Thursday, September 25, 2014
The dream of homeownership remains a strong one among younger renters. As the housing recovery continues, Americans are growing more confident in the housing market in general. And that confidence comes in part from a potentially surprising source: Millennial renters, who to date have been perceived by many as largely uninterested in and/or unable to attain homeownership.
FHA Loan Limit Changes Effective January 1, 2014 Loan limits for the country's highest-cost areas were reduced January 1, 2014. The 2014 national maximum "ceiling" loan limit for a one-unit property in a high-cost area was reduced from $729,750 to $625,500. The current standard minimum "floor" loan limit for a one-unit property in a low-cost area will remain unchanged at $271,050. Loan limits in other areas have also changed, with both increased and decreased loan limits in different areas. In Special Exception Areas (Alaska, Guam, Hawaii and the U.S. Virgin Islands), the maximum "ceiling" loan limit for a one-unit property will be reduced from $1,094,625 to $938,250. The following illustrates FHA loan limits for low-cost and high-cost areas. Property Size Low-Cost Area "Floor" High-Cost Area "Ceiling" One Unit $271,050 $625,500 Two Units $347,000 $800,775 Three Units $419,425 $967,950 Four Units $521,250 $1,202,925 For multiple-unit loan limit adjustments in Special Exception Areas, download the FHA's Mortgagee Letter. FHA loan limits are determined by the median home price in each county. Approximately 650 counties have lower limits as a result of this change in the governing law. FHA loans are extremely popular and currently account for about 25% of all loans used to purchase homes. With an FHA loan, buyers can put down as little as 3.5%. FHA loans are available as both fixed-rate loans and adjustable-rate loans.
New Mortgage Rules Won't Knock Out Many Borrowers Lenders managed to win a reprieve on another piece of the standard, which is that a borrower’s total debt payments (including credit cards and student loans) can’t exceed 43 percent of income. Loans eligible for purchase by Fannie Mae (FNMA) or Freddie Mac (FMCC) or for insurance by federal agencies don’t have to meet that debt-to-income standard until 2021.
Third party credit reviews or “hard inquiries” impact credit scores for 12 months from the date they occur even though they can be seen for 24 months. There are windows of time that a consumer can have multiple third party credit reviews and it will only impact the score as one inquiry. This happens only with mortgage, student loan, and car financing hard inquiries. Each of these categories has its own window where multiple credit reviews are considered as one. All other third party reviews can drop scores 2-5 points each time they occur. When an individual has many hard inquiries or third party reviews it can be considered “excessive shopping” and reduce scores dramatically. In many cases 6 hard inquiries (in total) in a 12 month period are considered excessive shopping and can drop Fico credit scores 20-40 points. Depending on what threshold a mortgage applicant needs for loan approval or the best interest rate available this could devastate their options. If a consumer buys their own credit scores from the Fico site their credit scores will not drop, even if it’s 100 times a day. If a promotional credit card offer is extended it also will not reduce scores. These types of inquiries are considered “soft inquiries” and will not hurt credit scores at all. If the promotional offer was accepted by the consumer a hard inquiry would occur before the final approval on the offer is given by the creditor.
How to Dodge 5 Costly Rookie Mistakes 1. Searching for the dream home before getting prequalified for a loan. Save yourself the disappointment of not being able to afford the home of your dreams by getting prequalified for your loan before you start house hunting. Instead of picking out a price range and searching listings, take the time to talk to a lender about how much house you can realistically afford and what the monthly payment breakdown -– with all taxes and other fees included –- will be. The amount you are preapproved for will help you create a realistic budget for your home search. 2. Delaying the buying process in hopes of a better rate.
As of August 2013, Mortgage customers that can document an "Economic Event" are no longer required to wait the standard seasoning time for bankruptcies, short sales & foreclosures. Rather than waiting (2) years for BK & (3) years for short sale/foreclosure borrowers are able to purchase within 1 year of the event as long as the following is true: • Household income (at the time) dropped at least 20% and continued for at least a six month period. • All credit was well maintained up until the event AND the borrower now has 12 month paid as agreed credit ~ this includes Non-Traditional • Borrower(s) have completed HUD's Satisfactory Housing Counseling.
40 Million Mistakes: Is your credit report accurate?A new study indicates as many as 40 million consumers have a mistake on their credit report and Steve Kroft finds it's hard to get them fixed. A must see video that will open your eyes on how hard it is to get errors on credit reports corrected.