Minimum credit score for mortgage falling

 Loan Guidelines, Owner-occupied, Residential Mortgage  Comments Off on Minimum credit score for mortgage falling
Jan 292015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

It’s nice to be able to report some good news. Credit standards are relaxing just a bit. Our minimum credit score for using an FHA loan to purchase a home is now 600. This minimum applies to single-family homes and duplexes, assuming you plan to live in one of the units. The minimum score for 3- and 4-unit homes remains 620.

Even better, if you want to refinance an FHA loan, we can accept a credit score as low as 580. In some cases we’ll be able to use FHA’s streamline process, which means you can qualify regardless of your current income and debts. However, if your credit report shows a foreclosure, your credit score needs to be at least 600.

The minimum credit score for conventional loans remains 620.

RateUpdate: Watch Fed meeting for potential change in direction

 Interest Rates, Residential Mortgage  Comments Off on RateUpdate: Watch Fed meeting for potential change in direction
Jan 272015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

While rate markets still seem most concerned about Euro-drama, this week may bring their gaze back to our shores. The Federal Reserve meets this week and releases its policy announcement on Wed. While no one expects the Fed to deviate from its previously announced plans, analysts will scour the release for changes in wording. Will the Fed acknowledge quantitative easing euro-style? What will the Fed say about the falling price of oil and its effect on inflation? Are recent weaker economic reports an indication of the slack in the economy noted in recent Fed statements? We may get answers Wed. Until then, expect rates to stay contained. Assuming the release contains no bombshells, markets probably will return to trend, which has been gentle improvement in concert with European rates, which are at all-time lows.

We have one other US event this week that could cause a stir. Friday brings the 1st estimate of 4th quarter GDP. This is a backward-looking report, and markets generally are expecting robust growth, but if the report greatly deviates from expectations, rates could move around a bit.

Your 2015 loan limits are…

 Loan Guidelines, Residential Mortgage  Comments Off on Your 2015 loan limits are…
Jan 222015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Every year, Fannie Mae and Freddie Mac release loan limits – the maximum amount you can finance with a conventional loan. FHA does the same for FHA loans. While the conventional loan limit didn’t change – $417,000 for a single-family home – FHA limits did change, mostly for the better.

In 3 of the 4 major TX metros, the loan limit increased by an average 9%. FHA sets an area’s loan limit based on 115% of the area’s median home price with a minimum loan limit of $271,050.

Austin’s limit rose by more than $25k to $331,200. Houston’s limit rose by $31k to $326,600, and the Dallas/Ft. Worth limit rose by $23k to $310,500. San Antonio’s loan limit remained $316,250. Remember that these limits apply to the entire metro area around these cities.

Click here for a link to the 2015 FHA loan limits.

Rate update: What effect will European QE have on rates

 Interest Rates, Residential Mortgage  Comments Off on Rate update: What effect will European QE have on rates
Jan 202015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

For the interest rate market, this week is all about Europe – again. The European Central Bank meets Thurs, and markets are expecting it will announce a full-blown sovereign debt buying program – what here we called quantitative easing.

The interesting thing is the German government still seems to be against such a program. This is despite a favorable ruling by a European court last week. Has the ECB managed to get the Germans on board? We’ll find out Thurs morning.

It’s tough to gauge what effect Thursday’s announcement will have. When QE programs went into effect in the US, rates rose. However, most analysts seem to think that ECB bond buying will be good for US rates. On the flipside, if the ECB announcement disappoints market, as it has many times before, US rates could fall because of increased uncertainty.

It’s hard to believe rates will win either way, but what I think you can expect is some reaction and volatile rate movement. Float cautiously.

Fewer financing options for flipped houses

 Investment, Loan Guidelines, Loan Programs, Residential Mortgage  Comments Off on Fewer financing options for flipped houses
Jan 192015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you rehab homes, your pool of potential buyers decreased at the beginning of the year. Buyers using FHA financing now cannot contract to buy your rehab until you’ve owned it for at least 90 days. FHA has never been a big fan of house flipping due to fraudulent flips that saddled it with big losses in years past. During the housing recession, FHA waived its rule against property flips allowing rehabbers to flip properties in 30 days.

