Bulls & Blogs

Payoff your FHA loan on the first of the month

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Oct 222014

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

By G. Steven Bray

For those with an FHA mortgage, an unpleasant surprise may await when you sell your home. FHA charges interest one month at a time. That means even if the sale closes on the 15th of the month, FHA calculates the mortgage payoff through the end of the month. For a $200,000 loan balance, Uncle Sam is going to dip his hand into your pocket for another $400.

This practice runs contrary to that for VA and USDA loans and for conventional mortgages. When the Consumer Financial Protection Bureau released its Qualified Mortgage rule, it labeled the practice a pre-payment penalty and instructed FHA to do away with it. FHA finally is going to end the practice next year. For all loans closed after Jan 21st, the payoff will include only interest through the funding date.

USDA delays new rural maps

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 262014

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

By G. Steven Bray

The federal government’s fiscal year ends on 9/30, and as is typical in recent years, Washington passed a Continuing Resolution (CR) rather than pass the various spending bills necessary to fund the government. In that CR is a provision that extends the use of the current USDA maps that define property eligibility for its housing programs. So, if a home is eligible today, it will remain eligible until the CR expires. And it’s entirely possible that when Congress finally passes a USDA spending bill, some legislator will slip in a provision to extend the current maps again. That said, if you’re eyeing a property that would have been ineligible on 10/1, I wouldn’t wait. Start the homebuying process now so you can take advantage of the benefits of a USDA mortgage.

USDA mortgage maps changing Oct 1st

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 102014

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

By G. Steven Bray

The USDA Rural Development loan is a great option for homebuyers in rural locations. It requires no down payment and has lower monthly mortgage insurance than an FHA loan.

The USDA’s definition of rural may surprise you as it includes many of the exurbs of the major TX cities. As of Oct 1st, that definition narrows a little as USDA is releasing new eligibility maps based on recent census data.

The main changes I noticed were the expansion of ineligible areas in Pflugerville, Round Rock, and San Marcos in the Austin area and Denton and McKinney in the DFW area. In addition, the ineligible area on the west side of Ft. Worth expanded significantly. However, you’re still going to find some subdivisions on the outskirts of these cities are eligible. The maps changed little in the San Antonio and Houston metros. I included a link at the end of my blog to the USDA eligibility Web site where you can compare the old and new maps for yourself.

USDA bases property eligibility on the date it receives your loan file. For most lenders, this will be a couple weeks after loan application. So, if you’re buying a home using the old maps, you need to act soon to beat the changes.

USDA mortgage eligibility Web site.

USDA raising monthly mortgage insurance rate

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 042014

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

By G. Steven Bray

The USDA RD loan is a great option for homebuyers in more rural locations. The loan requires no down payment and has much lower monthly mortgage insurance than an FHA loan.

Unfortunately, the gap between the two will close a little this year. For all loan commitments after 9/30, the USDA is increasing its monthly MI rate from 0.4% to 0.5%.

That still makes it a bargain compared to FHA. While USDA does have a higher up-front fee, 2% vs. 1.75% for FHA, look at the difference in monthly payment between the two. For a $150k FHA loan, the monthly payment including mortgage insurance would be about $863. For a USDA loan, the payment would be about $757, more than $100 less.

If you’re thinking about using a USDA loan, be aware that USDA bases the fee increase on the date it commits to the loan, not the date you apply. You probably should make your loan application no later than next week if you want to beat the deadline.