Tag Archives for " home loan "

January 29, 2015

FHA to Reduce Annual Insurance Premiums

FHA lower mortgage


Reduction to increase credit affordability and reflects improved economic health of FHA

FHA TO REDUCE ANNUAL INSURANCE PREMIUMS Reduction to increase credit affordability and reflects improved economic health of FHA WASHINGTON – As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent. This action is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years. Read FHA’s Mortgagee Letter.

Today’s action also reflects the improved economic health of FHA’s Mutual Mortgage Insurance Fund (MMIF). FHA’s recent annual report to Congress demonstrates the economic condition of the agency’s single-family insurance fund continues to improve, adding $21 billion in value over the past two years.

“This action will make homeownership more affordable for over two million Americans in the next three years,” said U.S. Department of Housing and Urban Development Secretary Julián Castro. “Since 2009, the Obama Administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”

In the wake of the nation’s housing crisis, FHA increased its premium prices to stabilize the health of its MMI Fund. In addition, the Obama Administration took dramatic steps to safeguard consumers in the mortgage market to ensure responsible borrowers continued to have access to mortgage capital as many private lending sources tightened their lending standards.

Today’s reduction will significantly expand access to mortgage credit for these families and is expected to lower the cost of housing for the approximately 800,000 households who use FHA annually.

FHA’s new annual premium prices are expected to take effect towards the end of the month. Read FHA’s Mortgagee Letter.

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November 28, 2014

Ways To Maintain A Healthy Credit Score

Ways To Maintain A Healthy Credit Score

Maintaining a good credit score offers a lot of benefits like being able to enjoy lower interest rates on your credit cards and saving money on insurance and security deposits on new utilities and cellphone service. But there’s another huge advantage to this and that it allows you to get your dream home easier than with bad credit ratings.

A lot of lenders use this three-digit number to help them determine your credit risk and that includes whether you’ll be able to pay back your loans and if you can do this on time. Therefore, it’s important that you know the different ways to maintain a good credit score especially when you’re in the market to buy a home.

Pay your bills on time. It has to be one of your main goals to pay your bills and other credit obligations on time and at the right amount every month. This includes paying for your credit cards, rents, utility bills, taxes, support payments, and service or product bills.

Do not exceed limits on your credit cards and lines of credit. It’s a good thing to follow the “20/10 Rule” wherein you do not exceed your credit card debt to more than 20% of your total yearly income after taxes. Furthermore, do not have more than 10% of your monthly income in credit card payments.

Don’t open or close any accounts. If you’re trying to increase your credit score, you shouldn’t open new cards or close old ones since doing both can negatively affect your score. Opening new credit accounts rapidly can make you look risky while lowering your credit age too. Remember, lenders prefer individuals with stable and lengthy credit histories.

Use your old cards. If you have any credit cards which you haven’t used in a while, you can try using them as this helps improve the age of your credit history and it makes you look more like a reliable borrower.

Watch your credit report regularly. It doesn’t mean that when you’ve done everything mentioned above, your credit score will remain good. Errors could still happen on your credit report that can result to a drop in your credit score. Identity theft and credit card fraud can also cause problems to your credit report, therefore, you have to practice to check it regularly to determine mistakes early and correct them when necessary.

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November 27, 2014

A Brief Guide to Pre-Approved Mortgage

A Brief Guide to Pre-Approved Mortgage

If you plan to purchase a home, even before you get started, you should get a pre-approval for your mortgage because at some point, sellers are going to ask you for this. But before that, let’s get to know first the basics of pre-approved mortgage.

What is a pre-approval?

A pre-approval, in the real estate lingo, pertains to a preliminary commitment in writing from a lender stating that a borrower would qualify for a certain loan amount based on different factor’s set by the lender. A pre-approval holds much more weight that just a loan pre-qualification, which is only an estimate of the amount you can borrow.

Why should you get a pre-approval?

It’s important to get a pre-approval for several reasons:

  • The most important reason why you need to get a pre-approval is that it helps you determine the amount you can spend on a home and the size of mortgage you can be able to obtain.
  • It gives you an advantage during the time to bid on a property. In other words, you’re ahead in the competition.
  • This helps ensure that you only look at houses that you can certainly afford based on your price range.
  • Helps speed up the home buying process once you find the home you want to purchase.
  • Most bank-owned homes require a pre-approval letter from the lender before they accept your offer letter.

What are the things you need to be approved for a mortgage?

  1. Proof of income. All borrowers need to prepare W-2 statements from the past two years, latest pay stubs showing income and year-to-date income, along with proof of any additional income.
  2. Proof of assets. You will need to show bank statements and investment account statements to show that you have funds necessary for the down payment, closing costs, and cash reserves.
  3. Good credit. A lot of home lenders usually provide the customers with excellent credit score of 740 or above with the lowest interest rates.
  4. Employment verification. A lender does not only check you proof of income, but will also call your employer to verify that you’re still employment by the company and to double check your income.
  5. Documentation. A lender will ask any identification like your driver’s license and your social security number to pull a credit report. 

How do you get a pre-approval?

Applying for a home loan pre-approval is similar to the usual home loan application process. You will have to begin the process with talking to a few lenders to know which loan suits you best in your financial situation. Hence, you will need to show what you earn, what you own, and what you owe – these are the requirements mentioned above. Normally, the pre-approval process takes 24 to 48 hours to obtain a letter.

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November 24, 2014

Mortgage Applications Week-To-Week Leaps 12 Percent

Mortgage Applications Week-To-Week Leaps 12 Percent

The number of mortgage applications surprisingly increased even with the relatively quiet week for interest rates.

