Our FHA adjustable-rate mortgage (ARM) provides many advantages:
This is a great time to be a homebuyer! Interest rates are historically low. There are plenty of homes to choose from. And with a government-insured FHA 5/1 adjustable-rate mortgage (ARM) (1):
• The initial interest rate (start rate) is very attractive and principal-and-interest payments are fixed for the first five years
• There are built-in safety nets, because the interest rate can only go up or down 1% per year or 5% over the life of your loan
• High loan amounts up to $729,750 are available in certain metropolitan areas with high housing costs. (2)
Benefits within an ARM’s reach:
• Buyer-friendly — Flexible credit and income qualifying guidelines
• Cost-effective — Down payments as low as 3.5%
• Attractive rates — initial ARM interest rates are typically lower than fixed rates, but can adjust in the future
• Accommodating — Gift funds accepted toward your down payment
• Fully assumable — Future qualified buyers may be able to take over the loan under its original terms
Credit Card Reform impacts millions…
With an average count of nine credit cards per American household, the new credit card regulations that went into effect on Feb. 22 will have sizeable impact on our country.
The provisions – part of the Credit Card Act signed into law by President Obama on May 22, 2009 – call for credit card companies to give consumers 45 days advance notice of significant changes in the terms of their accounts and the right to ‘opt out’ of the account if they disagree with the new terms. Issuers are required to send bills to consumers at least 21 days in advance of the payment due date, and the due date must be the same every month.
Also, card issuers can no longer:
~ raise interest rates on existing balances unless the card has a variable interest rate and the underlying index increases, a temporary rate for a specified period of time, or the customer is more than 60 days late on a monthly payment;
~ raise rates on new accounts for a period of 12 months;
~ charge a fee when a consumer exceeds a credit limit, unless the customer opts in to being charged the fee;
~ charge extra for certain payment channels, such as pay by • phone, unless the payment is expedited and representative of the creditor assists;
~ engage in the practice of double cycle billing.
In addition, card issuers are now required to provide more insight to customers about how much it costs to carry a balance on the card by paying only the minimum payments each month and how much the consumer will need to pay to eliminate the balance in three years.
We asked Ann Stickel-vice president of Affiliated Services for Michael Saunders & Company Mortgage, LLC-what government programs are available for distressed homeowners? Also, how these government loans help keep people in their homes and the foreclosure rate at a minimum.
If you have questions for Michael Saunders, email AskMichael@michaelsaunders.com.
Consumer Protection Act of 2009
In December, the U.S. House of Representatives approved – by a vote of 223 to 202 – the Wall Street Reform and Consumer Protection Act of 2009, otherwise known as H.R. 4173. This bill proposes sweeping reforms that have the potential to profoundly impact how financial companies operate and what consumers can be offered in terms of products and services.
A culmination of many months of work, the authors of the bill sought a way to protect consumers and the economy through stronger controls. While many agree that the legislation does introduce new means to achieve these goals, concern remains about the unintended consequences this bill may produce.
In its Dec. 17, 2009 public statement, the American Bankers Association said it “supports broad reform of the banking regulatory system and has expressed this view in testimony before Congress; (this includes)…the formation of a council charged with overseeing systemic risk, creation of a mechanism for the orderly resolution of systemically important non-banks, and ending too-big-to-fail. Although some improvements were made (in the bill), ABA remains opposed to this legislation as passed by the House.”
The Senate is expected to propose comparable reform legislation with some significant changes.
Financial Services Oversight
Currently, H.R. 4173 covers a comprehensive number of issues including the creation of an interagency Financial Services Oversight Council that would identify and regulate financial institutions that pose systemic risks to the country.
The bill supports heightened oversight and regulation for financial institutions and a process to dissolve firms that fail. This includes publicly identifying and subjecting financial companies to stricter standards if it is determined that the company’s performance or mix of activities could pose a threat to the financial stability of the economy. The council would be responsible for imposing a special assessment on financial companies that fail to pay for any shortfall in TARP that would add to the national debt.
By Gino Blefari, President and CEO – Intero Real Estate Services, Inc.
For many years, the Federal Housing Administration, by virtue of its policies designed to help people with lower incomes or those just starting out, made it possible for millions of Americans to purchase their own homes. They made it possible for these people to take part in the American Dream.
Fast-forward to 2006, at the height of the “boom” real estate market, and the FHA found itself backing just 3 out of 100 home loans, as “non-conforming” loans were being given to, pretty much, whoever asked for them, and their requirements were virtually hassle-free when compared to those that the FHA had in place.
Today, the FHA backs 3 out of every 10 new home loans, because, as other lenders have tightened restrictions, FHA has followed the status quo, keeping things fairly liberal.
The result of all of this? Problems. Big ones.
On December 2, 2009, the Secretary of Health & Urban Development, Shaun Donovan, stood before Congress and announced that the FHA’s cash reserves have fallen well below the Federally-mandated level of 2%, to a staggering .53%.
