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2 Myths About Mortgages That May Be Holding Back Buyers

by Keeping Current Matters

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New Changes Announced From FHA

by Samia S. Morgan

A new set of changes have been announced from The Federal Housing Administration (FHA) in regards to their home loan program. These new changes are aimed to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The agency hopes that these changes will help the FHA in a better position to manage its risk while continuing to support the nation’s housing market recovery.

With the rising defaults on FHA loans, the FHA’s cash reserves are falling below federally mandated levels.  FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.

Some of the specifics with the new policy changes include:

Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent.  HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.

Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program.  New borrowers with less than a 580 FICO score will be required to put down at least 10 percent.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.

Reduce allowable seller concessions:  The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.

In addition to the proposed changes,the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

Foreclosures - Homeowner's Crisis Resource Center

by Samia S. Morgan

It is no secret that foreclosures have increased drastically this year as a result of the subprime lending disaster and a lot of people are wondering if they will be next. For many homeowners there may be options, if they know what to look for and where to look. 

In the event that you find yourself struggling to make your mortgage payments, and you fear foreclosure may be in your future, the National Foundation for Credit Counseling (NFCC) has suggested a few possible alternatives. These options to fend off foreclosure include:

  • Repayment Plan
  • Reinstatement
  • Forbearance
  • Loan Modification

The Federal Trade Commission wants people to know that these alternatives may not work for everyone especially if you are already three or four mortgage payments behind.

For more information regarding the above alternatives visit the NFCC's Homeowners Crisis Resource Center website. They can also assist you in locating a certified housing counselor to explore your options in an effort to fend off foreclosure.

Considering a Reverse Mortgage?

by Samia S. Morgan

A reverse mortgage provides a way for seniors to borrow against the equity in their home with no repayment due until the homeowner dies, moves or sells. Any remaining equity after repayment goes to the borrower or the estate.

A reverse mortgage may be of benefit if:

  • You need cash assets or income and have no other source available.
  • You are unable or unwilling to sell your house.
  • You do not care what the costs are to get the income or assets you need. (Recent law has helped limit the outrageous costs of reverse mortgages.)
  • You have no concern about which assets are left to your heirs.

    Make sure you thoroughly scrutinize all costs and provisions.

    Other possible solutions to increase income or get to assets are selling the home to family members or establishing a home-equity credit line on the house.

    — Drew Tignanelli, president of the Financial Consulate in Lutherville, Md.

    Yes, if your sources of retirement income (savings, investments, pensions, Social Security) no longer cover your spending. But using the equity in your home should be a last resort after all other resources have been exhausted.

    The payments to the homeowner from a reverse mortgage can be received in the form of a monthly annuity, lump sum or revolving line of credit. Compared with a typical home-equity line of credit, establishing a reverse mortgage carries significant fees, so the decision to obtain one should be extensively evaluated.

    You should make sure it is a reverse mortgage under the Federal Housing Administration Home Equity Conversion Mortgage program so that mortgage insurance will cover the lender if the proceeds from the eventual sale of the home are not sufficient to pay the amount owed.

  • Top Six Documents Your Mortgage Lender Will Ask For

    by Samia S. Morgan

    Be prepared for your meeting with your mortgage lender. Have the following documention with you and review it for accuracy.

    Applying for a mortgage can be a daunting task, but if you are prepared it will be less stressful and help your lender move things along smoothly.

    • Employment information.
      Include current contact information for all your employers in the last 2 years
       
    • W-2s.
      These forms should have been given to you from your employer.
      Include W-2s the last two years filed
      You may also want to make a list of any additional sources of income such as self-employment income, pension’s, rental income, child support or alimony or social security.
       
    • Pay stubs.
      Include pay stubs received in the last 30 days.
       
    • Federal income tax returns.
      Include tax returns filed in the last 2 years
       
    • Bank statements.
      Bank statements for any/all your accounts for the last 2 months
      Providing these statements will verify that amount of cash available for your down payment
      In the event that a portion of your down payment is a gift, grant or assistance program, you may need to provide documentation to verify this as well
       
    • Current debts.
      Make a list of any/all debts you have with company names, account numbers, balances and minimum monthly payments

    Your lender may have already given you a list of items required and if not use this as a guideline. Most institutions will require similar documentation, but check with your lender first as they made need additional information from you.

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    Photo of Samia S. Morgan, Inc. Real Estate
    Samia S. Morgan, Inc.
    dba Samia Realty Group
    BRE# 00967165
    San Mateo CA 94403
    650-678-3633