FHA Proposed Changes

Currently FHA has an open comment period on considering changing some of the basic parameters for it’s mortgage loans.  For one, they are considering reducing the amount seller’s contribute to closing costs (seller’s concession) to 3% which would mean buyers would need to come up with the remaining monetary amount of these funds.  Additionally, enforcing credit score minimums of 500 to 580 depending on the loan to value ratio is also being considered.  The comment period runs through August 12th.  Any changes will likely not go into effect until October of 2010.

We’ll keep you posted on any changes we hear along the way.

For those of you looking to purchase a home with a USDA loan, the funds are now back and ready for your use.  The funding fee has increased to 3.5% until further notice.

If a loan was not already granted a conditional commitment at two percent it will need to be updated with the 3.5% funding fee as well.

Give us a call at 770-606-0054 if we can help find a home that will work for you!

Monies Needed in a Real Estate Transaction

Although every situation is different, there are a few common out of pocket costs associated with buying real estate.  While this is not an exhaustive list, we hope it will help you as you prepare to buy a home.

Most sellers require an earnest money check, typically between $500 and $1000 depending on the cost of the home, in order to show you are a serious buyer.  Additionally, in order to have peace of mind about the investment your are making, you’ll likey want to have a home inspection and termite letter done on the property.  Home inspections usually run anywhere between $350 and $400 while termite inspections are about $45-$75. 

Lenders have their own requirements as well.  An appraisal will need to be done on the home which is usually around $350.  Additionally, a credit report will be required for $75 in order to qualify you for the loan. 

Beyond these expenses, a good faith estimate will be performed by your lender which will detail all of the costs around the purchase of the home you desire.  Most of these costs are included in the closing costs and will be part of the final price tag on the home you buy.

Please don’t hesitate to give us a call if you have any questions regarding this transaction.  We work in this business everyday and keep up with the changes in our market to know what costs you can expect.

FHA Mortgage Insurance Premium Changes

April 5th marks the day that the government is increasing the FHA upfront mortgage insurance premium to 2.25%.   

For an average $150,000 loan, this means another $750 for the mortgage insurance premium!

Additionally, we’ve learned that now FHA has a legislative change pending in Congress that would provide FHA with the authority to increase the annual premium to as high as 1.55%.  This rate will be based on your credit score, so that is another great reason to work on improving your score today.

Once enacted, FHA has said that they will lower the upfront premium to approximately 1% and increase the annual premium to about .9%. 

The estimated timeline for the change in the annual premium is set to be passed in the next 3-6 months and implemented later this year.  Keep on the lookout for more information regarding this ever-changing plan. 

 Post contributed by Shane Siniard with WR Starkey Mortgage

With the information age we live in today, more and more people are becoming victims of identity theft.  Now more than ever it is important to protect your personal information so you don’t become a victim of identity theft and run the risk of ruining your credit score and potentially lose your chances of qualifying for a loan.  This article by Aleksandra Todorova tells the story of one victim of identity theft and provides several prevention steps you can take to help protect your identity.

For many, putting a monitoring service on your credit may be just the ticket to keep you safe.  However, as Aleksandra states, even this step may not be enough to protect your personal information.  Ultimately the responsibility to protect yourself falls on you, even though there are private companies and other initiatives offering you help.   Do your research today to be sure your credit is protected!

The appraisal process often baffles and angers consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn’t always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be compared in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa/hot tub, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $25,000, but the local marketplace supports the value of a pool at $8,000, then that item will be compared as [$8,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months to a year. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

New FHA Appraisal Mandate

Value on a home as provided by a certified real estate appraiser in a written report is critical to a mortgage loan.  Effective February 15^th, a change in FHA appraisals takes place.  Essentially FHA has implemented the same rule as FannieMae and FreddieMac, which are conventional loan agencies.  FHA is a government agency.  Prior to this new FHA mandate a lender could order an FHA appraisal from a certified FHA appraiser of their choice, who typically was someone with whom they had an established relationship.  Not anymore.  Beginning Monday the 15^th, all FHA appraisals must be ordered from an entity, an independent company, who maintains a roster of appraisers approved and certified by FHA. This mandate by FHA affects all lenders nationwide.  Failure to adhere and comply with this mandate will result in administrative sanctions, something no lender originating government loans wants to have happen.

HUD, and therefore FHA’s intention, is appraiser independence from any influence pertaining to value, condition of the property, etc. In order to ensure appraiser independence, lenders who are FHA approved are prohibited from compensating, choosing, or even retaining an FHA roster appraiser.  Even substantive communication between the lender and appraiser is no longer acceptable in order to avoid conflict of interest or even the appearance of such. The intent is to prevent a lender’s influence on an appraiser which could have an impact on valuation of a home. Because mortgage lenders are typically compensated based on production, and an appraisal report is essential to loan approval, FHA has begun to use these safeguards in an effort to protect the integrity of the loan collateral.

Those of us in the residential real estate industry have seen significant changes in the last year and a half.  This is yet another change, and while it sounds daunting compared to what we’ve been used to, it remains to be seen if it creates obstacles.  My expectation is we’ll likely be assigned appraisers we already know and who understand how to help us work though any issues, just as they always have.  Some turbulence is to be expected and I will continue to always be here for you to work through any appraisal problems we encounter.

Post submitted by Rena Rogers with Pine State Mortgage, (770) 387-4504

Bartow County Real Estate Market Conditions-Days on market decreases while number of homes under contract increases

While the verdict is still out on the overall implications of real estate in 2009, for Bartow County we know a few things.

For one, from January 2009 to January 2010, the average number of days a house stayed on the market reduced from 104 days to 98 days which is a 6% drop.  This is good news for those homeowners currently considering listing their homes.  While 6 days may not seem like a huge decline, it is likely the start of a trend that will take the real estate market back to the seller’s corner.

Additionally, although there are 12% fewer homes for sale from January a year ago (1698 in Jan. 2009 to 1501 in Jan. 2010), the number under contract has increased 88% from 50 in Jan. 2009 to 83 in Jan. 2010.  This shows the buyers market we are currently in that will hopefully get those waiting for homes to sell moving.

If you are thinking of buying a home, right now is the perfect time.  With the ever so slowly stabilizing economy we’re in, we never know how long good interest rates and great deals on homes may be around.  Give us a call to see if we can help you with any of your Bartow County real estate needs.

Now might be the best time to lock in a low mortgage rate

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer.  While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5%, the time just might be now or never (or at least for a very long time).  This past week, the first week in January, the average 30 year fixed mortgage rate was 5.09%.  The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates.  If you want to refinance or purchase real estate, now is definitely the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

As you can see in the graph below, the median home price for sold homes in the last six months decreased by about $15,000.  While that is a loss of about 12% on the amount the homes sold for, we also have to look at the seasonal pattern of real estate that is depicted in this graph.  During the summer months, homes sold for more than in the winter.  Usually there are more homes on the market in the summer and more people are ready to move then.  So, don’t be discouraged by this downward shift.  As we pay attention over the next few months, as we head into Spring I’m sure those numbers will start to climb once again.