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Home Refinancing

HUD Announced an Increase in FHA Fees

Image Increased costs FHA home loans oconomowoc wisconsin wiOn 3/6/2012 HUD’s Official Announcement came out (click here to read it). The revisions/updates below are in red.

As part of HUD’s ongoing efforts to increase their financial health – and to get the FHA back into a place where they meet their capital requirements – on Monday, HUD announced the anticipated increases in the premiums they charge borrowers for FHA loans.

In its simplest form: The cost of borrowing is going to rise.

As you might know, the standard FHA loans are less risk-sensitive with their underwriting guidelines relative to conventional loans (that means lower credit score requirements, less money down, higher debt-to-income ratios, etc.). FHA is not a lender. Instead, they are a federally-backed insurance company that insures lenders against default on loans that are in compliance with their published guidelines.  A PMI company would be a private equivalent of the FHA. It is because of this insurance that lenders approve and close loans with more liberal guidelines; without it, the loans could not be closed.

As a federally-backed insurer, the government charges two types of premiums on the FHA mortgages:

  • Monthly Mortgage Insurance Premium (UFMIP) This, too, will increase. It will go up 10 basis points (0.1% per year) on April 1, 2012 for all cases assigned on or after April 9, 2012 to cover the requirements of the payroll tax extension approved in December of 2011. You might recall that this was already tacked on to conventional loans from a post I wrote a while back. This is a direct increase of 10 basis points (0.1%) in the borrower’s mortgage payment. For those in very high cost areas, FHA loans over $625,000 will be bumped 35 basis points from today’s levels effective June 1, 2012 for all cases assigned on or after June 11, 2012.
  • Up Front Mortgage Insurance Premium (UFMIP) This fee will, effective April 1, 2012 for all FHA cases assigned on or after April 9, 2012, go from its current 1% to 1.75% of the loan amount. One huge advantage to this UFMIP is that it is customarily built into the loan and does not require additional cash from a buyer at closing. That increase, however, certainly does impact monthly payment and cash flow.

Bottom Line:

  • If you are selling a home, get it priced correctly and under contract this month.
  • If you are buying a home, it’s quite possible that right now is the time where the cheapest possible mortgage is available – ever.  It’s time to make that to get yourself into a home!

To find out how this impacts you directly, please contact me directly for a completely free consultation.

FHA 203K Streamline: Repair Your New Home or a Foreclosure, Bank Owned or Short Sale Property

Rehab Remodel 203K Wisconsin California OconomowocI know this happens all the time: Agents are out looking at homes with buyers and they pull up to a home that reads really well on the MLS sheet. It’s the house that the buyer is saying – before they even walk in the door – is exactly where they see themselves living. Upon entry however, things change, the home is nowhere near move-in ready.

This could be a bad day for some, but here at Envoy Mortgage in Oconomowoc, we now offer (in-house; not brokered) the FHA 203(k) streamline program to not only help a buyer acquire this non-move-in-ready home but also help them to finance the repairs it needs! A buyer really can make it be the home of their dreams!

While the full program details can be read here, below are the general uses for this amazing program:

  1. This loan allows up to $35,000 in repairs to be made to a home
  2. This program allows for homeowners in Wisconsin, California or anywhere USA to:
    • To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
    • To refinance existing liens secured against the subject property and rehabilitate such a dwelling.

Examples of repairs, replacements and/or upgrades are listed below:

  • Roof, gutters, or downspouts
  • Electrical and plumbing systems
  • HVAC Systems
  • Finish or remodel unfinished basements (as long as major structural work is not needed; i.e. moving a load bearing wall)
  • Remodeling of a kitchen or bathroom
  • Flooring and carpet
  • Windows, storm doors, and other weatherization items
  • Painting
  • Major Appliances
  • Addition of attached decks
  • Siding

The process is really quite easy:

  1. Locate the subject property if it is not your current home
  2. Set up times to meet with an approved General Contractor (GC) – and possibly a home inspector – to make your “wish list” of items that you want to repair/replace/upgrade
  3. The GC then submits the written cost of repairs
  4. Appraisal is requested to determine the “as is” value and the “after rehabilitation” value
  5. Loan documents are submitted with final figures from appraiser and contractor to underwriting for final approval
  6. Go to the closing on the soon-to-be home of your dreams!

Traditionally, this process will take about 30-45 days. Of course there are shorter and longer time frames, depending on the third parties involved. If you would like to see if you qualify for this program, please contact me
for a completely free consultation.