3.5% down on FHA Rehab Loans

Have you ever wanted to buy a fixer upper?  Did you know FHA offers a few different types of rehabilitation loans?  The Streamline FHA is one of the most common loans available.  This allows you to add an additional $35,000 to your base mortgage to improve or upgrade your home prior to moving in. The same low down payment of 3.5% is required and a minimum Credit score of 640.  Gifts are available as well as seller credits, go here to learn more about that. Seller Concessions and Gifts.

The list below is a general outline of all the items you are able to repair, fix and even replace. 

• Repair/replace roofs, gutters and downspouts
• Repair/replace/upgrade of existing HVAC systems
• Repair/replace/upgrade of plumbing and electrical systems
• Repair/replace existing flooring
• Minor remodeling, such as, kitchens, which does not involve structural repairs
• Exterior and interior painting
• Weatherization: including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances. Appliances may include free-standing ranges, refrigerators, washers, dryers, dishwashers and microwaves
• Improvements for accessibility for person with disabilities
• Lead based paint stabilization or abatement of lead based paint hazards
• Repair/replace exterior decks, patios, porches
• Basement refinishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and or well repair or replacement
• 10% contingency reserve with a maximum of $2,500; 15% with no utilities on or foreclosed property

The FHA 203K Rehab loan is a great way to get into a home that may need a little work or a full transformation.  For more information about Rehab Loans, call or email me anytime.

Email me at Bill’s Email

call me on cell:978-273-3227

FHA to increase fees…Again!!

FHA is once again increasing mortgage insurance premiums (MIP) on all new purchase and refinance transactions. Effective for FHA loans that have been assigned on or after June 3, 2013 and in addition to this increase, the Annual Mortgage Insurance Premium will remain for the life of the loan. Meaning, you can only remove the mortgage insurance by refinancing out of the mortgage or selling the home.

FHA had just increased all its rates just over a year ago to 120 basis points (1.2% of the loan amount) of the loan amount and now it will be as high as 155 basis points. On a $100,000 loan amount, the old mortgage insurance payment would have been $100 per month; the new Mortgage Insurance payment will be $129.17. Considering just 2 years ago, the mortgage insurance premium on all FHA loans was 55 basis points (just over a half percent) and that payment on $100,000 would come to $45.83.

So even though mortgage rates have come down over the last 2 years, this increase in Mortgage Insurance has caused the cost of this loan to increase dramatically. Also with this additional cost, you can no longer have the mortgage insurance just drop off once you gain 20% of equity in the home.

Now, these may not seem like big increases to you, but for someone borrowing $400,000; this would have the Mortgage Insurance going from $183.33 to $516.67. Imagine…paying $516.67 for mortgage insurance!!

Now is the best time to get pre-approved by a qualified Loan Officer to give you several choices of mortgage programs. It is not always wise to chase to the lowest rate available without truly understanding the overall mortgage program.

Call me to find out about low down payment loans, as low as 3% with-out any mortgage insurance at all.

I can be reached at 978-273-3227 or feel free to email me at bill@billnickerson.com

FHA Streamline Refinance

Do you currently have an FHA mortgage?  And has it not made sense to refinance because of the High Mortgage Insurance Premiums?  Well, FHA just announced that it is going to reduce the Mortgage Insurance fees for current FHA mortgage holders.  But before you get excited, there are some rules to follow.

You must have taken the mortgage out prior to May 31^st 2009 and of course be current on all payments.  The Up Front Mortgage Insurance Premium will be greatly reduced and the monthly mortgage insurance is only 55 cents per thousand borrowed.  This is huge news…for the last several months; homeowners have not been able to refinance their current homes due to insurance being so high!

THE BENEFITS:

Refinance at today’s historical low rates

Refinance with NO closing costs

NO APPRAISAL REQUIRED (the term can be the lesser of 30 years or remaining term plus 12 years)

NO income verification required (we simply verify you are currently employed but not the income amount)

Restrictions include the following:  You cannot have missed a mortgage payment for at least the last 12 months.  You have to be currently employed (income is not a factor).  You must still reside in the home as your primary residence.  Other restrictions may apply. 

Last month, the Obama Administration announced a broad package of actions and legislative proposals to help responsible homeowners save thousands of dollars through refinancing. This includes the changes announced today that will benefit current FHA borrowers – particularly those whose loan value may exceed the current value of their home.  By lowering monthly mortgage costs for homeowners, FHA hopes to help more borrowers stay in their homes, thereby decreasing the potential for future defaults and reducing losses to the Mutual Mortgage Insurance (MMI) Fund.

Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages.  By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting.  FHA-insured homeowners should contact their existing lender to determine their eligibility.

June 11^th is just around the corner.  Contact me today to refinance into a lower interest rate.           

Bill Nickerson        Bill@billnickerson.com         978-399-1313

FHA to Increase Fees Once Again…

Effective April 1^st…funny April Fool’s joke….NOT!  FHA announced this past Monday that the cost of government-insured mortgages will increase slightly for some new homebuyers.  The rise in up-front fees on mortgages was deemed necessary to build up dwindling capital.

FHA is increasing what is known as the Upfront Mortgage Insurance Premium “Upfront MIP” from 1.00% of the loan amount to 1.75% of the loan amount.  This fee is added directly to the total loan along with the monthly mortgage insurance premium.

So, on a $200,000 loan amount, based on today’s rate of 1.00%, you would pay $2,000 in MIP; with the new increase of 1.75% you would be paying $3,500 to the loan amount; an increase of $1500.  Then you add in a monthly mortgage insurance premium of 1.1% per thousand which costs $183 per month.

Although the FHA’s acting commissioner, Carole Galante, states this will raise the average homeowners payment by only $5 per month, FHA consumers are already paying about $183 more a month than those consumers that don’t pay any mortgage insurance.  Such programs as the Masshousing Loan that allows a 3% down payment with no mortgage insurance can save homeowners thousands of dollars over the course of the term of the mortgage.

The FHA fees which were just raised in the last year affected current FHA holders by preventing them from refinancing to lower rates.  The increased fees have become so high; it did not make sense for many homeowners to drop their rate a full percent.  This latest move will result in much higher costs to buyers.  A mortgage rate of 4.00% will be a net rate of 5.400% when you factor in the mortgage insurance. This is a difference in $170 per month higher payment for FHA clients compared to those who may obtain the Masshousing Loan with No Mortgage Insurance

Several economists when interviewed in regards to this latest increase agreed this would have a negative impact on the already struggling housing market.  First time home buyers represent a large percentage of the market and with these additional costs it will discourage many new buyers from entering the housing market in areas that need it most.

The FHA program was designed to be a very affordable alternative for those with a low down payment and credit that was considered less than perfect.  The FHA mortgage is still a very good option for those with credit scores under 680, but new alternatives are becoming available every day and consumers should look at all their options.

When shopping for a mortgage, make sure your lender offers Masshousing, FHA, USDA, Fannie Mae and Freddie Mac, this will allow to compare all the programs available to ensure you are getting the best possible option and the most cost effective mortgage.

Please contact me with any questions you may have regarding this article:  bill@billnickerson.com