Archive for Nashville Mortgage News
Changes to HARP Program Announced
Posted by: | CommentsChanges to HARP Program Announced
You may have heard that President Obama plans to open up refinancing to more homeowners who are underwater. If you are wondering what this means…and if you can benefit…here are some facts to consider.
First, it’s important to realize that the president’s proposal is not a new program, but a revision to the current Home Affordable Refinance Program (HARP). However there is a big change: Now homeowners can refinance no matter how underwater they are! Before homeowners could only refinance if they were 25% or less underwater, and even then many banks only let people who were 5% or less underwater refinance.
Also, with the revision it’s possible that an appraisal won’t have to be performed, which is great news as this will save time and money. But this is only the case if Fannie Mae or Freddie Mac can electronically estimate the value through their valuation models.
Keep in mind that these updates to HARP apply only to people whose mortgage is currently secured by Fannie Mae or Freddie Mac…and whose loan was securitized by Fannie Mae or Freddie Mac prior to May 31, 2009. So the chances are that people who have refinanced since May 2009 will not qualify to refinance under the HARP revision. Also if you have an FHA or VA mortgage loan you may also be eligible for a rate reduction or streamline refinance under updated guidelines.
So if you have previously attempted to refinance but were told by some other lender it is not possible you need to call us today. We will be glad to search your loan type and let you know if your loan qualifies for a rate reduction. In most cases appraisals are not needed and you can even skip a months mortgage payment. In addition you will receive an escrow refund check form your current lender!
To read more details, you can visit the FHFA Web site. And if you have any questions at all about what these changes mean or how they could impact you, call (615) 261-1368 or email me anytime at brian@tnhomelender.com. I’m always happy to help. Please don’t let this opportunity pass you by without at least checking. If it does not make sense we will definitely let you know. We will always give you the advice we would want someone to give us!
Video- What Are You Looking for in A Nashville Mortgage Loan Officer?
Posted by: | CommentsJust created this little video on YouTube: Nashville Mortgage Video
Tried to have a little fun with it, let me know what you think by posting a comment on YouTube- thanks!
Nashville Mortgage News- Loan Officer Compensation Rule
Posted by: | CommentsNashville Mortgage News
The Federal Reserve Board is showing no signs of backing down on its loan officer compensation rule, despite congressional requests and industry lawsuits to dela the April 1 effective date. In August 2009, the Fed came out with a proposed rule that prohibited lenders from basing compensation on the terms or conditions of the loan, except for the loan amount. This means compensation cannot be based on the interest rate of the loan, whether it is an adjustable- or fixed-rate mortgage, or whether it has a prepayment penalty. Just before the Fed finalized the compensation rule last summer, Congress passed the Dodd-Frank bill, which included similar loan officer compensation restrictions. Passage of the bill gave the Fed a strong signal to move ahead with the final rule.
What the Fed is doing to loan originators is unprecedented and goes way beyond what it would take to make sure in the future that loan officers would not be motivated to push borrowers into higher rate loans. A Federal agency actually dictating with arrogance how a person can make a living. The abuses that led to the 2008 mortgage and real estate meltdown have come home to rest and there isn’t much that can done about it now.
The thing that bugs me the most is that no longer will a borrower be able to accept a higher rate to lower their closing costs. Doesn’t the Fed understand the inverse relationship between interest rate and closing costs that has always existed??? The no-cost, or even low-cost refinances and lender-paid closing costs for purchase loans will be gone after April 1, 2011. Only time will tell what kind of effect this will have on the still slumping housing market.
Borrowers- one more thing, and this is very important…no longer will your favorite mortgage loan officer be able to price-match (rate or cost match) to prevent losing your loan to a competitor- it is against the Fed ruling. Nothing like further commoditization of the mortgage industry.
Nashville Mortgage News- FHA Loans Are Going to Get More Expensive Again?
Posted by: | CommentsNashville Mortgage News
Yes. FHA loans are about to get more expensive…again. Um, ok. It seems like every time we turn around now, it gets more expensive to get a home loans these days. As of April 18, 2011, FHA’s annual mortgage insurance premiums (or MIP, similar to conventional loans’ PMI), are going to increase by .25% per year for all loan terms.
