Dallas TX home loans, real estate loans, home finance information – Envoy Mortgage

What is Happening in the Mortgage Market

Those Who Wait Will Pay Thousands More This Spring

January 29th, 2010 12:13 PM

Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead - submit all FHA mortgage applications by the last week of March.

First Time Buyers and Step Up Buyers are still eligible for up to $8000 and $6500 Federal Tax Credit if under contract by April 30th. Click Here to read the FAQ's.

If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business.

Richard Woodward
Banker / Senior Branch Manager
When Trusted Advice Counts

Office: (972) 661-5136

17311 Dallas Parkway Suite 173 Dallas, TX 75248

Visit Us Online - www.EnvoyMortgage.US

Posted by Richard Woodward on January 29th, 2010 12:13 PMPost a Comment (0)

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FHA Announces Big Changes to Existing Programs

January 20th, 2010 3:57 PM

FHA Announces Big Changes to Existing Programs

Today FHA announced that it would make sweeping changes to the current FHA mortgage program in an attempt to shore up it's beleaguered balance sheet. As many existing FHA borrowers default on their home loans the move is necessary to ensure the program stays solvent.

The biggest impact will be the increase in the up front mortgage insurance required. FHA will raise the up-front Mortgage Insurance Premium, paid by borrowers, from 1.75 percent to 2.25 percent as well as request legislative authority to increase the maximum annual MIP that the FHA can charge. This is the second time in two years that it has raised the premium.

In addition, in order for new borrowers to qualify for the 3.5 percent down payment program, they will now be required to have a minimum FICO score of 580. Borrowers with a lower score will be required to put down at least 10 percent.

The FHA will also reduce allowable seller concessions, or how much the seller can help the buyer, from 6 percent to 3 percent. The change will give borrowers a greater financial stake in their home purchases.

Commissioner Stevens, with the FHA, said he wanted borrowers to have more "skin in the game," and this is clearly a means to that end.

As of today, the date that these changes will take place has not been announced. I would encourage my Realtor Partners to inform any prospects they may be working with to consider a move now if they have little cash for down payments and closing cost.

As a direct endorsed lender, I would be happy to assist any potential buyers with the best possible financing terms.

Richard Woodward
Banker / Senior Branch Manager
When Trusted Advice Counts
Envoy Mortgage

Office: (972) 661-5136 Fax: (972) 314-9647

17311 Dallas Parkway Suite 173 Dallas, TX 75248

Visit Us Online - www.EnvoyMortgage.US

Posted by Richard Woodward on January 20th, 2010 3:57 PMPost a Comment (0)

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The New Good Faith Estimate

January 6th, 2010 5:46 PM

Effective January 1, 2010 HUD implemented the new Good Faith Estimate (GFE) for both Refinance & Purchase transactions of FHA & Conventional loans. HUD has been working on this revision for over 4 years and finally pushed it through last year. The goal was greater clarity and transparency for borrowers. I do not want to get into the details of every single field of this 3 page document or I could write my own book. I would rather write about what I like about the New Good Faith Estimate form and what I don’t like.

Improvements I like:

All origination charges lumped together- This includes what was loosely referred to as the origination "point", underwriting, processing, flood cert, credit report, appraisal, doc preparation, wire transfer and any other fee that is required by the lender to originate the loan. This does make it easier for the borrower to shop rates and fees.
It clearly explains if the loan will have a prepayment penalty, if the payments can change, if the loan balance can increase, or if the loan has a balloon payment.
Tradeoff Table, this is a great idea but I promise you, most lenders will not use this. - Gives 3 different scenarios and compares the the loan quoted in the GFE to the same loan with lower closing cost but higher rate and the same loan with higher rate but lower closing cost. This gives the borrower the ability to pick the best option based on his/her situation.
Gives a snapshot of loan with important dates - Under “Summary of the loan” section on page 1, the borrower can get answers to most of the questions regarding the new loan.
Easier comparison of loan offers - The new GFE guides the borrowers on the factors against which to shop and compare loan offers. Surprisingly however, closing cost is not mentioned as one of the factors.

Things I don’t like:

Cash to Close missing - There is no place on the new form that tells the borrower what will be the cash required to close the transaction.
The full payment with taxes and insurance is not on the Good Faith Estimate - This will confuse most borrowers and make them think the total monthly payment is much lower.
Charges typically paid by the buyer have to be listed, even if the seller pays them - For example the owners title policy: if the lender quotes too low, then they are responsible to reimburse the borrower for the overage that exceeds 10% of the original quote. Don't you think most lenders will quote very high to make sure they don't pay for it? This will add to the disclosed estimated closing cost even though the borrower won’t be actually be paying for it. This will confuse borrowers and make them believe the amount required to close is much higher and potentially make some borrowers believe a purchase is out of their reach.
At least 1 provider per service required even if the lender permits borrower to shop - For some service providers lender may allow borrower to shop on their own. But even then, lenders are supposed to provide the borrowers with name of at least one service provider.
No signature - There is no signature required from the borrower on the form. In case of dispute, it will be impossible to prove which GFE did the borrower actually get at the beginning of the transaction.
3 Pages from 1 - Even though HUD claims to make everything simpler and easier for the borrowers to understand, the new GFE is 3 page long compared to the old one which was 1 page.
HUD prohibits Lenders from requesting income and asset documentation prior to issuing a Good Faith Estimate - All I can say is WOW! Most borrower believe that when they receive a good faith estimate that they are approved. Many will find themselves declined after the lender is able to review the borrowers full qualification. Just seems wrong to me.

Change is hard, and in this case, a little delusional. In my 14 years of originating mortgages in the Dallas/Fort Worth market I have seen many changes, let's hope this one is a good one for everyone. I would be happy to answer any questions regarding the 2010 Good Faith Estimate. Feel free to call me.

Richard Woodward
Banker / Branch Manager
When Trusted Advice Counts
Envoy Mortgage

Office: (972) 661-5136

17311 Dallas Parkway Suite 173 Dallas, TX 75248

Visit Us Online - www.EnvoyMortgage.us

Posted by Richard Woodward on January 6th, 2010 5:46 PMPost a Comment (0)

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