Major (Urgent) Changes to Mortgage Insurance Requirements on Condos

Right now, this is a rumor, but when I hear rumors like this, I’m pretty sure it will happen:

Effective 10.2.09, you will be required to put 15% down on a condo for a conventional loan.  FHA loans still allow for the minimum of 3.5% down, but there are stringent development requirements on condominium projects, which makes it very difficult to get a loan through if it is not already FHA-approved.  (Also, the seller may flat-out reject your offer if you only qualify for an FHA loan on a condo, since FHA condo requirements are so strict).

As a side note, if you’re seeking information online or from an online bank, make sure that they’re aware of the rules pertaining to the state you are buying in.  California is a declining market and thus does not allow for 10% down come October 2nd.

Here are the changes that we’re expecting in the industry in regards to the latest down payment guidelines for conventional loans (FHA remains 3.5% minimum):

Up to $417k Loan Amount:

SFR/PUD: 10% down minimum

Condo: 15% down minimum (effective 10/2/09)

$417k – $729,750 Loan Amount:

SFR/PUD: 15% down payment

Condo: 15% down payment

$729,750+:

SFR/PUD: Call me; there are too many variables for FICO and exact loan amount

Condo: If this is your loan amount range, I hope you’re not in the market for a condo! :)

Published in:  on September 20, 2009 at 11:43 pm Comments (1)

$8000 First Time Homebuyer Tax Credit Expiring 12/1/09

Just a reminder that the first time homebuyer tax credit is set to expire on December 1st. This means that you must close (own the home) by this date. Purchase contracts are averaging between 30 and 45 days right now on regular sales, so this means you would essentially have to go into contract by mid-October. If you’re putting an offer on a foreclosed or short sale home, then this process will take a lot longer. The clock is running out!

I provided details about the First Time Homebuyer Tax Credit here, although I recommend you speak to your tax advisor for qualification details. Good luck!!

Published in:  on September 15, 2009 at 8:13 am Leave a Comment

Interest Rates Have Been Improving!

Interest rates have steadily improved in the past week and a half.  I haven’t seen a good run like this in quite a while and definitely not in 2009.  Usually, we have had wild fluctuations.

I have a lot of clients that had a target rate and cost in mind and we were able to take advantage of this good opportunity.  If you’re still floating your interest rate or have not yet taken advantage of refinancing, I recommend doing it now.  You may always get on my Watch List as well!

And remember, if you have little to no equity in your home and if your current loan is owned by Fannie Mae or Freddie Mac, you can still potentially take advantage of these low rates as well. Check on the following two sites and if one of them states “Match Found,” let me know.

http://loanlookup.fanniemae.com/loanlookup/

https://ww3.freddiemac.com/corporate/

Published in:  on September 10, 2009 at 1:41 pm Leave a Comment

Closing Costs and the “Good Faith Estimate”

After you have applied for a loan, your broker or lender is required to mail a Good Faith Estimate (GFE) to you within 3 days of receiving your application.  The GFE gives you the breakdown of closing costs and prepaid items that you must pay at Close of Escrow.  This is just an estimate, but it’s important that you review it and discuss each item with your loan officer.

Closing costs are the one-time fees necessary for the purpose of the loan (such as the appraisal cost, escrow fee, title insurance, notary fee and underwriting fee).  Prepaid items are the items you naturally pay for anyway, but in most cases, you have to pay them upfront.  The three prepaid items are interest on your mortgage, property taxes and homeowners insurance.  The amount that you must prepay is completely dependent on the day in the month and the month in the year that you close, but they can also make up the majority of the funds you must come in with to close.

When you receive your Good Faith Estimate, review it line by line with your broker or lender, asking them to explain anything you do not understand.  If you have any questions, do not be shy about asking them, but do know that it’s an estimate. I tend to prepare conservative Good Faith Estimates, especially when it comes to the prepaid items.  It’s better for you to be prepared for that “worse-case scenario”.

Published in:  on September 1, 2009 at 9:21 pm Leave a Comment