In other words, if you take an average FHA loan size of $175k, the monthly mortgage insurance will increase by approximately $36/mo. That’s not a huge amount, but isn’t it worth considering how this might impact the real estate recovery that seems to be very slow at best? And remember, just last October, we saw a huge increase in FHA morgage insurance premiums, where the average rate went from .55%/yr to .90% (a 64% jump). So if you take that into consideration, then after this April 18, annual/monthly premiums will have increased by almost 110% (to 1.15% on 30 fixed loans).
The only “good” news out of all this is that HUD isn’t touching the upfront mortgage insurance premium that is financed into the loan. It remains at 1%.
Why is HUD increasing the premium? According to their press release, they want to strengthen capital reserves which help absorb any future foreclosure activity and ensure the FHA will still be around, as well as to attempt to bring back private capital (non-government loans). You know, the same private capital that was largely responsible for the subprime mess?
We’ll see. This announcement isn’t exactly a surprise, since we’ve heard over and over recently about how Congress, the Fed and the Administration wants to wind down Fannie Mae, Freddie Mac, and reduce the amount of government-insured loans (read: FHA) that are originated. It’s just not happening at the best time in my view, with a ton of shadow inventory out there and house values still not finding a bottom in much of the country. The road to a housing recovery possibly just got some major potholes.
Maybe the next Nashville Mortgage News post will actually have some good news for a change!
Nashville Mortgage News- Loan Costs to Be Increasing
Posted by: | CommentsNashville Mortgage News
Do you think this will help our housing crisis? http://www.reuters.com/article/2011/02/11/us-usa-housing-consumer-idUSTRE71A65P20110211
Nashville Mortgage News- A 3.8% Tax on the Sale of Your Home?
Posted by: | CommentsNashville Mortgage News
I got an email today touting that the recent Obama healthcare legislation included a nice little 3.8% tax on the sale of your home. It touted information saying that all real estate sales transactions would be subject to it beginning in 2013, conveniently after the 2012 elections.
My knee-jerk reaction to the email was “you’ve gotta be kidding me! A heavy tax on real estate? That’s just what our housing recovery needed! And why the heck haven’t I heard anything about this before now?!! After forwarding the email to several people I know might be indignant along with me, I checked out Snopes.com and found out it wasn’t exactly accurate, surprise, surprise.
It’s true that the Democrats did put into the bill at the last minute, but the truth is that only a tiny percentage of home sellers would have to pay this tax.
First off, only those individuals whose incomes exceed $200k per year, or $250k for married folks who file jointly, will be subject to this 3.8% levy. And for it to apply to these folks, the tax will only be applicable to the profits exceeding $250k from the sale of their primary residence, or to the profits above $500k for married couples who sell their home.
Whew! I don’t have anything to worry about then! And neither do the vast majority of folks. In March 2010, half of all existing homes sold for less than $170,700 according to the NAR (National Assocation of Realtors). So none of those deals could have had a $250k profit and therefore would not be subject to this tax. In fact, according to The Tax Foundation, the new tax will affect only the top 2% of income earners when it goes into effect in 2013. Sorry rich folks! (I actually would like to be in a position to pay this tax someday, wouldn’t you?!)
Stay tuned for more Nashville Mortgage News coming your way.
Nashville Mortgage News- Can Rates Go Up When the Fed Meets in November?
Posted by: | CommentsNashville Mortgage News- Can Rates Go Up When the Fed Meets in November?
Bond prices have recently been trading high (good for interest rates) for several reasons; one being the idea that our economy is going towards deflation, which of course means prices on goods and services are falling lower rather than climbing (inflation). Investors buy up bonds during deflation due to the fixed payment provided on bonds buy’s more items in a deflation time period.
But this morning (Oct 26) it seems investors are getting a bit more concerned with inflation as the talks of the FED buying more bonds resumes and the likelihood of that happening is almost a foregone conclusion. Most investors think this will cause a inflationary environment.
