FHA Announces Change to Mortgage Insurance

In a move to bolster the Mutual Mortgage Insurance Fund (MMI), FHA has announced an increase to the annual mortgage insurance premium paid by borrowers with FHA-insured mortgages. While the Up-front Mortgage Insurance Premium will remain unchanged at 1.0%, the annual Mortgage Insurance Premium will increase from 1.0% to 1.25%. The increase will amount to a monthly payment increase of $20.84 for a $100,000 mortgage and an increase of $41.66 for a $200,000 mortgage.

At the end of 2010, the MMI had reserves of $3.6 Billion – well below the minimum requirement. The increases are expected to bring an additional $3 Billion into the MMI annually, based upon the current projections.

"After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA's capital reserves and help private capital return to the housing market," says FHA Commissioner David H. Stevens. "This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost-effective mortgage insurance option for borrowers with lower incomes and lower down payments."

The changes to the annual mortgage insurance premium will take effect with all loans insured after April 18, 2011.

Baca selengkapnya »

Fannie Mae Announces Changes to LLPAs

What is an LLPA?

LLPA stands for Loan Level Pricing Adjustment. An LLPA is an additional fee on top of any points and closing costs paid for a mortgage based upon the Loan to Value Ratio (LTV) and the borrowers’ credit score. So, the higher the LTV and lower the credit score the more you will have to pay for a mortgage. This can take the form of additional points and/or higher rates. LLPAs are risk-based adjustments to the cost of a mortgage (e.g. rates and points).

Effective with loan locked on or after January 18, 2011, loan level price adjustments (LLPAs) will change as outlined below. This is in response to recent Fannie Mae changes.

Changes have been made to:
• LLPAs by Credit Score/LTV
• LLPAs for Subordinate Financing
• LLPAs remain the same for DU Refi Plus



For the first time, the LLPAs for some LTV/Credit score combinations are actually lower. This is in response to higher quality loans being delivered to Fannie Mae and Freddie Mac, the Government Sponsored Entities (GSEs) that own most conforming mortgages in the country.

For information on LLPAs for programs or property types not listed here, please contact me at BarkerLoans@gmail.com or 708-473-7688.

Baca selengkapnya »

Why Do I Have 3 Different Credit Scores?

I get this question from customers all the time. Mortgage lenders typically pull credit reports from the 3 main credit repositories – Transunion, Equifax, and Experian. All three of these repositories generate a credit score, which is a numerical representation of your credit history. While the exact formula for computing these scores is a trade secret, we know that your credit score is affected by your payment history, amount of credit available, amount of credit used, and any collections and/or judgments against you.

But why wouldn’t they all have the same score for the same borrower? There are many reasons the scores may differ, but the main ones are:

1. Not all creditors and lenders report to all 3 credit repositories. So, the three repositories do not all have exactly the same information



2. Creditors report to the repositories at different times. Your balance with ABC credit card may be different at the 3 repositories because one may not reflect the last payment or purchase you made on your account and another may.



3. There are several different scoring models that are used. In fact, each repository uses different scoring models depending on the purpose of the score or the requirements of the creditor/lender. So, different models will analyze your credit data differently and give you a different score.

This is why most mortgage lenders pull credit reports from all 3 repositories and use the middle score. By using the middle score, lenders are attempting to get as accurate a credit profile as they can for their customers.

What can I do to improve my credit score?
First, and most importantly, use credit wisely. Do not over extend yourself with credit and always make your payments on time.

Second, the amount of credit you use should be as small a percentage of your available credit as possible. For example, if you have $10,000 of available credit, your score will be higher is you are only using $500 of that available credit than if you are using $7,000 of it.

Third, make sure you know what is on your credit report. The Fair and Accurate Credit Transaction Act of 2003 (FACTA) allows a consumer to request a copy of their credit report, free of charge, from all 3 repositories. To learn how to obtain your free credit report, and for other reasons to monitor your credit, read my blog article, FREE Credit Reports.

For more information or help with your credit, please contact me at BarkerLoans@gmail.com or 708.473.7688.

Baca selengkapnya »

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.

Baca selengkapnya »

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)

Baca selengkapnya »

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

Baca selengkapnya »

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

Baca selengkapnya »