Utah Real Estate & Mortgage Blog

If you are thinking about buying a home in the near future and obtaining an FHA loan, you better act fast. The costs and guidelines of FHA loans have continued to change over the past few years and are becoming a less desirable loan option for borrowers. The next wave of changes are major and really can add to the total cost of the loan to home owners.

Here is a list of the top 5 changes to FHA

1. The annual mortgage insurance premium (MIP) for most new mortgages will increase by 10 basis points (.10 percent). Premiums on jumbo mortgages ($625K or higher) will increase by 5 basis points (.05 percent). New annual MIPs will range from 1.3% to 1.55%
2. FHA will require borrowers to continue paying annual premiums for the life of their mortgage loans. This change will be effective on or after April 1, 2013.
3. Lenders will have to manually underwrite loans for borrowers with a decision credit score below 620 and a total DTI ratio greater than 43%. This change will be effective on or after April 1, 2013.
4. Down payment requirements for mortgages with original principle balances above $625K will be raised from 3.5% to 5%. (A federal register notice was published on Feb 6th. Comments are due March 8th.)
5. Greater oversight will be required for borrowers who are trying to obtain a new FHA loan 3 years following a foreclosure.

Consider this, if you bought a home using FHA before April 1st and you made extra payments on your loan and one day you have at least 22% equity in your home, you can remove the mortgage insurance saving you around $200 a month. If you buy a home after April 1st you must pay the $200 a month for the full 30 years!!! That could cost you tens of thousands of dollars.

If you are looking at buying this year and planned on going FHA financing, you should consider buying before the April 1st deadline. You don’t have to be closed on a home by April 1st, but you must have a property identified by that date with an FHA case number assigned.

Call Kris at 801-683-9666 if you have any questions or would like me to assist you in buying a home in Utah.

-Kris Bowen

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.

Is this a realistic headline?  No.

Everybody is looking for a deal, so there’s a lot of competition in purchasing distressed or bank owned properties.  Good deals often average less than 7 days on the market because they have been priced to sell fast.  There are many buyers who are pre-approved or have cash in hand, waiting for new home listings to be announced.  Don’t miss out because you are not prepared for what homes are selling for in the zip code you are searching.

What do I mean?

Let’s talk about unrealistic home buyers.

Naturally everyone wants to get the most home they can for the least amount of money. This is in opposition to the home seller, who wants the most money for their home. This conflict is one of the things that make real estate sales challenging at times.  When the market starts a shift in an opposing direction, this conflict stands out.  Starting back in 2006 the shift in Utah real estate was starting to occur.  It has been almost four years and it has been our experience that home sellers in Salt Lake, Utah, Davis, Weber, and Washington counties are becoming much more realistic.

While it used to be quite common to hear sellers say things like, “But my neighbor’s home sold for “x” dollars last year!” sellers seem to be getting more realistic when it comes to their home’s value.  They are letting go of the attitude that their home needs to sell for what their neighbor sold for the year before.  A year is almost an eternity in the Utah real estate market.

Home buyers on the other hand seem to be losing their grip on reality.  Yes, there was a time when buyers were able to get significant savings off of the list price. While there is room to negotiate, we have not seen low-ball offers succeed in our local markets.   We often negotiate price discounts up to 10% – 20%, anything more is unrealistic in Utah.   Our market has stabilized from past volatility.

Here are some examples of recent conversations we have had with Utah buyers:

* We’d like to offer $40K under list price on a $175,000 home.

* We just short sold our home last month and are looking to buy now.

* The bank is out of state and doesn’t  know what the property is worth, let’s offer $100,000 less.

* I need a smoking deal on a bank owned home or short sale. I’m willing to pay 60% of list price.

* I refuse to pay a dime over list price on a short sale or bank owned home.

The answer for all of those comments above is “you can’t do/get/buy that”.  You might be asking yourself “why would I pay more for a short sale or bank owned home?”  Because there are multiple offers from buyers who are all looking for a good deal.  These homes are typically priced below market value to induce multiple offer situations.    This is why these homes often sell for more than list price.

Much of this type of thing comes from simply not understanding what is happening in the real estate market. And by “the real estate market” I am not talking about what you hear on network news or even your local evening news / newspaper. You need to understand what the market is doing in the specific area you are interested in. The term “real estate market” is just too broad and real estate is local.

Our agents at Zoom would be happy to provide you at no charge, specific pricing statistics on local Utah zip codes or a specific property.

As a home buyer, you may not know the details and current trends about your local real estate market. Most people buy a home every 7 – 10 years. We are up to our necks in this stuff every single day. This is what we do for a living and helping people understand the details of their local real estate market is what we get paid for.

Give us a call today to discuss your local market. 

You may reach Kris, Zoom Real Estate Realtor at 801-792-5040

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/