My Mind on Mortgages » First-Time Homebuyer

What are FHA minimum property requirements?

Evan — Mon, 09 Apr 2012 21:07:32 +0000

Homes that are the subject of a FHA mortgage application must meet minimum property requirements as determined by the Department of Housing and Urban Development (“HUD”: the agency which oversees the FHA mortgage insurance program). I am often asked if specific repairs will be required by the lender when a FHA loan is in play.

The guidelines are actually easily accessible so I thought I would post them here. If you are a realtor I would encourage you to read chapter 3 of HUD handbook 4150.2 which you can access HERE and chapter 2 of HUD handbook 4905.1 which you can access HERE.

Since underwriters don’t make visible inspections of homes they reply on the appraiser to inspect the home and highlight any “lender required repairs”.

FHA to raise mortgage insurance premiums…again

Evan — Tue, 28 Feb 2012 17:24:08 +0000

The Federal Housing Administration announced that it would increase the mortgage insurance premiums for FHA mortgages beginning April 1st, 2012. Here is the announcement copied from the FHA website:

“…FHA announced a new premium structure for FHA-insured single family mortgages: as of this spring, the annual mortgage insurance premium (MIP) will increase by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount; and upfront premiums (UFMIP) will increase by 0.75 percent…these changes would have a minimal effect on homeowners.“

Currently, borrowers who opt for a FHA 30-year fixed rate putting the minimum 3.5% down payment finance an upfront mortgage insurance premium equal to 1% of their loan and then pay monthly mortgage insurance based on a 1.15% annualized premium. Under the new structure the upfront mortgage insurance premium will increase to 1.75% (+.75%) and the annualized premium used to determine the monthly mortgage insurance payments will increase to 1.25% (+.10%).

How do these changes impact mortgage payments? Here is a chart comparing the new and old structures based on a $200,000 purchase price, 3.5% down payment, for a 3.75% FHA fixed rate:

Congress restores FHA loan limits

Evan — Mon, 21 Nov 2011 20:48:26 +0000

Congress approved an appropriations bill that amongst other things restores the FHA loan limits that have been in place the past 2 years and extends them through 2013. For the Portland-Metro area this means the maximum FHA loan amount goes back to $417,000. If you’d like to check another location you can do so at THIS LINK.

FHA loan limits decrease as of October 1st, 2011

Evan — Tue, 11 Oct 2011 15:57:26 +0000

Sorry for the late post on this topic. As of October 1st, 2011 FHA loan limits for most areas of the country have declined as a result of expiration of stimulus legislation. Currently, the FHA loan limit for a single family residence in the Tri-county area (Portland, OR) is $362,250. This figure can adjust as of Janaury 1st, 2012 but barring any new legislation I wouldn’t expect it to. You can use THIS LINK to check the FHA loan limits for other areas.

Are you looking for homebuyer assistance in PDX-Metro area?

Evan — Mon, 01 Aug 2011 17:40:41 +0000

In my interactions with first-time homebuyers I am often asked about special assistance programs that may be available for them. I recently came across the HOMEOWNERSHIP OPPORTUNITIES WEBSITE NORTHWEST which provides a search tool where you can plug in information about yourself and see what programs might be available to you. It’s an easy way to do research on the various types of programs that are available.

Prudent advice for aspiring 1st time home-buyers

Evan — Fri, 10 Jun 2011 15:12:11 +0000

The financial blog couplemoney.com gave very prudent advice in THIS POST for aspiring 1st-time home-buyers. They recommend taking a breath before jumping into a house and making sure that the home-buyer is both financially and emotionally ready for this level of commitment. What I also love about the post is that they recommend a home-buyer take into account their other financial goals (i.e. retirement, debt reduction, etc.) before committing to a house because “lenders and real estate agents don’t figure this into their calculations.“ This is exactly why I chose to pursue the CERTIFIED FINANCIAL PLANNER™ designation: so I can help applicants take these other objectives into account. Here is good excerpt from the post:

*“I will say up front that I don’t think home ownership isn’t for everyone. If you’re not willing to put in the legwork and run the numbers, it can be a huge financial and emotional burden. If you’re really intent on buying a home, taking the time to get a financial plan in order can be a huge step in helping you reach your goal. It can also provide you a way to make home ownership a relatively enjoyable experience.”

FHA mortgage insurance premiums on the rise…again

Evan — Thu, 03 Mar 2011 23:43:57 +0000

You may remember that HUD increased monthly mortgage insurance premiums on FHA loans last year in an effort to shore up finances for the FHA insurance poll. Unfortunately, HUD is at it again. Beginning with FHA case numbers assigned after April 17, 2011 monthly mortgage insurance premiums will be going up .25% for 30 year mortgages and .50% for 15 year mortgages. HERE is a link to download the mortgagee letter in case you want to read the news directly from the source.

What does this mean for homebuyers? It means monthly payments will rise. On a hypothetical purchase of a home for $215,000 the total monthly “PITI+MI” payment would increase from $1,509 to $1,552; an increase of $43 per month.

To avoid this change homebuyers would have to be in contract to buy a home a couple days before April 17th so that the lender could register the loan with HUD prior to the change. The upfront mortgage insurance premium that gets financed into the loan amount would remain unchanged at 1.00%.

Mortgage Loan Limits: FHA & Conforming

Evan — Tue, 11 Jan 2011 19:00:39 +0000

In case you want to find a FHA or conforming loan limit for a specific area around the country you can use THIS HANDY WEBSITE from HUD.gov.

HUD announces increase to mortgage insurance for FHA loans

Evan — Mon, 09 Aug 2010 16:05:11 +0000

The Department of Housing and Urban Development released THIS STATEMENT last week announcing upcoming changes to the popular FHA loan program. The changes will take effect September 7th October 4th and are designed to increase mortgage insurance revenue to help stabilize the FHA insurance pool which makes FHA loans possible. Effectively, HUD is decreasing the upfront mortgage insurance premiums (currently 2.25%) by 125 basis points (1.00%) but increasing the monthly mortgage insurance by 35 basis points (from .50-.55% to .85%-.90%). The change will increase monthly payments and decrease affordability. Here is the impact per $100,000 in loan amount:

Current MI arrangement for >95% loan-to-value per $100,000

Loan Amount: $100,000

Upfront Mortgage Insurance Premium (2.25%): $2,250

Total Loan Amount: $102,250

Monthly Mortgage Insurance Premium (.55%): $45.83

Monthly Principal & Interest + Mortgage Insurance @ 4.50%: $563.92 (does not include property taxes or homeowner’s insurance)

New MI arrangement for >95% loan-to-value per $100,000 as of September 7 October 4th, 2010

Loan Amount: $100,000

Upfront Mortgage Insurance Premium (1.00%): $1,000

Total Loan Amount: $101,000

Monthly Mortgage Insurance Premium (.90%): $75.00

Monthly Principal & Interest + Mortgage Insurance @ 4.50%: $586.75 (an increase of 4.05%-does not include property taxes or homeowner’s insurance)

See the spreadsheet HERE.

Close date for homebuyer credit is extended

Evan — Thu, 17 Jun 2010 01:45:07 +0000

Homebuyers with bad lenders just got a break. Congress has passed an extension provision to the popular homebuyer credit. Now homebuyers who qualify under the other rules (including going into contract by April 20, 2010) have until the end of September to close.