Utah Real Estate & Mortgage Blog

HUD recently removed the $100 down incentive to buy a HUD house.

Did you know that?    There’s no news of this on the internet.  No public announcement that states it no longer exists via any HUD website or any announcements to our local mortgage lenders and or Realtors.    I recently attended a HUD Home training course and learned of the change in person.

What is a HUD home?  It is a single family residence, 1-4 units, that had an FHA loan to secure the mortgage.  When these types of properties are lost to the bank in a foreclosure, they become HUD Homes.  You do not have to be a first time buyer to buy a HUD home.

Local mortgage lenders and Realtors®  probably believe this program is available.  Some Realtors® will begin to find out that their offers might be denied due to the recent change.  Do your homework, each state is different and other states may offer the program.   I had a client that was looking to purchase a home with this program.  I emailed him during the HUD training class to break the news.   Does your agent or loan officer know about this change?

The conversion of the HUD marketing and management contract had recently allowed the $100 down incentive to promote buyer interest for several years.  Now that HUD has transitioned to a new 2010  contract, they have decided to remove this incentive  in the state of Utah.

DON”T DESPAIR!   You can still buy a home with No Down Payment through our local Utah Housing Program.  HUD homes are still fantastic deals and in some cases ready to move in with little or no repair.  Also, my preferred lenders offer a 30 yr fixed rate loan that can include the rehab costs to fix or update the home.  You can make energy efficient changes, fix the leaking roof, replace the windows, etc with the same loan you use to purchase the property.

Contact me today if you would like to learn more about buying a HUD home OR if you have questions about the FHA rehab and energy efficient loan programs.

801-792-5040

Zoom Real Estate

Last month I wrote an article about interest rates.  On November 4th, 2010…my best lenders were offering 3.75% rates on a 30 year loan.  Six week later, rates are now 5% to 5.25%.  Keep in mind, that a 1% change in rates is almost equal to a 10% change in the price for a home.  Call me today if you are ready to get off the fence, and buy a home.

Buyer Beware…You might want to reconsider that decision and go with a Mortgage Lender the next time you buy a home in Utah.  I want to share a recent experience I had as a Utah Real Estate Buyer’s Agent.

This was for a purchase of an owner occupied home that was less than $150,000.  This buyer got approval from the broker back in September 2010.  We wrote an offer at the end of September and were under contract within the first few days of October.   We should have closed on this client’s home last week.

WE DID NOT CLOSE.

As of today, we are still waiting for formal approval from the broker.  The loan officer has communicated that he/she has done everything possible to speed up the process.  My client is now at risk of losing thousands of dollars in deposits and inspections due to the broker not closing the loan on time.  Every week, we were told that everything is OK and it should only be another day or two.  It has been more than 3 weeks in underwriting.  Is this an isolated problem that does not happen that often?  No.  Let me explain.

A couple of years ago, mortgage brokers were put on a pedestal by the banks and their loans were given priority.  After the collapse of the banks/lending, banks started to push mortgage brokers out of the way.   Many national and local banks shut down their wholesale lending operations (these were the divisions that handled mortgage brokered loans).    In the past I was a California & Utah Mortgage Licensee.   I have had experience in working with both brokers and lenders.  I understand what it takes to get a home loan and close on-time.

Since my move to only being a Utah real estate agent, I have never had deal not close on-time.  I went back and looked at the financing my clients used to purchase these properties.  NOT ONE was with a mortgage broker.  They were either with a Utah lender (bank, credit union, in-house lender) or cash.  Then I went back and looked at all of Zoom Real Estate’s closed purchase transactions for the previous year.  I looked at if the deals closed on-time and if they used a broker or lender.

• Of the deals that the buyer used a mortgage broker for the financing…85% of them DID NOT CLOSE ON-TIME.
• Compare this the deals that the buyer used a mortgage lender for the financing …1.5% of them DID NOT CLOSE ON-TIME.

I am writing this blog post today to warn Utah home buyers to beware of mortgage brokers if you want to close on-time.  It is difficult for brokers to close on-time because they do not have the resources to do so.  Lenders have in-house underwriting, control of the loan file, and better access to the team working on your file (AKA..your home loan).

If you are being given the run-around from your mortgage broker, give me a call and I would be more than happy to recommend several local UTAH lenders to help you with your home purchase.

Kris (801) 792-5040

Zoom Real Estate Agent

HOW?

