Fannie Mae and Freddie Mac launched their new mortgage guidelines that went into effect last December 1st, now requiring a much lower down payment. From the previous 5% to 3% in what lenders hope will be a good kick start from a sluggish housing market that we have seen lately.
Now the brain trust at WalletHub has released its 2014 Mortgage Insurance Report to help low-down-payment home buyers save up to $12,000 on their decision between a Federal Housing Administration loan and private mortgage insurance.
On the other hand FHA premiums, unlike private mortgage insurance, continue to be assessed throughout the life of a loan, even if the loan to value ratio drops below 80%. This creates a huge cost disparities over time, between private mortgage and the FHA option.
New mortgage guidelines are expected to significantly increase the availability of more new purchases.
Mortgage rates are historically low, and many owners have the opportunity to take advantage, but not all owners pay close attention to these numbers.
You have the opportunity to investigate the possibility of refinancing through HARP or stream line if your loan is FHA to take advantage of the historic rates.
You can analyze what financial options give you the best interest rate and most convenient terms according to your personal situation, and you do this by comparing these rates from various financial institutions through the Good Faith Estimate. This simple action prompts banks to be more competitive and offer rates lower while they.
Mortgage rates are closely linked to the action of the Federal Reserve – Fed and the economy, so it’s important that you analyze your financial situation to see if you could take advantage of the today historic rates, before they take off.
Let me explain with numbers in this example:
Balance of mortgage: $ 200,000 –
§ Interest @6.5% Monthly Payment $ 1,440.
§ Interest @3.75% Monthly Payment $ 1,014.
§ Total Savings Monthly $ 426.
§ Total Savings Per Year $5,112.
§ 30 Years Total Savings $153.360.
Check your mortgage payments, interest rate, balance and the pending term of the life on your loan, so you can determine if refinancing is best for you. The Government Program HARP that does not require evaluation of the value of the property, conventional and FHA Streamline Refinance are great choices to consider allowing substantial savings.
The Federal Housing Finance Agency (FHFA) indicated in its report on foreclosure prevention for Q2 2014 released on September 24, that Fannie Mae and Freddie Mac prevented nearly 80,000 foreclosures nationwide in the second quarter, raising the total number of foreclosures prevented since the start of the conservatorship in September 2008 to 3.3 million.
The measures taken by the two GSEs to prevent foreclosures have helped about 2.7 million borrowers remain in their homes in the last six years, with approximately 1.7 million of those borrowers receiving permanent loan modifications. The number of foreclosures prevented is down 10 percent from Q1, when GSE measures stopped almost 89,000 foreclosures.
FHFA reports as well that about 37 percent of those who received permanent loan modifications were able to reduce their monthly payments by more than 30 percent in second quarter.
Paying a mortgage is cheaper than paying rent. But owning a home costs more. The never ending debate…Is better to buy or rent? This could be answered only after considering all of the expenses that contribute to homeownership.
The Bureau of Labor Statistics (BLS) says it’s cheaper to own. It has become less expensive to own. From 2009 to 2012, fueled by falling interest rates, homeownership has become more affordable, while renters saw costs go in the opposite direction, according to the BLS.
A recent report by Zillow found that current U.S. home buyers can expect to pay 15.3% of their incomes to a mortgage on the typical home – down considerably from the 22.1% of income homeowners had to budget in the pre-bubble years but renters pay today over 29.5% of their income to rent, compared to 24.9% in the pre-bubble period.
The main reason for the budget disparity is the income gap between owners and renters. At the end of the second quarter, the Census Bureau reported the median annual income in the U.S. was $53,216. But among homeowners, median salaries were $65,514 per year, while the typical renter’s income was just $31,888.
There has never been a better time to buy a home; the advantage is on the buyer side. Buying is cheaper than renting in most markets. More people want to be homeowners, even younger buyers. A recent Fannie Mae survey of younger renters and buyers finds out that younger renters prefer owning. They don’t want to be renters – 90% would prefer to be homeowners.
