If you currently have an FHA Mortgage on your home, you may qualify to save hundreds of dollars on your monthly mortgage payments.  As with the Fannie Mae and Freddie Mac programs that we have been talking about for the last few months, you may not have to have an appraisal.  In addition, this program does not have any debt to income ratio requirements.  As long as you have not had any late payments on your mortgage (more than 30 days) in the last 12 months, you may very well qualify for an FHA Streamline Refinance.

The biggest differences within this program are determined by whether or not an appraisal is done.  If you are like me, the first question that comes to mind is, “If it is not required, why would you do an appraisal?”  If you decide NOT to do a new appraisal, the new refinanced loan cannot add any of your closing costs to the new loan balance (except odd days interest).  That means that you would either have to have your closing costs covered by the lenders wholesale credit or you would have to bring money to closing.  This option is actually a great value for many borrowers.  Particularly if you feel that your home’s value has declined since you took out your last mortgage.  Rates are so good right now too that you could probably get a rate in the 4% without having to bring more than one month’s payment to the closing table.  If you choose to get a new appraisal during the loan process, you will be allowed to roll any necessary closing costs into the loans so you can maybe get a lower rate without the out of pocket expense.

The other thing to remember with FHA mortgages is the up front mortgage insurance premium.  This is the amount collected by FHA upfront and is usually rolled into the new loan. (Please note that if you choose to use the no appraisal options, this is not a cost that can be rolled in.)  The good news is that on an FHA Streamlined refinance, you will get a portion of your existing upfront mortgage insurance credited back to you.  If you have had your FHA mortgage for a short period of time, the percentage of your credit will be high and the opposite is true too.

Rates are REALLY good right now.  If you have been thinking of refinancing your current home or buying a new one, now is the time.  Let The Kunselman Team find the right mortgage to fit your needs!

Last Friday, HUD announced a new program designed to help home owners who have seen a drop in their home’s value.  We do not have all the details yet, but here is a quick summary of what was announced:

1.  Existing lender must be willing to write down/reduce the loan’s principle balance by at least 10%.

2.  The new maximum loan to value (LTV) can be no more than 97.75% of your home’s value.

3.  If you have a second mortgage, your new combined loan to value (CLTV) can be no more than 115% of your home’s value.

4.  The new first mortgage will have standard FHA mortgage insurance.

5. Maximum housing expense ratio of 31% (No more than 31% of your gross income can be going toward your housing payments.

6. Maximum total expense ratio of 50% (No more than 50% of your gross income can be going toward your housing payments, credit cards, and other loans on your credit report.

7.  You MUST be current on your mortgage payments.

8.  Minimum Credit Score of 500.

9.  This will show as a Write Down or something similar on your credit report. (This means it has some impact but probably less than a foreclosure.)

10.  You cannot already have an existing FHA loan.

Now, the thing to keep in mind with this program is that even though HUD/FHA set these new rules, each lender has their own overlays that adjust the program’s qualifying guidelines.  But if this program rolls out the way it should, the new program should help thousands of home owners who want to keep from losing their home.

If you are interested in this new program, please feel free to send us an email at service@TheKunselmanTeam.com and we will keep you informed as this program is released.  Also, keep in mind the other Making Home Affordable Programs that The Kunselman Team offers which can help many homeowners who lost equity in their home, but have managed to keep making their payments on time.

1. The $8000 first time home buyer tax credit that didn’t have to be paid back is introduced.
2. Foreclosures declined but short sales were on the rise.
3. Stated income loans went away, making it difficult for self-employed income borrowers to get a new mortgage.
4. New mortgage guidelines tightened up.
5. Large investors (unless they are cash buyers) got bumped out of the market.
6. Resurgence of the small/first-time investor.
7. Resurgence of the USDA 100% financing mortgage for rural areas.
8. The Government injected lots of capital into the mortgage backed securities keeping interest rates low.
9. The Government injects billions into the banks in the form of the TARP (Troubled Asset Relief Program) with the intent to modify existing mortgages.  The banks modify only a very small percentage of these mortgages.
10. Fannie Mae and Freddie Mac introduce the DU Refinance + and the Home Access Programs designed for home owners to refinance who initially had 20% equity when they first got their mortgage and have seen their home values decline.  Program is a moderate success.
11. Rates went up and rates went down.
12. The Home Valuation Code of Conduct (HVCC) is introduced in May.  Appraisals must now be ordered through Appraisal Management Companies (AMCs). Many reports indicate this system is very flawed and has lead to higher costs to the borrower in obtaining a new mortgage.
13. The Mortgage Disclosure Improvement Act (MDIA) is introduced in August.  It gives borrowers more information upfront before any money can be collected, but adds costly time to the mortgage process.
14. The Government extended the $8000 First Time Home Buyer Tax Credit to June ’10 and added a $6500 repeat home buyer tax credit.  Experts say there will not be any more extensions.

For those of you who have tried to get a mortgage done recently, you have probably realized that option are getting smaller and smaller. If you have a high loan to value (You owe almost as much as your home is worth) you may be limited to an FHA loan. This is a mortgage that will allow you to borrow up to 96.5% of your homes value. (Not including the upfront Mortgage Insurance Premium.) FHA is changing some rules January 1st, 2010 in an attempt to make it easier to get a n FHA mortgage, but these one of these changes could actually have the reverse affect.

Currently, HUD requires that all originators work for a broker or banker that is FHA Approved. The new rule will no longer require that a mortgage broker have this approval, instead it will shift the responsibility to the funding lender. The lender will now have sole responsibility for quality control of the loans. The intent of this new rule is to allow more mortgage brokers to be able to originate FHA mortgages. Some speculate that because of the shift in responsibility, lenders could start to have stricter guidelines as to who can originate FHA loans with them.

If the lenders start to become more restrictive than they already are, it is going to be harder to find someone to do an FHA loan that is not a bank. If you have been thinking about buying or refinancing a home with an FHA loan, it would be wise to do it before the end of the year.