FREE Credit Reports

Most of us know that we should be checking our own credit reports periodically to make sure the information is accurate. And, we have all seen the banner and pop-up ads offering us free credit reports. But, can we really get our credit reports for free?

Yes, you can. The Fair and Accurate Credit Transaction Act of 2003 (FACTA) was passed by Congress to, among other things, allow consumers to monitor their own credit reports from the three main credit repositories – Equifax, Experian, and Trans Union. These free credit reports may be obtained on the internet, over the phone, and through the mail through a centralized source that was established specifically for this purpose (you cannot obtain a free credit report by contacting the credit repositories directly.)

On the internet go to http://www.annualcreditreport.com to get copies of all three credit reports. You can also call 877-322-8228 to obtain the credit reports by phone or you can download a form to mail in at http://www.annualcreditreport.com/cra/requestformfinal.pdf.

Why should you check your credit periodically?

First, the credit reports may contain information that is inaccurate. Most of the credit you obtain, and the rate you pay, are based upon your credit history and credit score. If your credit reports have inaccurate information you may be paying more for credit than you should.

Second, all of us have heard of identity theft on the news. The key to minimizing the damage done by identity theft is to stop it as quickly as possible. By checking your credit report at least annually you can spot activity that may be identity theft and take steps to stop it as soon as possible.

What if the information on my report is inaccurate?

All three credit repositories will list the steps you need to take to dispute an inaccurate listing. When you receive your reports, simply follow the steps for each of the three credit repositories.

Another site that has a lot of great information on FACTA, identity theft, and privacy issues is www.privacyrights.org.

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Changes to FHA Mortgage Insurance Premium (MIP) take effect today

For the second time this year, FHA is changing their mortgage insurance premium (MIP). FHA does not make loans directly, rather FHA guarantees mortgages made by approved lenders. The FHA MIP is mortgage insurance for FHA loans that protects the lender in case of borrower default on the loan.

FHA charges two types of MIP
(1) Up-Front MIP (UFMIP) which is paid at closing and added to the base loan amount and
(2) Annual MIP (AMIP) which is collected each month with the regular mortgage payment.




So, for a $200,000 FHA mortgage with a term of 30 years and an LTV greater than 95% the UFMIP would be $2,000 instead of $4,500 and the AMIP would be $1,800 instead of $1,100 (or, $150/month instead of $91.67/month)

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FHA Streamlined Refi Offers Great Options to Lower Rate

FHA allows a current FHA Mortgagor to refinance their mortgage under the Streamline Refinance Program. Streamline refers to a reduced amount of documentation needed to refinance the mortgage. The basic requirements of the program are:

• The mortgage to be refinanced must already be FHA insured.


• The mortgage to be refinanced should be current (not delinquent).


• The refinance is to result in a lowering of the borrower's monthly principal and interest payments.


• No cash may be taken out on mortgages refinanced using the streamline refinance process.

Many lenders also require a minimum credit score for the streamline program.

Streamline Refinance With an Appraisal

If an appraisal is performed for the refinance, the new mortgage balance is limited to 96.65% of the appraised value. However, the borrower may not receive cash out on a streamline refinance. The new mortgage may include the unpaid principal balance of the mortgage, closing costs and prepaid items (e.g interest, initial escrow account deposit, etc.).

Streamline Refinance Without an Appraisal

A streamline refinance can also be done without an appraisal. In this case the new mortgage is limited to the original mortgage amount. Closing costs and prepaids may be included in the mortgage but only up to the original loan amount. Borrowers using this option may incur out of pocket expenses to refinance their mortgage.

This has been a great option lately for those homeowners who are currently upside down (owe more on the home than the home is worth) on their homes. Since no appraisal is done, no one knows if this is an issue or not. Also, a property that was originally purchased with an FHA mortgage and has since been converted to an investment property can only be refinanced with an FHA streamline refinance without an appraisal.

No-Cost/Low-Cost Refinances

Although not unique to FHA refinances, many borrowers refinancing using the streamline refinance opt for a no-cost refinance. In exchange for a slightly higher interest rate, the lender will pay a portion (low-cost) or all of the closing costs of the mortgage. This is especially popular with the streamline refinance without an appraisal because the borrower will usually be able to roll less of the costs into the mortgage. With interest rates at historic lows lately, this option is very attractive since you can still get a phenomenal interest rate and use less of your equity to pay closing costs.

If you are thinking of refinancing your FHA loan, please give me a call so we can see if this might be right for you! You can call me at 708-473-7688 or email BarkerLoans@gmail.com

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Is the FHA Streamlined 203(k) Loan right for you?

With the increase in the amount of foreclosures, short-sales, and fixer-uppers on the market, many people are looking for ways to purchase a home that needs some work without paying for all of the costs out-of-pocket. FHA offers a streamlined version of the traditional 203(k) rehab loan that can help you do just that.

The Streamlined 203(k) loan offers that homebuyer the ability to finance up to $35,000 of improvements to the property directly into the mortgage.