Mortgage rates have dropped across all loan types including FHA loans, USDA loans, VA loans, and conventional loans backed by Fannie Mae and Freddie Mac, and 30-year rates are at their best levels of 2014.
Inventory is down but so is the buyer pool. That means prices may be coming down. You may well have less competition for homes right now, especially if you’re in the ultra-competitive first time buyer market. This means that your chances of finding a home—and getting it for the right price—look good.
Credit and affordability issues remain. If you are financially and emotionally prepared, it makes sense to write a check list of what you need to get approved for a mortgage; order your credit reports; get your FICO score; pay stubs and bank statements; shop for the best mortgage rates; cobble together a down payment; meet with your choice of lender, and find out what your monthly payments will be for the home of your dreams, then GO for it!
A recent report revising the waiting periods for distressed borrowers with a derogatory credit event such as a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure on their credit history to obtain a new loan has been released by Fannie Mae. This revised statement reduces the waiting period up to two years for borrowers with a short sale or deed-in-lieu of foreclosure on their record if there are extenuating circumstances that borrowers can prove.
According to Fannie Mae, extenuating circumstances are defined as “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.”
If a borrower has a foreclosure on his or her credit record, the new minimum waiting period is seven years. Under extenuating circumstances, that period is shortened to three years with some additional requirements for up to seven years. For those with a bankruptcy the waiting period is four years but two years with extenuating circumstances from the discharge date.
Fannie Mae said in the report that it is “focused on helping lenders to provide access to mortgages for creditworthy borrowers while supporting sustainable homeownership” and that the new policy “provides opportunities for borrowers to obtain a loan to Fannie Mae’s maximum LTV (loan-to-value) sooner after the Pre-foreclosure, Short Sale or DIL.”
Un reciente informe en la revisión de los períodos de espera para prestatarios afectados por la crisis hipotecaria fueron ampliados. Fannie Mae redujo el periodo de espera de hasta dos años para aquellos prestatarios que por circunstancias atenuantes vieron sus créditos afectados como resultado de una ejecución hipotecaria, bancarrota, venta corta o escritura en lugar de ejecución hipotecaria.
Según Fannie Mae, circunstancias atenuantes son definidas como eventos no recurrentes que estuvieron fuera del control del prestatario, resultando en una reducción repentina, significativa y prolongada de sus ingresos o en un aumento catastrófico de sus obligaciones financieras.
Si el prestatario tiene una ejecución hipotecaria en su historial de crédito, el nuevo período de espera mínima es de siete años, pero bajo esta nueva política, este período se reduce a tres años. Para propietarios que se declararon en bancarrota, con circunstancias atenuantes el periodo de espera son de dos años desde la fecha del descargo.
Fannie Mae dijo que esta nueva política brinda facilidad a los prestamistas para que estos puedan proporcionar simultáneamente acceso a hipotecas asequibles para prestatarios ofreciendo más oportunidades en obtener un préstamo de Fannie Mae en corto plazo.
The FHA has allowed for a long time lenders to charge borrowers a full month of interest when they sell or refinance a home regardless from the closing date.
However, Thanks to a policy switch that was recently made final, charging extra interest payments on loans insured by the Federal Housing Administration will soon be banned.
The FHA has served as a major source of financing for moderate-income first-time buyers allowed lenders to charge borrowers a full month of interest when they sell or refinance a home.
New FHA mortgages will require lenders now to collect interest only on the balance remaining on the date of closing for a home sale or refinancing.
Under the revised policy, if you’re selling your home and you have a balance left on your FHA loan, the lender will have to stop charging you interest on the date of the closing, not compute the interest charges that would be due through the end of the month and roll them into your bottom line.
These changes will make the FHAnow more attractive to borrowers and remain as the go-to choice if you have as low as 3.5 percent down payment on a purchase of a home.