Three different lenders I work with contacted me today about home loan rates.  All three of them are able to do a 30 yr fixed rate FHA or VA  loan at 3.75% (apr 3.99%).  WOW!  With the loan rates getting even better today, you can save an estimated $72 a month (see example below).

Saving $72 a month on your Utah home payment is great, but how does $72 a month = $25,000 in savings?  Look at the total interest paid over the life of the loan as given in the example below.  In addition to the lower payment, you will save thousands in total interest paid.  What a great day to buy a home.

Interest Rate: 3.750% (3.99% APR)

Loan Amount: $250,000.00 ~

Term of the Loan: 30 years

Monthly mortgage payments: $1,157.79 ~

Total interest paid over the life of the loan: $166,804.04

VS.

Interest Rate: 4.25% (4.49% APR)

Loan Amount: $250,000.00 ~ Term of the Loan: 30 years  

Monthly mortgage payments: $1,229.85

Total interest paid over the life of the loan: $192,745.91

Buy more home today than yesterday.  Contact me today to find out more about these rates and loan programs. 801-792-5040

November Update on Utah Home Lending:

• There is money available as of November 4, 2010 for Down Payment Assistance (up to $10,000) throughout Salt Lake County.
• 100% financing programs available.  NO DOWN PAYMENT!
• $100 down payment HUD homes are available throughout Utah.
• Special Loan deferral programs are available in Salt Lake County (up to $20,000!)  No payment/No Interest on select homes.
• FHA rehab loans that allow you to buy a home through FHA and receive the money to rehab/repair a home at the same time.
• FHA  Energy Efficient Mortgages that allow you to update windows, appliances, furnace, hot water heater, insulation when you purchase a home.

If you have a steady job and decent credit, you may be a home owner before the end of the year.

801-792-5040

For Utah families in these current economic times, the dream of owning a home seems to be moving farther away. With expensive closing costs, a high down payment and other fees, some families don’t have the extra cash to get into a home. That’s when the Community Development Corporation and the Own in Murray program steps in to help.

In 2009, Murray City approved $25,000 from Community Development Block Grant funds to assist people who want to purchase a home in Murray. Qualified applicants received between $5,000 and $7,500 to help cover those extra out-of-pocket costs. For the current fiscal year, $49,000 has been set aside for Murray’s down payment assistant program.

Funding for the program is limited, so applicants are being encouraged to apply as soon as possible. Applicants must submit all required documentation, meet eligibility requirements, have a good debt-to-income ratio and meet income requirements depending on the number of family members working and living in the home. A chart listing income eligibility as well as a link to the application packet can be found on the Murray City website at www.murray.utah.gov.

Most down payment assistance loans have a zero percent deferred interest rate and for residents who stay in the home for 15 years, half of the loan is forgiven.

“I think we will be able to do seven loans this year,” Harper said. “If someone is looking to purchase a home, they should contact a Realtor with Zoom Real Estate for more information.”

In addition to the Murray City program, there are programs to help buyers in Utah County, Davis and Salt Lake County.  The money will not last long.  Contact Kris today at 801-792-5040 to learn more.

FHA mortgage insurance premiums approved to triple in 2010.  Last week, the House of Representatives gave the FHA power to raise the monthly mortgage insurance premiums it charges to its borrowers.
Currently, monthly mortgage insurance premiums are 0.55% of the unpaid loan balance, divided by 12.  The recently approved Federal Housing Administration Reform Act provides for an increase in monthly premium of up to 1.55 percent.

Despite the ability to charge 1.55 percent, FHA officials say an increase to 0.90 percent would be sufficient to self-insure its loans.

Assuming a $200,000 mortgage, the math to a homeowner looks as follows:

* Current Premium (0.55%) : $91.67 monthly mortgage insurance premium
* Expected Increase (0.90%) : $150.00 monthly mortgage insurance premium
* Maximum Increase (1.55%) : $258.33 monthly mortgage insurance premium

A increase in monthly mortgage insurance premiums will reduce home affordability for buyers in Utah.   If more of your monthly payment is going towards the mortgage insurance premium, then you have less money to pay towards the home mortgage.

The bill awaits companion legislation in Senate and final approval into law, but considering the House’s vote last week, it could happen rather quickly.  If you’re planning to buy or refinance a home using an FHA mortgage, you may find that waiting to take the next step could reduce how much home you can afford to purchase.

