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FHA Delinquency Rates Plummet

While many take jabs at the FHA loan program, calling it a vehicle for less creditworthy borrowers, the delinquency rates for FHA loans prove quite the contrary. FHA 30 day or greater delinquencies dropped 300 basis points in 2012, now down to a 14.68% delinquency rate. Couple that with a drop of 69 basis points to 8.73% for 90 day or greater delinquencies in the first quarter of this year, and perceptions may soon change.

Some speculate the lower delinquency rate is due in large part to FHA selling off its non-performing mortgages. Others believe the rising home prices have allowed those with delinquent mortgages to sell their homes and pay off their past due loans.

Many fail to acknowledge the lower delinquency rates as a byproduct of securing more creditworthy borrowers. More stringent underwriting guidelines mandated for FHA loans in the middle of 2009 could be a large contributor to the improvement in home loan repayment.

With today’s 30 year FHA streamline refinance rates as low as 3.25%, this may be the best option to decrease your house payment while taking advantage of better home values. To see if you qualify for a streamline refinance, please contact me at pwoods@mychartermtg.com today. Often times, this refinance can be completed with no money out of pocket with closings in less than 30 days.

Mortgage Delinquency Rate Not Indicative of Creditworthiness

According to recent figures compiled by TransUnion, one of three major credit reporting agencies, the high mortgage delinquency rate does not indicate current creditworthiness.

Comparing numbers from mortgages originated before 2009 to those originated in 2010, TransUnion states 86% of all loans 60 days or more delinquent were from 2009 or earlier. Also, comparing delinquency rates within the first three years, 14.5% of loans from 2007 met this criteria, as opposed to 2.5% of loans originated in 2010. These figures, not surprisingly, correspond to the tightening of lender requirements after the housing bubble burst.

Another startling figure corresponds to the length of time it takes lenders to resolve problems with a delinquent loan through loan modification, foreclosure or possibly short selling the property. In 2007, the resolution process for a delinquent loan that was at least three years of age was only 257 days on average. In 2013, the loans of the same age are taking an average of 417 days to resolve.

What this TransUnion study shows is two-fold. First, lenders are continuing to hold potential mortgage holders to higher credit performance standards than ever before. Knowing your credit performance is essential to obtaining a mortgage in today’s market as underwriting is still stringent and unforgiving. Because of the look-back period and collection forgiveness, many borrowers affected by today’s economy are subsequently utilizing FHA programs.

Second, if a current mortgage holder finds themselves facing the possibility of not being able to pay their mortgage, it’s important to know help is available. Often times, a HARP loan may be the answer, especially if a homeowner owes more than their home is currently worth.

If you have concerns about the mortgage qualification process or have been denied a mortgage in the past, please contact me at pwoods@mychartermtg.com today. I would be happy to help you through the refinance or purchase process and find a mortgage program that is right for you.

Are Credit Requirements Really “Loosening?”

With higher home prices and a stronger economy on the horizon, many mortgage lenders have anticipated a “loosening of the reins” on qualifying borrowers for a mortgage. This is especially true based on the Federal Reserve’s estimation of America’s equity in their homes at $8.2 trillion, or roughly 47% of total real estate. This is the highest value for equity since the first quarter of 2008.

While other lending venues have lightened up on their underwriting guidelines, no such easing of requirements is in site for mortgage qualifications. Based on the foreclosure rate over the past 5 years, it is understandable that Fannie Mae and Freddie Mac will continue to keep their guidelines tight, not wanting to repeat the mistakes of the past.

Even though some of the minimum score requirements may have lowered recently with Fannie Mae on their high balance products, the lenders who are funding the FNMA underwritten loans have held their standards higher. So, while FHA, VA, Fannie Mae and Freddie Mac has less strict underwriting guidelines, the lenders aren’t going to give the funds away to just anybody who can meet the government’s guidelines.

What seems to be the biggest problem for borrowers trying to qualify now is the income requirement, even more than the credit piece of the puzzle. Banks are choosing superior credit and substantial income as the norm, even if it far exceeds the standards as required by Freddie and Fannie. So, without the support of the big banks, all the change in the world to federal lending guidelines will make no difference.

Now more than ever, exploring options with a mortgage broker may be the best option to finding the right lender. Lenders willing to fund the loans government agencies stand behind are readily available when there are many companies from which your loan specialist can choose.

With government backed programs at 3.25%, and low down payment programs, there are many attractive options available. If you are considering the purchase or refinance of a home and have had trouble finding a lender to approve you, please contact me at pwoods@mychartermtg.com today. I would be happy to help you decide what options are available for you.

