There are many changes that have taken place in the Mortgage World recently that you need to be aware of.
What are the changes and how will it impact our market and sales opportunities?
Conventional loans lending limits, which are FANNIE MAE & FREDDIE MAC, loans have been reduced IN SOME AREAS.
This is important as the vast majority of all Conventional loans are underwritten under the FANNE MAE & FREDDIE MAC guidelines.
The GREAT news is that there has been NO REDUCTION to the lending limits in our area. The maximum LOAN AMOUNT remains the same at $417,000 in Yavapai County.
What does this mean to Home buyers? With Conventional Financing they can PRUCHASE A PRIMARY RESIDENCE with a SALES PRICE up to $438,900 with only 5% down and borrow up to $417,000 . WOW!
FHA lending limits were changed on 10/1 and our new maximum loan amount for a SFR was reduced to $271,050 down from $390,000.
I believe the impact to our market will be negligible as very few buyers have purchased homes using FHA financing with a loan amount of $390,000.
Under the new FHA lending limits you can still purchase a $280k home with 3.5% down using FHA financing. FANTASTIC!
Many of you have heard that USDA loans were suspended. At W & V we can now close USDA loans with a conditional commitment from USDA, which means we will service the loans until the funding for the new fiscal year is approved.
There has been a change to the Guarantee Fee on USDA Loans. In the past the upfront guarantee fee was 3.5% which is typically financed. The upfront fee has been reduced to 2% and a new monthly fee has been added of .3%. This structured much like the MIP insurance for FHA Loans.
The reduction to the VA funding Fee, which also is typically financed HAS NOT BEEN REDUCED as we had hoped. This proposal is part of the Presidents Job Bill that has not passed. Therefore what will happen with the VA funding Fee remains to be seen.
It was just announced 10/24 that the Home Affordable Refinance Program also known as HARP has been enhanced.
To be eligible the current loan on the property must be owned or guaranteed by FANNIE MAE or FREDDIE MAC and have been sold to them on or prior to 5/31/09. The loan may be serviced by another lender and still be guaranteed or sold or to FANNIE or FREDDIE. Homeowner’s do not have to go to their existing lender to take advantage of this program. WE CAN HELP THEM!
The goal is make the program more accessible to more borrowers who can benefit from refinancing their home who are underwater while reducing the risk to FANNIE or FREDDIE and to bring some STABILITY TO THE HOUSING MARKET!
The details of the program will be released 11/15.
The proposed changes are;
Pricing improvement for borrower who refinance into a shorter-term mortgage by lowering the fees and rate that are currently in place when a Homeowner owes more than 80% of the value of their home.
The removal of the current restriction of the maximum loan amount of 125% Loan to appraised value for fixed rate mortgages.
An important element of these changes is to encourage Homeowner’s by eliminating higher rates if they agree to shortening the term of their mortgage. Borrower that utilize the HARP program to refinance into shorter-term mortgages will be eligible for lower rates than are currently available on this program. Borrowers who owe more on their home than they are worth will be able to reduce the balance owed much more quickly if they take advantage of today’s low interest rates and shorten the term of their mortgage.
The concept is by reducing the rate and the term of the loan, borrower’s will reduce their loan balance much more quickly hand at the same time keep their house payment the same or if not lower and to be able to take advantage of the historically low interest rates. For example, If a homeowner refinances with a 30 Yr Fixed it could take a full 10 yrs before their loan balance equals the value of their home. A 20 Yr Fixed could cut it the time needed to 5 ½ yrs. A 15 Yr Fixed Rate Mortgage would likely give them a slightly higher payments, with the lowest rates available and cut the time frames down to 3 ½ years to have their loan balance equal the value of their home. How quickly a Home Owner will achieves a positive equity positions will depend on what they owe and how much their home is worth.
What I love about this proposed program is it gives Home Owners incentive to stay in their homes rather than walking away, which will be GREAT FOR OUR MARKET AND THE STABILITY OF VALUES!
I will share the details once they are announced.
Your Local Lending Resource offering "Speed with Expertise"!
Wallick & Volk
3615 Crossings Dr. Ste A
Prescott, Az 86305
Licensed Sr. Mortgage Consultant
Certified Reverse Mortgage Specialist
Office 928 778-7167
Cell 928 308-1723
Fax 928 445-5308
This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates. This post is for informational purpose only and is not guaranteed and does not render as legal advice. Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney. Please visit my website for contact information