Atlanta Loan Source

Risk Based Pricing/Rates Surprises Customers as they Search for the Lowest Possible Rate

Changes to the mortgage industry continue to create confusion for those shopping for the best mortgages in the market place.  Most of the changes are coming from the largest money center banks that end up servicing the lion’s share of the nation’s mortgages through tightening underwriting guidelines.  In addition, Governments from all levels feel compelled to “do something about it” in order to protect their citizens by creating legislation that may or may not help in the long run.

What is risk based pricing?

As the true cost of the mortgage meltdown is exposed, mortgage rates are now based on the varying levels of risk to the lender.  I feel that mortgages, now more than ever have become a custom product for each specific client.  The rate offered will depend on credit scores, down payment, debt-to-income ratios, mortgage program, etc.  Just a year ago, the spread between the rates being offered to the most qualified clients and the clients with less down payment, lower credit scores and higher debt-to-income ratio’s is widening.  Your credit score can drastically affect the mortgage rate that you are offered. 

What is your credit score?

Conforming Loan adjustments:

• 720+ allows the most flexible programs and best rates with no pricing adjustments
• 680 – 719 requires up to .50 additional points that may affect the rate being offered.
• 660 – 679 required up to 1.25 additional points that will affect the rate being offered.
• 640 – 659 requires up to 1.75 additional points that will affect the rate being offered.
• 620 – 639 required up to 2.50 additional points that will affect the rate being offered. 

FHA Loan Adjustments:

• 600 +  No pricing adjustments
• 580 – 599 require .50 additional points that may affect the rate being offered
• 530 – 579 require 1.50 additional points that will affect the rate being offered
• Bellow 530 requires 3.00 additional points that will affect the rate being offered and this adjustment applies to borrowers with no credit score.

The lending game has changed and prudent planning will help secure the best possible loan in any given situation.  Create a good mortgage plan that will guarantee success.  Do not wait until the last minute. 

Jim Hogan is the LOANSOURCE and available to address your questions or concerns and extends this service offer to anyone you know that need to create a mortgage plan.  Call direct at 404-870-2348.

New FHA Loan Limits Will Help Ease the Lending Crisis

The Federal Housing Administration (FHA) has been authorized by Congress to increase their maximum loan limits.  Their increase raised the maximum base across the country and even higher for specific “High Cost” markets. 

 

The Atlanta MSA (metropolitan statistical area) new Maximum FHA Base Loan is now $346,250 and this number translate into a sales price of $354,200.  For your area, follow the link to FHA loan limit web site.

 

This new limit has created a huge opportunity for buyers who would otherwise not qualify for a purchase or refinance under the current conforming lending guidelines.

 

The lending game has changed but prudent planning will help secure the best possible loan in any given situation.  Make a decision with knowledge.  Give me a call to discuss your situation or introduce me to anyone you know who needs solid mortgage advice.  I want to be your mortgage consultant.

 

News continues to blast the mortgage industry as underwriting guidelines tighten.  In spite of a recent move by the Federal Reserve to build a foundation of confidence through offering guarantee’s to the lending industry, it will take considerable time to get back to a more normal lending environment.

 

Buying a foreclosure property using the FHA 203-K Renovation loan…a Match made to Order!

Atlanta, GA. -- Foreclosure’s are on the rise and there are huge opportunities for home buyers who are interested in buying real estate at bargain prices. Opportunities yes, but they come with their own set of problems and risks. 
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The Problem:XXXXX

Most foreclosed properties are not in the best of shape
Most foreclosed properties require extensive repairs and renovation
Most buyers today do not have the cash available to renovate
Most lenders will not lend on properties that require extensive repairs until the work is complete.
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What is a buyer going to do?
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To the Rescue…The Department of Housing and Urban Development offers a home loan through the Federal Housing Administration Called the 203-K loan. The “K Loan” allows a buyer to purchase a home, allows them to roll the cost of renovation into the loan and if the renovations require that the owner vacate the home, the borrower may finance up to 6 months of payments. 

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The final base loan amount must remains under the FHA loan limit for the county in which it is located. In the Atlanta MSA (Metropolitan Statistical Area) has a loan limit of $252,890 for a single family home, $284,834 for a two-family home, $346,060 for a three-family home or $399,300 for a four-family home. If you are not sure of your counties loan limit, go to the FHA Loan Limits web site, choose your state and review the list for your loan limit.
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The property does not have to be a foreclosed property; in fact, it could be a home that the borrower would like to update the kitchen or bathrooms, maybe some paint, new appliances or new carpet. You could use this loan program to add a room or a 2^nd floor to the home. The borrower can use this loan program as a refinance and fund home improvements. The “K Loan” is a great loan for renovations, so if you are thinking about a renovation or know of someone who might need a loan product like this, just call or e-mail Jim Hogan, the LoanSource. 
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Jim Hogan is with Opteum Mortgage and is an FHA 203-K Renovation loan expert. You can contact him at jhogan@opteum.com or 404-240-2348.

The Death of Down Payment Assistance...

What else is going to happen to prolong the housing slowdown and create additional road blocks to home  ownership, especially for the First Time Home Buyer?

First, it was the end of Sub-Prime mortgages then, tougher underwriting standards at all levels of the mortgage industry, a housing market which continues to get pummeled and then HUD publishes their Final Rule concerning using private down payment assistant programs to fund the 3% minimum borrower investment on HUD insured properties.

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On October 1, 2007, The Department of Housing and Urban Development published in the Federal Register a new ruling concerning the Standards for Mortgagor’s Investment in Mortgaged Property: Final Rule which basically eliminates the use of privately funded down payment assistance programs that “in whole or in part, is funded by the seller or any other person or entity that financially benefits from the transaction or any third party or entity that is reimbursed, directly or indirectly, by the seller or any other party that financial benefits from the transaction”.

 

But Wait!  Is there hope that this ruling could be over turned?  Both the Nehemiah Corporations of America (Sacremento, CA), and Ameridream (Gaithersburg, MD) have filed separate law suits to challenge this directive.  In addition the politician’s are beginning to make a lot of noise over this issue.  An article published in the National Mortgage News on this subject says that the Nehemiah Corporation of America has a six month reprieve from this ruling because of a law suit from 1998.

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The Federal Register report revealed that there is a “2 to 3 time greater risk of default and claim with purchase loans that receive down payment assistance from the seller or other persons or entities that financially benefit from the sale of a home to the borrower than from all other loans with down payment assistance from all other sources”.

It also mentioned that in May of 2007, the IRS ruled that “companies that funnel down payment assistance from seller to buyers through “self-servicing, circular-financing arrangements” are inconsistent with operations as a section 501 (c) (3) charitable organization”. The down payment assistance companies sprung up all across the US during the 90’s and organized their companies as "Charities” to circumvent the HUD/FHA rules.  Now their existence is in jeopardy.

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So where do we go from here?

 

HUD has been working on a 100% financing program by restructuring their mortgage insurance system to a tiered system, but it seems we are still a long way off from this happening.  There are also public funded down payment assistance program like the Georgia Dream Program which is part of the Georgia Department of Community Affairs.  They help create home ownership opportunities for first time home buyers through the use of state bond money.

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As dedicated mortgage professionals our consultation becomes even more important and the coordination between the real estate agents and lenders should strengthen as additional road blocks to home ownership are created.  We are more than just mortgage or real estate sales people; we are consultants and counselor’s, we are educators and it is our responsibility to do the right thing and help create successful long term wealth through proper mortgage strategies.

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