Yesterday, Oct 25, for the first time in history, the government treasury auction resulted in a negative yield for investors. This means investors bought 5-YEAR “Inflation Protected Securities” for $105.50 for every $100.00 or “par” value of the security. The fixed interest rate that this type of security pays over 5 years is .5%, which is not enough to pay back the $105.50 the investors spent for every $100.00 worth. So, why would investors pay this premium on these securities? For these types of securities (TIPS) the investors get paid more at the end of the term based on an increase in consumer prices (inflation). The fact the investors are willing to pay a premium shows they are very confident inflation will be seen in the near future and the prices on consumer goods will be higher which will lead to a profit for them.
You should start seeing the media finally start discussing inflation. Interest rates are based on the bond market and where bonds are pricing at the time. Bonds do not like inflation so when inflation is finally here, bond prices will fall which means higher interest rates. This flys in the face of the thought that the FED buying more treasuries is a sure thing that rates will fall even more, because it most definitely does not guarantee that Nashville mortgage rates will fall.
Nashville Mortgage News- FHA Loans About to Get More Expensive
Posted by: | CommentsNashville Mortgage News- FHA Loans About to Get More Expensive
With the passing of H.R. 5981 and the resulting Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up Front and the Annual premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all case numbers assigned on or after October 4th, 2010.
Here are the 6 things you need to know about these changes:
1. The Up Front premium is now 1.0 % for all standard FHA loan programs (this is compared to the current 2.25% premium; it sounds good on the surface, but the impact isn’t huge because the premium is spread out over 30 years typically)
2. The Annual premium is now .90% for LTVs GREATER than 95% on 30 year FHA loans (this is a huge 64% increase over the current monthly mortgage insurance amount of .55%. This one is a zinger, because if you take an average 30 year fixed FHA loan of $150,000, your monthly mortgage insurance payment now jumps from $68.75/mo to $112.50/mo, a $43.75/mo increase!!!)
3. The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year FHA loans (the current amount is .55%, so this is a 70% increase in the monthly premium!)
4. The Annual premium is now .25% for LTVs GREATER than 90% on 15 year FHA loans (surprisingly no change, but most FHA loans are 30 fixed anyway)
5. The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans (no change)
6. These premiums apply to purchases, regular refinances and streamlines
Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%. Guess what? If they CAN do it, they surely will. How are we ever going to get out of this current housing mess now that HUD has just significantly raised the borrowing costs of getting an FHA loan, and pave the way for future cost increases? FHA now represents about half of all the new loans originated today, so you better believe this will be a drag on the recovery, to say the least.
My advice: if you are currently looking to buy a home and are in need of FHA financing and a Nashville mortgage, you better find it before the end of September and get your mortgage application approved, because after October 4, your loan payments are going up!
USDA Loans – Encouraging Developments
Posted by: | CommentsUSDA Loans- Encouraging Developments
Last Friday morning, 4/23/10, a new bill named HR 5017 passed through the House Financial Services Commitee. This bill essentially replenishes the supply of funds to the USDA Rural Develpment loan program and even better, it makes it self-sustaining and not reliant on taxpayer dollars for continuation. Next the bill will next go to a vote in the House. The program had been essentially estimated to run completely out of funds by April 30, so the timing could not have been better.
The USDA program will likely carry some changes such as an potential increase in its Guarantee Fee from its current level of 2%, to 4% (Guarantee fees are financed into the loan amount, so the cost is spread out over 30 years). USDA loans may also start including a monthly mortgage insurance payment, so they will begin to be more in line with the FHA loan program. It would only makes sense, given that FHA has recently increased their upfront funding fee from 1.75% to 2.25% at the beginning of April. Regardless, the USDA loan will still be one of the best ways to purchase a rural eligible home with no down payment. For more information on USDA loans, please check out these articles.
