In any event, the fourth quarter this year will be a time of change for lending. The first of these changes occurs today. Those who have been in the real estate industry pre-2008 probably remember a mortgage loan called "My Community." My Community is a conventional mortgage that is a great alternative to FHA. In it's original format, My Community was 100% financing. Since the rate of foreclosures on properties that had little or no down payments was higher than other types of loans, My Community is not back in its 100% configuration. However it is back as a 5% down loan. The 5% can be a gift from a family member. How does this differ from a normal 5% down loan, you may ask? I would be pleased to answer - - the good news about My Community is that the mortgage insurance premium is significantly lower than either FHA or conventional lending. And just as is the case with conventional lending the MI does fall off the loan once a 78% equity position has been achieved. An FHA loan requires the mortgage insurance to remain on the loan for the life of the loan. Blech!
My Community does have an income cap like USDA, but unlike USDA the income cap is only for the borrower not the entire household. In our area the cap is generous - - around $61,000 for those who reside in Tippecanoe and contiguous counties.
The next change on the horizon happens on October 1st and it has to do with USDA. The monthly mortgage insurance premium will go up to a .50 factor of the loan amount. So a $100,000 mortgage will be assessed $41.67 per month in mortgage insurance as compared to the .40 percent ($33.33) that has been charged on the same $100,000 mortgage.
The second change having to do with USDA is that the current maps of eligible areas are changing October 1. USDA property eligibility is based upon population density. USDA has finally gotten the 2010 census integrated into their system and will be shifting boundaries based on those numbers. So beware, what once was an eligible area may no longer be. If you currently have a USDA mortgage and are thinking of refinancing, where you are located has no bearing on your ability to refinance. However your income is still a qualifying factor. But, if you do still qualify income wise, USDA has a great streamline refinance that allows you to roll closing costs in, but does not require an appraisal. So for anyone that has an old USDA loan out there at 5.5% or more, you are a prime candidate for a streamline refinance as the current USDA rates are 4.0-4.50 depending on credit, loan size etc.
simonfamilyjcc.org
Coming soon to a Tippecanoe Mortgage Branch near you another oldie but goodie (drum roll please)
azerotheanlife.com
DOWN CONVENTIONAL LOANTHE 3% ! You can see by the fact that I have written this in read and in bold type that I am very partial to this loan. Once again we have an alternative to FHA that features a lower down payment than FHA. I am not sure when this one will be available again but I am told prior to the end of the year.
USDA is proposed to go to a new underwriting system typical of the manner in which FHA loans are underwritten - - by the lender. If the lender approves the loan, it is ready to close. Currently USDA loans have to be underwritten and then double checked by USDA to ensure that their guidelines were met by the lender. A bit of duplication of effort, department of the redundancy department I 'd say, not to mention that the check off by USDA creates a backlog of loans. (currently 760 loans in Indiana are waiting for USDA to stamp them approved which translates to a wait time of 32 business days) FHA uses a system which certifies underwriters to underwrite to FHA rules and that is that. If an underwriter messes up and the lender has to take back too many loans - -the underwriter won't retain their job long. Therein lies the control on the FHA system. So, the USDA is supposed to be going to a similar system this November. It does involve and act of Congress, and you know how that's going lately.
And as further proof of change, lenders are becoming more tolerant of lower credit scores. Up until the fall of last year purchasing a home with a score under 640 was an impossible task. FHA allowed it but the first challenge was finding a lender who would underwrite the loan. We began seeing a thaw in that ice, however, it was a tortuous, difficult, frustrating route to closing. This fall we are seeing more lenders say they will consider lower scores, but the process is still extremely difficult. We have been fortunate to affiliate with a lender that will do these lower score FHA and VA loans without demanding an arm, a leg, rights to the first male child and a DNA sample from our borrowers. Our files have been moving through their system with little problem. Many people have lower scores due to past medical issues, or loss of job credit hangover from several years ago. These folks are prime candidates for this lender.
thabto.wordpress.com
It is true, the more things change the more they stay the same, repackaged and reconfigured, perhaps, but more opportunities for more people to buy homes. I'll drink to that!
fineartamerican.com
HAVE A GREAT WEEKEND!
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