But, the waiver expired on Dec 31st. For any purchase contract signed after that date, the old 90-day rule applies. FHA says the dangers of house flipping outweigh the benefits for first-time and minority homebuyers – those dangers being that flippers will sell poorly renovated homes at inflated prices to unsuspecting buyers. Of course, FHA ignores the fact that it doesn’t take 90 days to rehab most homes, and the rule reduces the number of quality, affordable homes available for these same homebuyers.

On a positive note, you still can sell to buyers using conventional financing as Fannie Mae and Freddie Mac only require a seller to own a home for 30 days.

Rate update: Still watching Europe for direction

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Still watching Europe for direction
Jan 122015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

This could be an interesting week for interest rates. As we expected, last week’s jobs report had very little effect on rates despite the strength of the headline numbers. Markets are focused on overseas events, and it’s one of those events that could make this week interesting.

Wed, the European Court of Justice will announce a preliminary assessment of the European Central Bank’s bond buying plan. If the court rules in favor of the ECB’s position, rates could rise.

Much as they did when the Fed announced quantitative easing, markets are likely to interpret ECB bond buying as reducing the risk of recession for the EU economies. That risk has been much of what’s driving the flight to safety buying of US bonds, which is pushing rates down.

The most significant US economic data this week, retail sales, also falls on Wed. However, I suspect is would take a big departure from trend to make any difference for US rate markets.

Does lower MI make FHA better than conventional loan?

 Loan Programs, Residential Mortgage  Comments Off on Does lower MI make FHA better than conventional loan?
Jan 102015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The folks over at FHA probably shuddered in Dec when Fannie Mae and Freddie Mac announced they were lowering their min down payment to 3%. Buyers with stronger credit already were shunning FHA. Its only advantage was its lower down payment requirement, and that now was gone.

But FHA is fighting back. It announced this week a reduction in its mortgage insurance rates. (If FHA, Fannie, and Freddie all weren’t owned by the government, you’d think capitalism had broken out.)

The change leaves FHA looking good again. For a $200k home purchase, the monthly payment for an FHA loan would be roughly $100 lower than for a conventional loan. The difference is the result of the lower MI rate and lower interest rates for FHA loans. This analysis assumes a buyer with a 720 credit score.

The two remaining advantages for conventional loans are a slightly lower down payment – $1000 lower in this case – and lower total mortgage insurance. FHA still requires up-front MI, and its monthly MI lasts for the life of the loan. For conventional loans, MI automatically ends after about 11 years.

FHA lowers mortgage insurance rates

 Loan Programs, Residential Mortgage  Comments Off on FHA lowers mortgage insurance rates
Jan 092015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

FHA officially announced today it’s lowering its max monthly mortgage insurance premium from 1.35% to 0.85%. That’s great news for folks looking for a low down payment loan. The change is effective for FHA loans registered on or after Jan 26th.

But, what if you have an FHA loan already in process? Can you take advantage of the lower MI rate? Yes, you can. FHA says that for the next 30 days it will allow lenders to cancel active registrations – FHA calls them case numbers. Once the case number is cancelled, your lender can re-register your loan with the lower MI rate.

The MI rate change only applies to loan terms greater than 15 years. The MI rate for 15-year loans remains 0.45% for down payments of 10% or more and 0.7% for smaller down payments.

Rate update: All eyes on Europe

 Interest Rates, Residential Mortgage  Comments Off on Rate update: All eyes on Europe
Jan 052015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The direction of US mortgage rates should be governed by things that happen here in the US, right? Nope. That hasn’t been the case for several months. While the US economy has revealed some unexpected strength, interest rates are hitting 18-month lows. Strong economic data typically pushes rates up.

The problem with that theory is the US economy is an island in a sea of despair at the moment. Europe appears headed for another recession if not depression, China is faltering, and Japan is still a basket case. Money is fleeing these economies for the safety of the US, and that’s keeping a check on rates.

Will it continue? I think odds are it will for the near term. One fly in the ointment is the jobs report this Fri. While the market has mostly ignored the report the last couple months, another particularly strong report could create some ripples.