THDA Loans- The Great Advantage Program
Posted by: | CommentsTHDA Loans- Great Advantage Program
Of the 3 different THDA loans (TN Housing Development Agency) available, the Great Advantage program falls right in the middle, in terms of the financial assistance offered and interest rate. This program is ideal for the first time buyer who might already have some or most of their down payment and closing costs in the bank, but who still need a little help. THDA loans are typically based on an FHA loan, so a borrower would need a 3.5% down payment. Whereas the Great Start (GS) program offers a 4% grant to qualified buyers for down payement or closing costs, the Great Advantage (GA) program offers a 2% grant. While the assistance is less, the interest rate is over .25% lower than than the Great Start Program. Currently the GA program rate is only 5.05% which is right in line with market FHA rates. This is particularly impressive when you consider you’d get a $3000 grant for a $150,000 loan amount.
Like the GS program, qualified borrowers would need to complete an 8 hour homebuyer education class prior to closing. For more information about THDA Loans, see my other articles on the subject.
How to Remove PMI From Your Nashville Mortgage Loan
Posted by: | CommentsHow to Remove PMI From Your Nashville Mortgage Loan
The word PMI conjures up a lot of emotion, usually not the good kind. PMI, or Private Mortgage Insurance, is required on conventional loans when the borrower doesn’t have at least a 20% down payment. (FHA loans have it too, but the most common FHA loan, the 30 year fixed, has it regardless of down payment). Since it could add as much as $300/mo to the payment, my Nashville mortgage clients are very interested in knowing just how to get rid of this insurance as soon as possible.
But most people assume that as soon as they have a 20% equity position in their home, they can simply have it removed from the loan. They assume this because this is what they have been told by many Nashville mortgage originators, realtors, and even title agents, all who are generally very well informed. It’s compounded by the fact that the mortgage servicers themselves have not done a good job of notifying their customers when it can be removed.
So what’s the real scoop? It really depends on whether you’re basing the percentages on the increase in the value of your property (vs. the balance), whether it’s based strictly on your pay-down of the principal balance to below the 80% threshold, or if neither of these, the original amortization schedule itself.
Increase in the Value of Property: the Homeowner’s Protection Act of 1998 (HPA) does not require the lender to consider the current property value, so a borrower will have to check with the mortgage servicer to see if they would be willing to do so. Most lenders won’t consider dropping PMI when a new appraisal is used if the borrower hasn’t had the loan for at least 2 years, because Fannie Mae (FNMA) policy requires at least 2 years from the date of closing in order to drop the PMI. After having the loan for 5 years, FNMA allows for dropping it at 80% using a new appraisal. Between 2 and 5 years, they want you to have the loan-to-value ratio below 75%.
Borrower Accelerated Pay-down of Principal (Cancellation): the HPA does cover these circumstances. If the borrower has paid the principal balance down to 80% or below of the lesser of the purchase price of the home or original appraised value, they can contact the servicer and request that the PMI be cancelled. They must submit the request in writing, have had a good payment history, and satisfy any lender requirements such as asserting that they have no 2nd mortgage on the property, and that the property value has not gone down. If the require the latter, it might mean they’ll want a new appraisal, which could cost up to $400 or so. You’ll definitely want to contact them to find out what their exact procedures are for your getting rid of PMI on your Nashville mortgage loan.
Automatic PMI Termination: the HPA also covers this scenario. When the mortgage principal balance, according to its initial amortization schedule, and regardless of the current outstanding balance on that date, reaches 78% of the original value of the home (lesser of the purchase price or original appraisal), the PMI can be cancelled. For example, on a $200,000 sales price and a 10% down payment, it would take about 8 years for the PMI to be terminated by this schedule. Most lenders will follow this schedule, but some won’t, so you have to be diligent. If your PMI remains in your payment after this, you must call the servicer and request to have it removed from your mortgage, per HPA.
Final PMI Termination (worst case): Under HPA, if PMI hasn’t been canceled or otherwise terminated, it must be removed within 30 days of the loan balance reaching the midpoint of the amortization schedule. E.g., on a 30 year loan, the midpoint would be a 15 years, or 180 months. The borrower must be current on the mortgage.
