Cooking Corner

Looking for a quick and tasty snack?   

These caprese skewers would be perfect for serving guests on the patio or as a light appetizer for your family. 

News You Can Use

The department of Housing and Urban Development recently announced some changes regarding underwriting guidelines and the biggest change was in the handling of collections.  This will take effect July 1st.

Previous Guideline:

FHA does not require collection accounts to be paid as a condition of mortgage approval but judgments do need to be paid.  However, most lenders want open collections to be paid with the exception of medical collections. 

Proposed Guideline:
 
If the total outstanding balance of all collection accounts is equal to or greater than $1,000 the borrower must resolve the accounts (e.g. entered into payment arrangements with minimum three months verified payments- paid as agreed) or paid in full at the time of, or prior to closing.
 
If the total outstanding balance of all collection accounts is less than $1,000, the borrower is not required to pay off the collection accounts as a condition of mortgage approval.
 
FHA continues to require judgments to be paid off before the mortgage loan is eligible for FHA insurance.
 
The most glaring part of this new guideline is the fact that it includes ALL collections including medical.  Medical is the most common collection found on anyone’s credit report.  Borrowers with medical collections can easily reach this $1000 threshold over the course of a few accounts.
 
The remedy per this guideline is to either pay off or enter a payment arrangement of a minimum of three months for the collection.  If this is done on an older collection, it is very likely this collection’s DLA (date of last activity) will be renewed.  The DLA determines the weight of negativity a collection has on one’s score.  Renewing this is very likely to drop a score.
 
I wanted to give you a heads up on the affect this change will have on FHA loans and the affect the remedy might have on a client’s ability to qualify.   Common sense would tell perspective buyers to pay off all collections before applying for a loan but doing so could actually backfire.   If you or your clients have questions about their credit history and if they need help getting qualified, please call or email anytime.

Cooking Corner

Warmer weather always prompts me to refresh my ‘go-to’ recipes for the grill.  I recently came across this recipe for Shrimp Boil Kebobs.   

It looks like a perfect mix that could make most folks happy with the selection while still making it easy to grill for a large crowd.

News You Can Use

As a reminder there is one week left for FHA borrowers to avoid the upcoming mortgage insurance increases.   

FHA has published ML 2012-04 detailing mortgage insurance premium changes.  The increases that affect Charlotte area homeowners are as follows:

• Increased annual premium- 10 basis points across for the board to 1.25%
  • Implementation – April 9, 2012:  Case numbers assigned on or after April 9th
  • Single family mortgages w/ amortization terms of 15 years or less & LTVs of 78% or less remain EXEMPT from annual MIP
• Increased upfront premium- 75 basis points:  Total upfront premium – 1.75%
  • Implementation – April 9, 2012: Case numbers assigned on or after April 9th
  • Applies to all loans regardless of LTV or amortization term
  • Premium can be financed (same as now).

What this means is for a $200,000 priced home the increases will result in a $23/mo payment increase which effectively reduces a buyer’s purchasing power by $5000.

What can you do?
Buyers who anticipate using FHA to buy their home are encouraged to get under contract and make loan application prior to April 9^th.  By doing so their lender can order a case number prior to the new MI guidelines cutoff date and your client will save significant money over the life of the loan. 

Cooking Corner

As the weekend nears, try this appetizer as you’re watching the Final Four games.    

This rich and flavorful dip sounds like it will be a winner at my house.

News You Can Use

You may have noticed the uptick in rates over the last two weeks.  For example, this week the Freddie Mac Market Survey crested back over 4% and we’re at rates we haven’t seen since last October.  We’ve been blessed with subpar 4% for some time and each time rates peaked over 4%, they trended back down fairly shortly.  While the sustained ultra-low rates have been a great boon to folks buying and refinancing homes, the flipside has been some complacency about how long they’ll stick around.  

As a refresher of how mortgage rates are established, they are a function of mortgage backed securities (mortgage bonds) and lenders’ appetite for a certain loan type/borrower profile.  Similar to the stock market, the bond market is influenced by economic data.  Typically, bad economic data equals low mortgage rates and positive reports cause them to rise.

Many Realtors have commented on how the spring market has arrived early.  It’s encouraging to hear stories of offers being presented after homes are on the market for just a few days and in some instances, even experiencing multi-offer situations.  On a broader scale there’s been a trend of positive economic data which initiated a ‘sell off’ in the bond market resulting in higher rates.  We saw the Federal Reserve express a more positive assessment of the economy, banks producing better than expected results in their stress tests and a possible second bailout for Greece.   Now we’re not necessarily out of the woods yet – unemployment remains high, gas prices are increasing and February had a dip in new home sales.  

This push-pull of positive and negative economic data has put added volatility into an already touchy market.  I expect as we continue on the road to recovery we’ll continue encountering these quick and wide swings in rates.  Clients are advised to understand their available options and if the terms are fair, consider locking them in – this is not a market to test your luck.

Cooking Corner

Looking for a sweet treat that’s a little bit different? 

These chocolate chip salted caramel bars could fit the bill.   

With salty and sweet in each bite, it’s sure to be a winner.

News You Can Use

You may remember a few weeks ago I mentioned there would likely be a mortgage insurance increase on FHA loans.  Well as it turns out, there will actually be two changes.  With these changes HUD will have increased mortgage insurance on FHA loans four times in two years.

FHA has published ML 2012-04 detailing mortgage insurance premium changes.  The increases that affect Charlotte area homeowners are as follows:

• Increased annual premium- 10 basis points across for the board to 1.25%
  • Implementation – April 9, 2012:  Case numbers assigned on or after April 9th
  • Single family mortgages w/ amortization terms of 15 years or less & LTVs of 78% or less remain EXEMPT from annual MIP
  •  
• Increased upfront premium- 75 basis points:  Total upfront premium – 1.75%
  • Implementation – April 9, 2012: Case numbers assigned on or after April 9th
  • Applies to all loans regardless of LTV or amortization term
  • Premium can be financed (same as now).

Comparisons:
What this means is for a $200,000 priced home with 3.5% down the total loan amount would be $194,930 ($193,000 + 1% upfront premium of $1930).  At a 4% rate, this would give a Principal & Interest and mortgage insurance payment of approximately $1115.  

Under the new guidelines, with the same $200,000 home with 3.5% down the total loan amount would be $196,377 ($193,000 + 1.75% upfront premium of $3377).  At a 4% rate, this would give a Principal & Interest and mortgage insurance payment of approximately $1138. 

This $23/mo difference effectively reduces a buyer’s purchasing power by $5,000!

What can you do?
Buyers who anticipate using FHA to buy their home are encouraged to get under contract and make loan application prior to April 9^th.  By doing so their lender can order a case number prior to the new MI guidelines cutoff date and your client will save significant money over the life of the loan.