Mortgage

Quick Hits, FAQs and Calculators

Preparing for Home Ownership     Am I better off renting?     Am I better off refinancing?     What home can I afford?     How much should I put down for a new home?     

Understanding Finances         How advantageous are extra payments?     How much can I borrow?     How much can I save in taxes?      How much will my mortgage payments be?    Should I pay points to lower the rate?     Which is better: 15 or 30 year term?    Which is better: fixed or adjustable?    Which loan is better?

Considering Home Equity Financing   How much will my loan payments be?    Should I consolidate my debts?    Buying a vehicle – auto or home equity loan?    How large a line of credit can I obtain?    What will it take to pay off my line of credit?    

Where will mortgage rates go in 2012? Originators chime in.

Some of the best home mortgage originators from across the country answered Dan Green’s call for 2012 mortgage rate predictions, here is his post on the subject but, in a nutshell:

“Predictions for 2012 were remarkably consistent — mortgage rates stay low, housing continues its recovery, and the government adds more grease to the engine. These are ideal conditions for both buyers and sellers, and would seem to benefit would-be refinancers, too.”

Worried about Losing your Columbus Home to Foreclosure? Find out The Ins and Outs of Obama’s New Mortgage Refi Plan

DAILY REAL ESTATE NEWS | TUESDAY, OCTOBER 25, 2011

As of Today – FHA Mortgage Insurance Premiums Increase .25

How will this FHA change effect your Columbus Home Buying Experience?

How will this effect your Columbus Home Buying experience? Well, if you’re purchasing your home with an FHA loan, this higher MIP will take away, on average, approximately $5000 of buying power.

WASHINGTON – As part of ongoing efforts to strengthen the Federal Housing Administration’s (FHA) capital reserves, FHA Commissioner David H. Stevens today announced a new premium structure for FHA-insured mortgage loans increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30- and 15-year loans.  The upfront MIP will remain unchanged at 1.0 percent.  This premium change was detailed in President Obama’s fiscal year 2012 budget, also released today, and will impact new loans insured by FHA on or after April 18, 2011.

“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said Stevens.  “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”

The proposed change was announced last week as part of the Obama Administration’s report to Congress, which outlined the Administration’s plan to reform the nation’s housing finance system.  The Administration’s housing finance plan also recommended that Congress allow the present increase in FHA conforming loan limits to expire as scheduled on October 1, 2011.

This premium change enables FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010.  The change is estimated to contribute nearly $3 billion annually to the Fund, based on current volume projections.  It is vital that HUD take action to ensure that FHA will continue to serve its dual mission of providing affordable homeownership options to underserved American families and first-time homebuyers while helping to stabilize the housing market during these tough times.

On average, new FHA borrowers will pay approximately $30 more per month.  This marginal increase is affordable for almost all homebuyers who would qualify for a new loan.  Existing and HECM loans insured by FHA are not impacted by the pricing change.

FHA will continue to play an important role in the nation’s mortgage market in 2011.   President Obama’s FY 2012 budget projects the FHA will insure $218 billion in mortgage borrowing in 2012.  These guarantees will support new home purchases and re-financed mortgages that significantly reduce borrower payments.

FHA vs Conforming Mortgage Loans in Columbus…Which Costs Less in the Long Run?

Do put some thought into your mortgage...You'll be glad you did later on

I have a feeling this is something that many buyers constantly wonder about but rarely verbalize.  Aside from short and long term costs of the loan, there is more to both than meets the eye.

Take, for instance, the possibility of a big promotion in another city only two years after you moved in to your new Columbus home. If you put down 10- 20% on your conforming loan, you’re in a better position to sell and move. Dan Green explains the basic long and short term costs from his Mortgage Reports blog….

FHA And Conforming Mortgages : Key Differences

People tend to assume that a 30-year fixed is a 30-year fixed is a 30-year fixed.  The market doesn’t work that way.  It’s like saying a car is a car is a car. There are traits that make each product unique.

Yes, both the FHA and Fannie/Freddie back a product called the “30-year fixed rate mortgage”, but beyond their identical, 30-year amortization schedules, the products are hardly similar.

As examples:

• FHA mandates mortgage insurance on all loans. Fannie and Freddie do not.
• FHA mortgage insurance lasts 60 months. Conforming mortgage insurance lasts until there’s 20% equity in the home.
• FHA mortgages can be assumed by a subsequent, qualified buyer. Conforming mortgages cannot.
• FHA-backed homes must be free of defects and “issues”. Fannie/Freddie homes may have small defects.
• Fannie/Freddie require loan-level pricing adjustments. The FHA does not.

And, lastly, the FHA requires a minimum downpayment of 3.5% on a purchase. Fannie and Freddie want to see 5 percent, at least; oftentimes, 10 percent.

Lots more great information on this post which is continued here….

Reforming America’s Finance Market – The Obama Administration’s 3 Options for the future of Fannie Mae and Freddie Mac

It’s not just talk in Washington, the administration wants federal mortgage market reform and they want it now.  Here are some excepts from the 28 page paper that came out this month. Take some time andread the whole thing here. It’s an easy read and I’d love to hear your thought. Here are some quick excepts…

“The housing finance system must be reformed.  It is the vital link to sustainable homeownership

and rental options for millions of Americans,  and it is central to our nation’s economy.  We

allowed its flaws to go unchecked for too long, contributing to a financial collapse that has

strained families, decimated communities, and pushed the economy into the worst recession

since the Great Depression.  The Obama Administration here provides a path of reform, which

will lead to a future system with more private capital, better-aligned incentives, more oversight,

and less risk to the taxpayer – in short, to a healthier, more stable system of housing finance.”

The Obama Administration’s reform plan is designed to:

1. Pave the way for a robust private mortgage market by reducing government support for housing finance and winding down Fannie Mae and Freddie Mac on a responsible timeline.

2. Address fundamental flaws in the mortgage  market to protect borrowers, help ensure transparency for investors, and increase the role of private capital.

3. Target the government’s vital  support for affordable housing in a more effective and transparent manner.

Option 1: Privatized system of housing finance with the government insurance role limited to FHA, USDA and Department of Veterans’ Affairs’ assistance for narrowly targeted groups of borrower.

This option would dramatically reduce the government’s role in insuring or guaranteeing mortgages, limiting it to FHA and other programs targeted to creditworthy lower- and moderateincome borrowers.  While the government would continue to provide access for this targeted segment of borrowers, it would leave the vast majority of the mortgage market to the private sector.

Option 2: Privatized system of housing finance with assistance from FHA, USDA and Department of Veterans’ Affairs for narrowly targeted groups of borrowers and a guarantee mechanism to scale up during times of crisis.

As in the option above, FHA and other narrowly targeted programs would provide access to mortgage credit for low- and moderate-income borrowers, but the government’s overall role in the housing finance system would be dramatically reduced.  In this option, however, the government would also develop a backstop mechanism to ensure access to credit during a housing crisis.

Option 3: Privatized system of housing finance with FHA, USDA and Department of Veterans’ Affairs assistance for low- and moderate-income borrowers and catastrophic reinsurance behind significant private capital.

Under this option, as in the previous options, the mortgage market outside of the FHA and other federal agency guarantee programs would be driven by private investment decisions with private capital taking the primary credit risk.  However, to increase the liquidity in the mortgage market and access to mortgages for creditworthy Americans – as well as to ensure the government’s ability to respond to future crises – the government would offer reinsurance for the securities of a targeted range of mortgage.