A few things to consider are that the Streamlined 203(k)is designed for non-structural repairs to the property, so you can't move load-bearing walls or add an addition to the property. But there are a lot of repairs that can be covered:

• Repair/ replace/upgrade roofs, gutters/downspouts, HVAC systems, plumbing systems, electrical systems, flooring.
• Remodel kitchens, baths, etc.
• Painting – interior and exterior
• Weatherization of property – doors, windows, insulation, etc.
• Finish/re-finish basements or attics
• Handicap-accessible improvements
• New appliances
• New siding
• Basement/crawlspace waterproofing
• Lead-based paint stabilization or abatement
• Repair/replace/add exterior decks, porches and patios

Following are the limits to the extent of work that can be performed with a Streamlined 203(k) loan:

• Major rehab/remodeling that may require the addition or relocation of a load-bearing wall.
• Any new construction including adding an addition to the property
• Repairing any structural damage to the property
• Any work that cannot be started within 30 days of closing or completed within 6 months of closing
• Any work that requires detailed plans, drawings or architectural exhibits
• Any work that would require the homeowner to vacate the property for more than 30 days.

Projects that involve any of these items may still be eligible to be done with the traditional FHA 203(k) loan

In addition to the above, the Streamlined 203(k) loan also doesn't require the use of a consultant, nor the use of a general contractor to complete the work. And, if the amount of work to be performed on the property is less than $15,000, the mortgagee (lender) may not require an inspection of the completed work.

The Streamlined 203(k) can also be used on a refinance to remodel/rehab a property you are currently living in. However, it can only be used on owner-occupied properties.

If you are thinking of purchasing a property that will need some work after closing, please give me a call so we can go over the details of this loan and see if it might be right for you! You can call me at 708-473-7688 or email BarkerLoans@gmail.com

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House Passes Extension to Home Buyer Tax Credit

The last day to close on your home purchase in order to qualify for the Home Buyer Tax Credit (Congress Extends/Expands Home Buyer Tax Credit) is tomorrow, June 30, 2010. Many people who had a signed contract on or before April 30, 2010 may not be able to meet that deadline. The National Association of Realtors (NAR) estimates as many as 180,000 people will lose that tax credit due to delays in their closings.

In recent years, with lenders tightening their lending standards and increased regulations, many real estate purchase transaction are taking longer than they had in the past. Many people in the industry were worried whether two months from the contract deadline (April 30) to the closing deadline (June 30 was long enough. In addition to the tighter standards and regulation, the increase in volume has made closing on a home an even longer process.

The House of Representatives passed a two-month extension to the closing deadline today with a 409-5 vote. The extension only applies to those home buyers that met the contract deadline of April 30. The Senate must now pass a similar bill which is already in the works.

The home buyer tax credits are credited with helping to stabilize the slumping housing market across the country. According to the NAR, over 1 million home purchases would not have occurred if it were not for the home buyer tax credits. The IRS states that over 2.6 million home buyers had claimed the credit by April 2010 for a total of $18.7 Billion in tax credits

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FHA Mortgages Just Became Slightly More Expensive

On April 5, 2010 the first of several planned changes to the FHA Mortgage Program went into affect. HUD increased the Up-Front Mortgage Insurance Premium (UFMIP) to 2.25% from 1.75%. The UFMIP is part of the mortgage insurance charged by HUD to insure FHA mortgages. It is based upon the mortgage amount and it is rolled into the mortgage rather than being paid for by the borrower at closing. This will make the impact of the increase much more affordable to borrowers.

On a $200,000 FHA mortgage, the UFMIP increased from $3,500 to $4,500. Since the additional $1,000 of UFMIP will be rolled into the mortgage it will increase the monthly payment slightly - $5.68 per month.

The reason for the increase is that delinquencies and foreclosures on mortgages have increased significantly over the past several years. And, a greater percentage of mortgages are now FHA insured mortgaged. This has caused greater losses to the FHA program and the increase is intended to increase the reserves set aside to handle these situations.

FHA is still a great deal. Conventional mortgage carry higher monthly mortgage insurance rates and, with the Loan-Level Pricing Adjustments, only those borrowers with the highest credit scores and largest down payments can qualify for the best conventional mortgage rates.

FHA will be making more changes in the future. Go to “FHA to Tighten Lending Standards, Increase Fees” for more information.

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Local Market Reports, 4th Quarter - National Association of Realtors

The National Association of Realtors has just released their Local Market Reports for the 4th Quarter of 2009 for the largest metropolitan housing markets across the US. This report details information such as median home prices, home sale growth, construction, affordability and more and compares it to historical data and national averages.

There is a lot of interesting information in the reports - below is the report for Chicago:


Click here to download the PDF.

Click here to go to NAR's website to see the Local Market Reports for all markets.

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Homebuyer Tax Credit Deadline is April 30, 2010

Time is Running Out - Only 45 days left!

If you are looking to take advantage of the homebuyer tax credits, you only have 45 days to go. In order to qualify, you must have an accepted contract dated on or before April 30, 2010 and you must close on the sale on or before June 30, 2010.

For the latest information on the tax credits, see my previous post: Congress Extends/Expands Home Buyer Tax Credit

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