement by April 31.
In the current lending environment, it can be difficult or even impossible for previously qualified people to get a home loan. One of the most flexible mortgage programs available today is FHA Loans. Although, FHA loans offer many rules and guidelines that borrowers must meet in order to obtain an approval, there are a few big pointers that you can use to get a general idea if you qualify. To qualify for an FHA loan, you will need the following to meet the following conditions:
- You almost certainly will need credit score of 620 or higher.
- You will need to make enough documented income to exceed the debt ratio requirement of 31/43. This means that your housing expense shouldn’t be more than 31 percent of your income and your total expenses shouldn’t be more than 43 percent of your income.
- The property must have the equity to hold the desired loan amount up to 96.5% on purchases and 97.75% on refinances.
If all of the conditions above are true for your transaction, you will have a much better chance of getting your FHA loan approved.
Effective February 1, 2010, home buyers will now be able to purchase properties that have been “flipped” in the previous 90-days with an FHA Mortgage Loan. This will assist FHA Loans in having a very significant role in helping the housing market stabilize, providing liquidity in the mortgage market, and increasing mortgage credit, both nationally and in those states suffering the most from the subprime mortgage meltdown. Waiver Specifics
According to CNNMoney.com, time is running out if you want to refinance your mortgage into a FHA mortgage loan or Conventional Loan with an interest rate below 5%. Your window of opportunity is closing fast. During the week of Jan. 7, the average 30-year, fixed-rate loan closed at 5.09%, according to mortgage giant Freddie Mac. That is significantly higher than the 4.71% it averaged at the beginning of the month, and experts say rates are heading higher.
A big reason for the climb is that a government program that has kept rates very low is coming to a close. The Federal Reserve has been purchasing mortgage-backed securities since early 2009, buying up a whopping $1.25 trillion worth.
But the Fed’s program ends on March 31, which leaves the buying to private investors, who will almost surely demand higher rates. The Fed has already been slowing its purchasing, and that has corresponded with the recent rate increases. Read More
In recent testimony during a hearing before the House Committee on Financial Services, HUD Secretary Shaun Donovan outlines several new policies in FHA to address the quality of the existing portfolio, improve the performance of future books, and return the capital reserve to above the legislated 2 percent level, while also ensuring that the FHA continues to contribute to the nation’s housing recovery.
An initial measure is to reduce the maximum permissible seller concession from its current 6 percent level to 3 percent, which is in line with industry norms, and we will continue to consider additional reductions. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value.
Secondly, to protect the fund from the riskiest borrowers, the FHA will for the time being also raise the minimum FICO score for new FHA borrowers.
The FHA is currently analyzing what this floor should be, including the relationship between FICO scores and downpayments to determine whether FHA should increase FICO minimums in combination with changes to other underwriting criteria for lower downpayment loans.
Third, the FHA has made the decision to exercise our authority to increase the up-front cash that a borrower has to bring to the table in an FHA mortgage loan – to make sure that FHA borrowers have more “skin in the game” and a stronger equity position in their loans. There are several ways to accomplish this, and so the FHA is currently analyzing various options to determine which is the most effective and consistent with our mission.
Finally, the FHA is examining the FHA mortgage insurance premium structure to determine whether an increase is needed and, if so, whether it should be the up-front premium, the annual premium or both. Our current up-front premium of 1.75 percent is below the statutory cap of 3 percent, while the annual premium is currently at the statutory maximum. To protect against future uncertainty in market conditions, the FHA is requesting authority from Congress to raise annual premiums, as this is one of the most effective means of raising capital for the fund with the least impact per borrower.
The U.S. federal government is slowly extracting itself from the MBS market for home loans, closing out several emergency measures put into place in the throes of distress last year to prevent a collapse of mortgage finance.
According to a recent WSJ online article, The Federal Reserve’s $1.25 trillion program to purchase mortgage-backed securities, considered the most critical support, will draw to a close in the first quarter of 2010. Fannie Mae, Freddie Mac and Ginnie Mae will then be without a government buyer of last resort for their home loans for the first time since the mid-1990s and will have to rely solely on private investors.
Simply put, this means that interest rates can not remain at their present levels for much longer. If you are on still on the fence about a refinance or home purchase, the time to move is now. Learn more about Home Mortgage Loans, FHA Loans, USDA Loans, VA Loans and Jumbo Loans and Conventional Loans at www.loans-101.com.
From the FHA:
Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 (originally planned for a January 1, 2010 implementation) has two parts: a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection. The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010. This extension will provide FHA and lenders additional time to adjust systems to accommodate the changes.
Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter. However, lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the loan.
FHA Loans are the most popular mortgage on today’s home loan market. FHA Home Loans have surged in popularity because more and more people are turning to the security of FHA government insured fixed-rate mortgages. FHA Loans allow home buyers to purchase a home with a great, low interest rate and a small, 3.5% down payment. FHA Refinance Loans may also be use to refinance a current mortgage, up to 96.5% of the homes value, into a stable, fixed-rate FHA Mortgage. FHA Loans could be the best home loan for your circumstances when compared to USDA Loans, VA Loans, and Conventional Loans.