While 3.5% down is still available to home buyers who use FHA financing, the  Federal Housing Administration has announced changes to the popular home buying program.  The changes are being implemented to increase the FHA’s income and reduce the agency’s risk on these loans.   There was talk before this week’s announcement that the minimum down payment would be increased to 5% down.  For now, the minimum down payment will remain the same.

Announced FHA Policy Changes:

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending.
Up Front Mortgage Insurance is currently 1.75% of the loan amount.   After April 5th 2010, this is going to increase to 2.25%.  For a $180,000 purchase, this would cost a home buyer about $900 more.  In addition, FHA may increase the monthly mortgage insurance premiums later in the year.

Reduce allowable seller concessions from 6% to 3%.
Buyers that want a seller to pay their closing costs will be limited to a maximum concession no greater than 3% of the sales price.  This change is expect to occur by Summer 2010.

Update the combination of FICO scores and down payments for new borrowers.
Home buyers that do not have the required minimum FICO score may increase their down payment to 10% to compensate for the lower score.

If you have questions please call 801-792-5040

What is really going on in the Utah Real Estate market?

We’re inviting you to a special workshop, co-sponsored by the Utah Chapter of the Financial Planning Association, and of course, zoomUTAH.com.

You’ll get valuable tips from various experts on such topics:

• Utah’s Economic & Real Estate Outlook
• Home Grants, Tax Credits and 100% Financing Options
• Improving Your Credit Scores
• Cash Flow Management & Cutting Your Debt Strategies
• Recovering your Stock Market Losses – Based on Last 9 Recessions

Be prepared to take a lot of notes! Whether you’re a first time home buyer or a seasoned real estate investor, you do not want to miss this free seminar.

To Register Visit http://www.zoomutah.com/events/

In 1997, when I entered the financing world, I was awed by the availability of 100% financing. It was such a recent development in the mortgage industry that not many lenders were making it available. However, as time went on and competition became fierce, more and more banks and lenders made 100% financing available to the masses.

Not that long ago, 100% financing was available on an investment property with no income verification. Can you believe that? It amazed me how easy money was to obtain AND how little was needed to risk. Banks loosened their requirements to the point that not even work verification was needed. However, the bubble burst on such loans and many banks and financing institutions withdrew all of their 100% financing options. As many of you know, many of these banks and mortgage companies have closed their doors.

FHA, our government backed loan, followed suit and withdrew the availability of “seller assisted” down payment. This means that using the existing equity of a home for the required 3% down payment is not an option anymore. They even changed their required down payment from 3% to 3.5% effective January 1st 2009. This means that a borrower of an FHA loan will need more money out of pocket. This is good in many ways as it lowers the high risk these loans have fallen subject to.

Is there still a loan out there for those of us who need to buy and don’t have a down payment? YES, here is a list of 100% loans available today:

• FHA: This 97% LTV (Loan To Value) government backed loan will allow a borrower to finance up to 100% CLTV (Combined Loan To Value) of the purchase price IF the borrower can obtain the remaining 3% from another source. This is a great loan and has incredible rates. It’s 100% for those that can obtain a gift or a second loan from family, employer, church, etc. They allow energy-efficient upgrades above the sales price.
• Utah Housing: This is an FHA hybrid that allows first time home buyers to purchase a home in Utah using up to 103% of the purchase price. It’s technically an FHA loan up to the 97% and a concurrent 2nd mortgage is added for the remainder. This loan is incredible, it allows a qualifying borrower (some restrictions apply) to get into a home with no down payment.
• Conventional 100%: This is a conventional type loan that allows borrowers access to 100% financing using a combination of a 1st and 2nd mortgage. This loan is a last resort option for those not qualifying for other 100% loans because the rates are a bit higher.
• USDA Rural Housing: This is a government loan used to develop rural areas of the community (Eagle Mountain, Saratoga Springs, etc.) and allows 100% financing with no mortgage insurance. Qualifying is easier, and with no mortgage insurance the payment stays low.
• VA: This loan is reserved for veterans and active duty military. Borrowers have access to 100% financing and no mortgage insurance. This is the best loan available today. The rates are low and qualifying is more generous. They even allow for energy-efficient upgrades over the sales price!

As you can see financing options are still available with little to no money down. Please call us at 801-266-2466 for a friendly no-obligation quote. We can quote you rates and fees right over the phone or have them sent directly to your e-mail.