If your situation falls into the bottom 3 scenarios above, and the servicer you are dealing with tells you something different, you can dispute their claim by referencing HPA. If that doesn’t work, you can always take it to the entity regulating the servicer in question, which is typically the Office of the Comptroller of Currency (OCC), http://www.occ.treas.gov/customer.htm. Being proactive could save thousands of dollars on your Nashville mortgage!
THDA Loans- The Great Start Program
Posted by: | CommentsTHDA Loans- Great Start Program
The THDA loan program which offers the most financial assistance to first-time buyers in TN is the Great Start Mortgage Program. Just like the Great Advantage and Great Rate Programs, it is usually an FHA loan, but it can also be a VA or USDA loan (which are both 100% programs).
Here is how it works: a borrower meets both the guidelines of FHA and the eligibility requirements of THDA loans, but needs help for closing costs or down payment. Since FHA loans require a 3.5% down payment, this loan works great because it essentially offers the highest possible assistance (4% grant money) to the borrower. This grant can cover the down payment, the closings costs, or both, and is calculated by taking 4% of the FHA loan amount. When combined with the allowed 6% max seller financing concessions, it would allow the borrower to potentially have a no-down payment loan, along with all closing costs and prepaid items covered. (Note: FHA will most likely lower the max seller concession to 3% in early summer 2010)
The interest rate for the Great Start loan is currently 5.35%, based on a 30 fixed loan. As a matter of fact, all THDA loans are 30 fixed terms, and the rate for this program is just modestly above the market FHA rate, which is excellent when you consider the grant. Rates on these loans don’t change as often as regular FHA loans, as the rates are determined by the TN Housing Development Agency and their bond issuance. In other words, the THDA loan rate is the same regardless of which lender you choose.
With the demise of 80/20 combination loans, 100% subprime loans, and the seller-funded down payment assistance programs like Ameridream, the THDA Great Start program is currently only 1 of 3 loan programs, including the USDA Rural and VA program, which offers a buyer the ability to have no money down as well as partially or fully covered closing costs (with seller help). A few more very important points: the home must be a primary residence, the borrower(s) must be first-time buyers (not owned a home in the last 3 years) or must be purchasing a home in a targeted county, must take a Homebuyer Education class before closing, and may be subject to Federal recapture tax (doesn’t affect most buyers). Please see my other articles for more general information on the awesome THDA loan program.
How DO You Find Your Best Nashville Mortgage Lender?
Posted by: | CommentsHow DO You Find Your Best Nashville Mortgage Lender?
I recently heard the following from a radio commercial for a Nashville mortgage- “while other lenders are raising their rates, we’re keeping OURS low … Huh? At first “glance,” it sounds great- this lender is going the extra mile by giving borrowers the lower rates they deserve, despite the increasing rate environment that all the other lenders are affected by.
Well, as nice as it might sound, it just doesn’t work that way. All lenders are subject to the same rate gyrations, and so the biggest rate difference you’ll find among lenders is typically just a measley .125%, or at most .25%. There won’t be one Nashville mortgage lender who has the “corner” on the low-rate market, because if they did, word would get out, and then that lender would be slammed with so much business they’d have to raise rates high enough to stave off the onslaught of incoming mortgage applications.
So when you hear advertising like this, the best conclusion is that the lender is charging more closing costs to the borrower to achieve the “lower than market rate” status. It’s easy to advertise low rates and then not even disclose the heavier closing costs (aka “points”) required to get the better rate. The only time you’ll get a hint of the higher closing costs is when the lender advertises the APR, which is a goverment formula that takes into account the closing costs. But just seeing or hearing the APR % doesn’t really help the average consumer know what the closing costs are which make it up. You’d have to get that lender to give you a Good Faith Estimate, and to get that you’d have to do a full application. Then, you’d have to do the same with 2 or more other lenders to find out how they all stack up. You’d have to make sure the lock period is the same, and also get the rate quote/estimate on the same day, if not same time of day, since rates can literally change hour to hour. So in the end, it’s quite easy for a lender to make these claims, because it’s so difficult to know for sure if they are right.
