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How to buy a house with a Reverse Mortgage

Using a reverse mortgage to purchase a new home.

We’ve helped dozens of home-buyers move to a more comfortable home or closer to family and friends using this incredible FHA insured loan program available only to homeowners and home-buyers age 62 or older.  Watch this 3 minute video to see how it works.  Visit the Reverse Purchase page for more information.

Federal Housing Finance Agency Reports Mortgage Interest Rates

FHFA LogoWashington, DC – The Federal Housing Finance Agency (FHFA) today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 3.90 percent based on loans closed in March. Beginning in March, FHFA is calculating interest rates using un-weighted survey data. There was a decrease of 0.18 percent from the previous month. The complete Contract Rate series can be found at http://www.fhfa.gov/Default.aspx?Page=251.

 

The full press release is available here: http://www.fhfa.gov/webfiles/23913/Apr%20MIRS%20Apr%202012%20final.pdf

Fannie Tells Lenders to Get Microscope

Fannie Mae Loan Quality Initiative

Fannie Mae (FNMA) released an update earlier this month that will make committing loan fraud even tougher.  Under the new guidelines, lenders will be required to dig a little deeper when verifying a borrowers identity, credit information and occupancy of the subject property. 

Following is a summary of the changes that will impact most of us:

  • Verification of each borrowers Social Security Number
    Lenders must now verify each borrowers Social Security number with the Social Security Administration (SSA).  If your SSN can’t be verified with the SSA your loan won’t be eligible for a Fannie Mae loan.
  • Verification that all parties involved in the transaction are not on “the list”
    Lenders must now verify for every transaction that all parties (Lender, Loan Officer, Real Estate Agent, Real Estate Company, Appraiser and Appraisal Company) are NOT on the HUD or GSA excluded list.  Offenders are essentially being removed from participation in any part of the transaction. 
  • Occupancy Verification
    Borrowers with multiple properties and/or conflicting addresses will be required to provide sufficient documentation to justify the new transaction.  This has been a particular issue in instances where a borrower is purchasing as a primary residence a property with lesser value than the current residence.
  • Undisclosed Liabilities
    All credit inquiries UP TO THE DAY OF CLOSING must be addressed and all debts must be disclosed on the final application.  Borrowers that apply for other credit during the loan process (for example to buy appliances) will most certainly face closing delays.

It is fully expected that these measures will be adopted industry wide to include other loan types.  Borrowers should be forwarned that the government is putting significant pressure on lenders to report instances of fraud to the appropriate authority.  Omission of a material fact is fraud.  

Implementation of the new guidelines will occur over the next several months.

8,004 reasons now is a good time to buy a house

Is real estate at the bottom?  Will rates ever be lower? Will you ever be able to qualify for a loan again?  I don’t know the answer to any of those questions.  There certainly may be a better time to buy a house but lets look at whether this is a GOOD time to buy (or maybe even really good).  Here are my reasons 1 – 8004 that now is a really good time to buy a house.   

Reason Numbers 1 – 8,000:  Cold Hard Cash

Our government wants you to buy a house so much they are going to give you up to $8,000 if you are under a contract by April 30th to buy a primary residence and close by June 30th.  As long as you meet those deadlines you will qualify for tax credits of up to $8,000 (for first time buyers or $6,500 for repeat buyers).  This is a tax CREDIT not a deduction.  The $8,000 is a direct reduction of the income tax you pay so it goes directly back in your pocket!  $8,000 in cold hard cash is yours for the taking.

Reason Number 8001: Really, Really Low Mortgage Rates

Ok, so this song sounds familiar but fortunately this is a good thing for you.  While not at absolute rock bottom, fixed rate mortgage rates are unbelievably low.  According to financial publisher HSH Associates, Nationally 30yr fixed rates averaged just under 5.5% for January 2010 while 15 year fixed rates dipped to 4.9%.  The likelihood of us seeing higher rates in the next few months is much higher than it is for them to drop further.  An increase of just 1/2% on a $300,000 loan means nearly $100.00 /mo increase in your monthly payment.  

Reason 8,002: Procrastinators will pay more in loan fees

As I mentioned in an earlier post, FHA is increasing the cost of its mortgage insurance by 1/2% to 2.25% for all loan case numbers issued on or after April 5th 2010.  That’s an extra $1,500 in up front cost on a $300,000 loan just for waiting.  There is no reduction for first time buyers. 

Reason 8,003: You may not get a loan later… really

According to the Wall Street Journal, Fannie Mae and Freddie Mac are stuck with about $300 billion in loans that are 90 or more days delinquent and they have unleashed armies of auditors to sift through files looking for underwriting flaws so they can force lenders to buy those loans back.  As lenders face increased loan buybacks, guidelines will continue to tighten.  Average credit scores for loans backed by Fannie and Freddie jumped 40 points from 720 just two years ago to a current level of 760.  What do you think happened to the people with scores in the lower range?  The answer is simple, they didn’t get loans.

Reason Number 8004: Great Deals are happening all around you

I’m going to keep this part simple.  There are some amazing deals to be had out there.  statistically speaking, home prices are beginning to stabilize in many parts of the country and buyers with a bit of patience remain in the driver’s seat when it comes to negotiating a great deal. 

What to do next?

  1. Gather all your financial information (w2’s, paystubs, bank statements, etc)
  2. Meet with lender (I am happy to recommend one) to get started with your loan approval
  3. Find a great agent that will help guide you through the negotiating and paperwork (can recommend one here as well)
  4. Make your best deal
  5. Figure out how to spend your $8,000 tax credit

HUD Takes Action… Issues waiver on 90 day transfer prohibition

Following is the text of HUD Press Release 10-011 dated Friday, January 15, 2010

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes. Continue reading

Mortgage Rates hit 38yr Low… but can you get one?

Mortgage rates hit 38 year low!

The Wall Street Journal is reporting today that mortgage rates “generally” fell this week to the lowest level in 38 years according to the most recent Freddie Mac Survey after falling for the 5th straight week in a row.  Clearly this is great news for homeowners and home buyers but the question is, with today’s more stringent underwriting guidelines… will you qualify and can you get the lowest rate? Continue reading

The song remains the same…

Good news for Consumers… Maximum Loan Limits for 2010 unchanged from 2009 levels.

The Federal Housing Finance Agency (FHFA) announced on November 12 it would be leaving the temporary conforming loan limits for 2009 unchanged for 2010.

The News Release can be found HERE

Credit Check Nightmare…

Your information is a hot commodity

Having credit checked is an important and necessary step in the home buying process. But very few people realize that each time their credit is checked, the “inquiry data” that the credit bureaus (Equifax, TransUnion, Innovis or Experian) have on file have now become a commodity. This information is being sold by the credit bureaus to other lenders…and also to companies that sell and resell the same names and personal information.

That’s right – the credit bureaus have found a way to increase their revenues at your expense….and without your permission.

These “inquiry leads” include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing personal, confidential information to competing creditors…and making millions. Your privacy is being sold, not just once, but over and over again.

And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously “passed on” the information to them, because they knew that they’d be able to offer much better interest rates and terms. Ouch!

Just Say “No”

The consumer credit reporting industry has provided a way to “opt out” and remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period – at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.

The good news is by opting-out you can make it stop right away and protect yourself from “pre-approved credit offers” arriving via mail, which is one of the leading causes of identity theft in the US.

Take Your Privacy Back.  Take five minutes right now – opt out, and pass it on. Refuse to be a part of this system.

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