Gulf Shores Real Estate
From your FHA Resource: Rob Smith, HMC, Inc., Fairhope, AL
Baldwin County Alabama
From your FHA Resource: Rob Smith, HMC, Inc
As a mortgage professional, one of my #1 priorities is to keep you informed with changes in the mortgage market and up to date on mortgage programs. We have all seen a shift in getting a borrower qualified for a mortgage. The shift has been made by lenders using FHA loan programs. The main reason behind this shift is due to the credit restrictions that have been placed by Fannie Mae and Freddie Mac guidelines from risk based interest rate pricing, risk based mortgage insurance premiums, and required down payments.
Many of you may not even understand what an FHA mortgage is or what it stands for, so I will give you a brief synopsis of what FHA is all about and some of the changes to FHA loan programs and how they will affect our client:
What is the Federal Housing Administration (FHA)?
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes.
The History of FHA.
Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development’s (HUD) Office of Housing in 1965. Since it was created much has changed with FHA but FHA has always been there to help Americans gain the dream of home ownership.
What is FHA Mortgage insurance?
FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.
Why does FHA Mortgage Insurance exist?
Unlike conventional loans that adhere to strict underwriting guidelines, FHA insured loans require very little cash investment (Typically 3% investment from the buyer) to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property-whichever is longer.
Now that we have an understanding of what FHA is and what FHA mortgage insurance is, here are some of the recent guideline changes we have need to be aware of and understand. For the first time in history, credit scores will be utilized in FHA lending. I encourage all of you to be aware of the guideline changes:
- Minimum credit score is 580.
- Borrowers without credit scores will require manual underwriting.
- Upfront Mortgage Insurance Premiums has been raised to 1.75% across the board.
- The Monthly Mortgage Insurance will range from .50% if LTV is < 95% and .55% if LTV is >95%.
- Credit rescoring is allowed to improve a borrower’s credit grade.
- All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
- Along with purchases, these changes apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.
We have space available for training classes:
FHA has more changes to come at the beginning of 2009 which it will increase the minimum investment from the buyer from 3% to 3.5%. I will be sending more on this as we get closer to the close of the year. It is important as in any industry to stay on top of changes and news, this is why I want to encourage you and everyone in your office to contact me for an in-depth look at what FHA has to offer. Here at HMC, Inc, we have our own conference room that can hold up to groups of 15 and as little as 3 people, so please get a group together at your office and call me direct to schedule an appointment to learn more. Training can include but is not limited to FHA appraisal requirements, how to figure mortgage insurance and a FHA Good Faith Estimate. I look forward to working with you and doing all I can to help your business grow!!
Rob Smith
Mortgage Banker
HMC, Inc
813 Estella St
Fairhope, AL 36532
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Date: Friday, October, 31st 2008 @ 10:18:05 AMViews: 156
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