It really is a great time to be a first time home buyer because not only are rates historically low, but the Tennessee Housing Development Agency (THDA) is providing very low rates themselves. As of today, their Great Rate is 3.95%, the Great Advantage rate is 4.25% and the Great Start rate is 4.55%. As you can see, if you are a first time home buyer with a credit score in the mid-600′s, now is the time to apply for a home loan.
Just to give you a little history about the agency, the THDA was created in 1973 by the Tennessee General Assembly. The assembly’s stated purpose for the THDA was “to promote the production of more affordable new housing units for very low, low and moderate income individuals and families in the state, to promote the preservation and rehabilitation of existing housing units for such persons, and to bring greater stability to the residential construction industry and related industries so as to assure a steady flow of production of new housing units…”
It is important to remember that the THDA loan process is a two-pronged one. First, the buyer must go through the FHA process. Then, second, they go through the THDA process. The buyer must get documents from both processes signed, so when you buy a house, you need to give yourself enough time to get the proper paperwork finished. Make sure the seller understands the process as well, so there will not be any miscommunication.
With THDA rates so low, it would be wise to get your financial situation in order if your are looking to buy a home. You really can get a great deal on a mortgage, and it is worth the time and energy to see if you qualify. Take some time to talk to a home loan professional so you can understand exactly what you need to do to start the process.
Real estate laws are constantly changing, and it’s more important than ever to stay up to date on all real estate legislation. Recently, the FHA waived the anti-flipping waiver temporarily.
Before the waiver, a mortgage could not receive Federal Housing Administration insurance was executed within 90 days of acquiring it. In other words, buyers could not sell homes within 90 days of buying them, preventing real estate investors from “flipping,” houses. Since this has been waived, a seller is now allowed to sell the property for a profit, within 90 days of acquiring it. The temporary waiver is only valid as long as the seller holds the title to the specific property, and no previous “pattern or flipping,” exists for the specific property. There are other regulations that must be adhered to, including the requirement that all repairs be made before the sale is made, and that proper documentation is kept to prove the increase in value. This temporary waiver is big news in real estate, and should make for many interesting real estate investments.
Right now is the time to buy if you would like to qualify for the first time homebuyer’s tax credit or the move up/move down tax credit. You will need to have a house under contract by the end of April to qualify. The only exception to this date is for military personnel coming back from Iraq and Afghanistan.
The other reason it’s a good time to buy is interest rates. They are still historically low right now, though it has been predicted that they will be rising throughout the year into the 6’s. With that in mind, interest rates in the 6’s are not bad when you look at where rates have been over time.
The last reason to buy is the homes that are currently on the market. There are a great many homes to choose from and some are at great prices due to short sales and foreclosures. It can take more time to get a contract in place for these homes so it is important to start soon if this is the type of home you are looking for.
HUD has announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. This measure should help bring stability to home values and accelerate sale of vacant properties and is part of the Obama administration commitment to addressing the foreclosure problem. It is hoped that this will help stabilize home values and improve conditions in communities where foreclosure activity is high as well as help local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes through the $2 billion in Neighborhood Stabilization Program grants that were announced by the HUD Secretary yesterday.
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
Recently the head of the Federal Housing Administration went before congress with some recommended changes for qualifications to get a FHA loan as well as some guideline changes. While nothing will happen until congress votes on these changes, it is believed across the industry that some, if not all, of these changes will happen in some form or fashion. Since we cannot do anything but abide by the new changes, most people just want to know how it might affect them.
For sellers, it looks like the amount you can contribute will be reduced from 6% down to 3%. This means that buyers will have to cover more of their down payment and closing costs in the future and won’t be able to rely totally on seller concessions. It also looks like buyers might have to have up to 5% to put down on the home, which is 1.5% higher than is currently required. There are also some changes in the mortgage insurance and that will most likely raise MI both on the front end and monthly but I have been told that the monthly will be reasonable; we will see.
There are some other provisions that will affect the lenders as well so it will be very important going forward to have a lender that is FHA approved under the new guidelines. As always, if you need some additional information, please give me a call and I would be more than happy to answer any questions you might have or send you to someone who can. In the mean time, we will all have to wait and see what the final results on FHA will be.
In today’s mortgage market, credit hasn’t dried up but it sure has tightened up so that many people are left on the sidelines due to credit scores, lack of down payment and MI restrictions. The Federal Housing Administration (FHA) has tightened up it’s lending as well but still remains one of the easiest places to qualify for a loan mainly due to the fact that it provides the mortgage insurance and has less restrictions than conventional loans.
You only need 3.5% down payment with a FHA loan, compared to the 5% with a conventional loan, and that can come in the form of a gift. FHA loans do not have the tiered credit restrictions, no income cap or geographic restrictions and no pre payment penalties. You can also finance part of your Mortgage Insurance in with the loan thus lowering your monthly payment for easier qualification purposes. The interest rates continue to be very competitive with conventional rates and the appraisal process has been streamlined as well. Check with your favorite lender or loan officer on these and other benefits to the FHA loan program.
You may be thinking that if you don’t have money to put down on a house that you are out of luck. However, there is one place that you have always been able to count on for a 100% loan and it is still available! It’s through FHA or the Federal Housing Administration.
With a FHA loan, you can negotiate for the seller to pay up to 3% of your closing costs as well as an additional 3% for your down payment assistance. Down Payment assistance comes from non-profit agencies that have been approved through FHA and require the seller to also pay a small fee.
If you are interested in this type of a loan, contact your local loan officer and they can take you through the process to see if you qualify with your credit score, loan to value and debt to income. Once you know you are approved, contact your realtor and find that home you have always dreamed of!