According to the Mortgage Bankers Association (MBA), the total number of mortgage applications increased 4.9 percent week-to-week for the week ending November 14, which was mostly brought about by home buying applications. Though refinance applications only increased one percent week-to-week, home purchase applications jumped 12 percent, which has ben the highest since July. These results were adjusted for the Veterans Day holiday as well as the seasonal trends.

“MBA and other data are showing strength in the market for new homes, likely reflecting the boost from continued job growth in recent months,” MBA’s Chief Economist Michael Fratantoni said.

These purchase applications basically indicate the future of home sales since potential homebuyers need to secure a loan before purchasing a property.

Aside from this, homebuilder sentiments also increased this month with builders claiming a rise in buyer traffic according to a report released by the National Association of Home Builders.

However, even with such a huge increase, home purchase applications are still 6 percent lower the year-ago levels and are 9 percent below the level four weeks ago.

“This is historically a volatile time of year for purchase applications, and MBA’s seasonal adjustments made the difference,” Matthew Graham of Mortgage News Daily said.

The week’s increase is certainly good news for the housing market however, the trend has to continue for a long time to push the housing recovery.

November 18, 2014

Mortgage Delinquencies Hit Lowest Since 2007

Mortgage Delinquencies Hit Lowest Since 2007

According to the Mortgage Bankers Association, the percentage of consumers who are mortgage delinquent had reached its lowest since the end of 2007.

A Washington, D.C.-based trade group reported last November 14 that the delinquency rate for mortgage loans has dropped to 5.85%, a seasonally adjusted rate of all loans outstanding at the end of this year’s third quarter.

This has been the sixth straight quarter where the number of mortgage delinquencies continues to drop based on the MBA’s National Delinquency Survey.

MBA reports that the delinquency rates comprise of loans that are at least one payment past due but does not include loans within the foreclosure process. The percentage of loans within the process of foreclosure at the end of the third quarter was 2.39%, which is down 10 basis points from the second quarter and 69 basis points from 2013.

“Delinquency rates and the percentage of loans in foreclosure fell to their lowest levels since 2007,” MBA’s Chief Economist Mike Fratantoni said. “We are now back to pre-crisis levels for most measures. Foreclosure starts were unchanged on a seasonally adjusted basis, but increased slightly in the raw data.”

“Given that this measure reached the lowest level in eight years last quarter, and given the continued decline in delinquency and foreclosure inventory rates, we expect that the increase in the unadjusted starts rate is just regular seasonal fluctuation,” he added.

Fratantoni claims that the delinquency rate fell by 15 basic points from the last quarter and declined 100 basis points since 2013.

Most of the seriously delinquent loans, either more than 90 days late or in the foreclosure process were mainly loans done before the downturn. In fact, 74% of them were made in 2007 or before that.

“Loans made in recent years continue to perform extremely well due to the improving market and tight credit conditions; loans originated in 2012 and later accounted for only four percent of all seriously delinquent loans,” Fratantoni said.

November 14, 2014

Bank of America No Plans On Loosening Up On Mortgage Credit Standards


Although policymakers have been hinting on their desire to open the mortgage credit box allowing more borrowers, the CEO of Bank of America claims that the banking institutions aren’t likely to relax on their credit standards any time soon.

Bank of America CEO Brian Moynihan, who was one of the speakers during the investor conference held in New York, claim that their company, the institution usually listed among the top five mortgage lenders in the country, has a few incentive “to try to create more mortgage availability where the customers are susceptible to default.”

His statements are against the most common complaints today about the mortgage industry, which is their over-tight lending standards that have certainly lessen the amount of potential homebuyers in the market.

Such issue is usually shared by young first-time homebuyers who are facing not only the tightening mortgage criteria but also the difficulty to save on their down payment.

Even with such complaints, Moynihan claims that their bank doesn’t have any plans on offering low down payment options, and instead suggest that these potential homebuyers consider renting than purchasing their own home.

However, the government continues to promote homeownership with both Fannie Mae and Freddie Mac taking steps to encourage lenders to provide more options to borrowers. Last month, Director of the Federal Housing Finance Agency (FHFA) Met Watt revealed that the GSEs are currently working on guidelines for mortgages with loan-to-value ratios between 95 and 97 percent, thus allowing down payments as low as 3 percent. Aside from this, FHFA is working on their representation and warranty framework to lessen the concerns of lenders on buyback risk.

Though this might pacify some individuals who claim that the tight mortgage credit standards have been holding them back from homeownership, Moynihan believes his institution takes a longer view.

“I know that that doesn’t sound good for an instant housing recovery and faster housing markets, but it’s actually good, because in the long term it keeps housing more fundamentally based,” he said.

October 24, 2014

Mortgage Rates Hit Below 4%

Mortgage Rates Hit Below 4

Mortgage ApplicationMortgage rates continue to fall this week with the average of a 30-year mortgage now below 4 percent, which is the lowest since June 2013. According to Freddie Mac, a 30-year fixed-rate mortgage reached 3.97 percent from 4.12 percent in the week ending October 16. A 15-year borrowing costs feel from 3.30 percent to 3.18 percent. Furthermore, a one-year adjustable-rate mortgage averaged at 2.38 percent from 2.42 percent. With such drop in average costs, long-term mortgage rates are seen to be following the 10-year United States Treasury rate, which were seen falling briefly below 2 percent this week. “Mortgage rates are at their lowest levels since June 2013 amidst continued investor skepticism regarding the precarious economic satiation in Europe,” said Frank Nothaft, chief economist at Freddie Mac’s.