FHA Says, “Fix It, We Have Options”

With the high incidences of foreclosures and REO homes for sale in today’s real estate market, many savvy borrowers would do well to take advantage of FHA’s rehabilitation loan programs. Although the programs have been available since 1978, many home buyers who could qualify for and benefit from these programs have past them by, probably without even knowing it.

So what can FHA do for a borrower looking to repair an existing home or purchase a fixer-upper? The answer is plenty, depending on the extent of repairs needed on the property. Following is a short summary of the two programs available for these types of properties.

For homes in need of more extensive or structural type repairs exceeding $35,000, the 203(k) Program is the loan of choice. While borrowers will need $5,000 to contribute towards repairs, as well as the 3.5% down payment, if they are purchasing a home to fix that is not in livable condition, they can finance up to 6 months of payments into the loan while repairing the home. The loan amount, however, may not exceed 110% of the final improved value of the home. Depending on where the property is located, maximum loan amounts of close to $730,000 are available.

If, however, a home needs less than $35,000 in repairs which are not structural in nature, (i.e.-no additions, foundation work) the 203(k) Streamline Program may be the better choice. Many home owners who are looking for cosmetic or minor repairs to their existing homes would do well to take advantage of this opportunity, as well as home buyers who may be buying a home in need of a “facelift”. Another great feature of this program is it puts less demands on the borrower, one of which is not requiring the use of an FHA-designated consultant to draft architectural plans or prepare reports on repairs. Most lenders will require the use of a licensed general contractor to disperse the repair funds, however, so be sure to check for this requirement with your loan specialist.

With FHA 203(k) rates today as low as 3.75%, this program may be an attractive option for a fixer-upper. If you are considering the purchase or refinance of a home in need of repair, please contact me at pwoods@mychartermtg.com today with any questions you might have. I would be happy to help you decide if this is the best choice for you.

FHA Loans, the New Subprime?

While the FHA loan program for home finance was developed after the Great Depression to increase home ownership possibilities for the average American, today it is argued to be an even bigger player in the mortgage market.

In the late 1930s, buying a home required 40-50% down and payoff in three to four years. With employment at an all-time low and a housing market full of foreclosed homes, the American banking system underwent reform and FHA was hatched. Effectively, the FHA program allowed lending with lower down payment and backing by the federal government for banks to remove substantial risk from their portfolios. During the next few decades, homeownership increased substantially, to up to 40% of Americans.

Fast forward to a similar climate today, with unemployment or underemployment as well as foreclosure numbers at a high resurgence, many borrowers are turning to FHA as an answer. With substantially lower down payments, lower credit scores and higher debt to income ratios allowable than with a conventional mortgage, many people previously unable to borrow can now qualify. And as FHA seems quicker to relax their lending guidelines than conventional mortgage programs, even more people unable to qualify previously are now purchasing a home.

Let’s not fail to mention the streamline refinance FHA is currently offering either. If a borrower simply wants to take advantage of a lower interest rate or shorter term, and their loan was purchased by FHA prior to June 1, 2009, the borrower may see substantial savings. These loans do not require an appraisal, and often most or all of the closing costs associated with the refinance can be covered with the new loan amount, requiring little to no out of pocket cost for the borrower.

While many traditionalists are calling FHA the new subprime, fearing the quality of borrowers may cause another “boom” in foreclosures when we face another burst in the housing “bubble”, others argue that having more mortgages backed by the US government make controlling the quality of the market more viable and a further depressed housing market less likely. No matter where the experts fall, everybody agrees the revenue stream generated by the mortgage insurance premiums required for an FHA loan are an excellent revenue source for the government to utilize for boosting the still depressed economic climate today.

With FHA rates today, without compensating factors, at 3.25% and lower make this program an attractive option. If you are considering an FHA purchase or refinance, please contact me at pwoods@mychartermtg.com today with any questions you might have. I would be happy to help you decide if this is the best choice for you.

Streamline FHA

fha mortgage rates update

FHA streamline rates still at all time lows. 30 year fixed FHA mortgage at 3.0%.  Streamline FHA refinance loan applications at all time highs.

Home owner’s with fha mortgages are refinancing their current FHA loans by the thousands using the FHA streamline refinance loan. Mortgage holders with FHA loans edorsed on or before 07/01/2009 are eligible for lower fha mip rates and are saving hundreds of dollars monthly with no costs to the borrower. Get fha streamline refinance rates today at www.fha-rates-today.com/fha-streamline-refinance-rates

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