Bulls & Blogs

Your 2015 loan limits are…

Loan Guidelines, Residential Mortgage Comments Off

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.

Fewer financing options for flipped houses

Investment, Loan Guidelines, Loan Programs, Residential Mortgage Comments Off

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.

Does lower MI make FHA better than conventional loan?

Loan Programs, Residential Mortgage Comments Off

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

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.

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.