The better lenders don’t have to advertise “teaser rates” hoping to get their phone to ring. They simply offer each client a competitive rate, and reasonable closing costs, and then back it up with stellar service. Service that includes being available after hours, educating clients about what programs make the most sense for their situation, attending the closings to make sure everything goes smoothly, following up months and years after a loan is closed, etc. Just like about anything else out there, one of the best ways to find out who will offer you this kind of service is to simply ask around for a referral.
If you are in need of a Nashville mortgage, feel free to give me a call at (615) 261-1368. I’d be happy to provide you great advice tailored to your situation, and a very competitive quote. And should you decide to move forward, you’ll get nothing but great service - I promise! Your repeat business and referrals are my best advertisement.
Nashville Mortgage News- Home Buyer’s Tax Credit About to End
Posted by: | Comments| Nashville Mortgage News- Home Buyer’s Tax Credit About to End |
 By now, you’re probably up to your neck in forms and paperwork as the April 15th income tax deadline approaches. Maybe you’ve already completed your taxes, paid your bill, or are waiting on your refund check. Either way, now is the perfect time to revisit the extended and expanded Home Buyer’s Tax Credit.Why? Because now, as you calculate your tax bill or your refund, you can finally see in real terms just how beneficial a tax credit of up to $8,000 can be to your bottom line.Here are the basics:Qualified 2009 and 2010 first-time home buyers can get up to 10% of the home’s purchase price or a maximum of $8,000. In November 2009, legislation extended a tax credit of up to $6,500 (or up 10% of the home’s purchase price) to long-time residents of the same primary residence if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their previous homes for a five consecutive year period during the eight-year period ending on the closing date of the new home.
Important details to remember: 1) You don’t have to pay it back (as long as you stay in your qualified home for at least 36 months). 2) If you qualify for the credit, you can still apply it to this year’s taxes, even if you’ve already filed your returns, or save it for your 2010 returns. 3) This is a true tax credit, not a deduction. If you qualify for the full credit, there will be an actual dollar-for-dollar reduction of up to $8,000 (or up to $6,500 for qualified repeat buyers) on your tax bill now or in 2010. 4) New income qualification limits have been put in place that expanded the pool of qualified buyers. 5) If you purchased a qualified home or plan to after reading this article, you must have a contract in place by April 30, 2010 (with closing to take place by June 30, 2010), so don’t wait! There are, of course, other details and qualification requirements and restrictions that you’ll need to consider. But don’t hesitate to call your Nashville mortgage lender at (615) 261-1368 if you have any questions. Also, if you happen to have your completed 2009 tax return available, we’ll help you calculate how much money you can get if you purchase a home and qualify for the full credit.
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Nashville Mortgage News- USDA Loan Program Running Out of Funds
Posted by: | CommentsNashville Mortgage News- USDA Loan Program Running Out of Funds
The Department of Agriculture, which oversees the USDA loan program has recently announced that its Guaranteed Loan Program will run out of funds by the end of April 2010. While this does happen every year, it’s usually not until the fall (August/September). Furthermore, this notice has a lot more serious tone than in the past because USDA will not be issuing “conditional commitments” subject to funding this time, because they have stated that they are not sure when new funds will be appropriated by Congress. And just like clockwork, multiple lenders announced they have stopped taking mortgage applications for USDA loans, and the remaining ones said they will continue as long as they can get conditional commitments from USDA offices. 
Having said this, if you are planning on using USDA for your (metro) Nashville mortgage and do not know if you will get final lender approval by mid-April (at which point it is sent to the USDA office to get the conditional commitment), I would urge you to start making backup plans to use FHA or other mortgage financing in case funds dry up more quickly than outlined in the USDA notice.
Final thought: the tax credits being offered to purchase homes have most likely been the cause for the accelerated depletion of funds. Congress allocates money every October for this program, which is a month or two after typically run out of funds, and we’re no where near October 2010! We’re very hopeful that Congress will be able to quickly address this issue well in advance of their normal timeframe. Otherwise, it’s certain to dampen the housing recovery across the nation, particularly in the more rural counties.