To try to alleviate the FHA’s problems and raise reserves to their legally-required levels, Mr. Donovan indicated sweeping changes would be coming to the FHA’s loan process. Here’s some of what you should expect:
Refinances and first-time homebuyer property sales largely contributed to third quarter volume
Consumers were active in the housing market during the third quarter with refinance and purchase applications. Existing homeowners fueled the refi activity, and first-time homebuyers accounted for 43% of home purchases in August, according to the Sept. 18 issue of Inside Mortgage Finance.
In a September 2009 Wells Fargo Home Mortgage survey, 56% of first-time homebuyers cited the $8,000 tax credit for their reason to purchase. Low interest rates drove 66% of these borrowers, and 74% attributed the decision to low home prices.
In the same survey, renters shared their reasons for intending to purchase their first home within six months. Roughly 84% said low home prices were the reason, 74% cited low interest rates, and 72% referenced the tax credit as the key deciding factor.
As of the publication date, there is still debate in Congress about whether the first-time homebuyer tax credit will be extended beyond the Nov. 30 deadline.
When will local housing markets recover?
Recent news released from the National Association of REALTORS® showed that pending home sales have increased for seven consecutive months based on contracts signed in August. In addition, the S&P/Case-Shiller Home Price Indices demonstrated that the annual decline in home price values continues to slow and that many markets have experienced some sustained monthly increases.
Rising energy costs have consumers thinking about energy conservation and the green must-haves for their home.
The Energy Efficient Mortgage (EEM) is federally recognized and has benefits for both buyers and sellers. Buyers can stretch their dollar with the energy-saving measures in the home that will help save on utility bills. Sellers who use an EEM to make improvements on their home will make older homes more comfortable and more attractive to buyers looking to go green. Homeowners looking to remodel or refinance also gain benefits from EEM by making improvements that will help save on utility costs and potentially increasing the resale value of the home down the road.
According to the Energy Efficient Mortgage Home Owner Guide on the Housing and Urban Development Web site, buyers who qualify for a home loan may also qualify for the EEM. The guide also says that availability is not limited by location, home price or utility company. When applying for an EEM, a Home Energy Rating System report must be completed on the house. An energy appraisal is done by an inspector and the results are certified. More information about EEMs and case study examples are available at www.hud.gov.
Tax credits also are available for energy-saving home improvement products placed in a home in 2009 and 2010. For specific details visit http://www.energystar.gov/index.cfm?c=tax_credits.tx_index.
Turn-of-the-century bayside villages, quiet rural settings, country club communities, comfortable urban neighborhoods and secure retirement enclaves are all part of Bradenton and Manatee County. Bordering the Gulf of Mexico between Tampa and Sarasota, Manatee County has earned the reputation of being one of the friendliest communities in on the Gulf Coast, in addition to its diverse neighborhoods and Florida charm. The agents of our Bradenton office proudly serve the residential opportunities throughout Manatee County and beyond.
Manatee County Sales Reports
Pam Ali, branch manager of Michael Saunders & Company’s Bradenton office, is pleased to report significant activity in home sales throughout Manatee County. In the Multiple Listing Service (MLS) for Manatee County, there were 243 single-family homes that sold in the last 30 days. The average sales price was $230,488. (more…)
As many homeowners continue to struggle with making their home mortgage payments and fear of losing their homes, there is help available. The government program and websitewww.MakingHomeAffordable.gov provides homeowners with home mortgage information from both Freddie Mac and Fannie Mae as well as contact information for the mortgage servicers who have committed to assist eligible homeowners with either refinance or modification options which may provide them with the opportunity to stay in their homes. The Making Home Affordable site also shares some great “how to’s” to guide homeowners through these challenging times and help them avoid pitfalls when reaching out for assistance. I’ve attached a flyer which provides an overview of some of the support options available – please feel free to share this with homeowners you may know who could use this information.
Click on the document below to open and save as a PDF.
With stricter qualifications and more scrutiny than previous years for securing a home loan, preapproval letters provide piece of mind for sellers in knowing that the buyer is capable of handling the purchase. The following article lends some helpful tips for homebuyers in today’s market.
Today, the first step in landing a home loan is obtaining a letter of preapproval. This means a mortgage lender has verified that you’re approved for a mortgage of a certain amount over a fixed timeframe.
Preapproval letters are prepared even before you’ve picked out your home. They remove some of the uncertainty in the home-buying process. In the current housing market, real estate agents and sellers won’t want to work with buyers unless they have one.
“Before you even get in my car, you want to get preapproved,” says Gerry Bourgeois, a real estate broker and president of Towne & Country Realtors in Leominster, Mass.
With a letter in hand, buyers know exactly how much they can borrow – and therefore how much house they can afford. A preapproval letter shows the seller and the seller’s agent that the buyer is capable of buying their house. “For most sellers, the issue is not whether they can get an offer, but whether they can close the deal,” says Tara-Nicholle Nelson, a real estate broker in Oakland, Calif.
Agents see preapproved buyers as more serious (and more valuable) because they’ve taken proactive steps to secure a preapproval. When it’s time to make an offer, a preapproved buyer will be in a better position to negotiate.
Here’s what home buyers need to know about the new rules of mortgage preapproval.
