Mortgage Loans

Mortgage Loans

FHA Loans – Mortgage Insurance

John Thomas July 26, 2007 Tags: ,

FHA Loans – FHA Mortgage Insurance

FHA does not fund home loans directly; rather, it provides a guarantee to the mortgage lender against default. There are two separate fees that HUD collects to provide a level of guarantee coverage to the lender:

  1. Up-front mortgage insurance premiums (UFMIP).
  2. Monthly renewal mortgage insurance (Monthly MI).

The up-front mortgage insurance premium, if required, will be 1.75% of the base loan amount. This can be added directly on top of the base loan amount to determine the total loan amount, regardless of initial loan amount or appraised value. MI can always be added to the maximum base mortgage amount.

Monthly mortgage insurance premiums for home loans closed after January 1, 2001, are refundable through the 5th year of the loan based on certain percentage increments. For example, if a borrower sells or refinances after having the property or the loan for 36 months, the borrower is entitled to a partial refund of the original FHA up-front mortgage insurance premiums.
The annual renewal premium, also referred to as the mutual mortgage insurance premium in the HUD mortgage insurance premium policy, is 0.85% per year divided by 12. This is included in the borrower’s monthly payment. Keep Reading...

Monthly Housing Report for June 2007 Released

John Thomas July 25, 2007 Tags:

Monthly Housing Report for June 2007

Existing Home Sales for June 2007 were reported at 5.75 Million units, which was less than the 5.90 Million expected.  But there was some good news within the report – the median home sales price increased by 0.3% to $230,100 representing the first year over year price increase in 11 months.  Additionally, the monthly sales inventory dropped to a level of 8.8 months from the prior month’s reading of 8.9 months. The monthly sales inventory is a measure of how many houses are for sale currently measured in how many months it would take to sell all of the houses currently for sale.  All in all the report suggests the housing market is stabilizing and isn’t as dismal as the media portrays. Keep Reading...

Delaware Home Buyers Face Decisions that Affect Their Long-Term Financial Picture

John Thomas July 21, 2007 Tags:

Delaware Home Buyers Face Decisions that Affect their Long Term Financial Picture

Taking the step into home ownership is one of the most important financial decisions a person will make in their lifetime. There are many factors to consider when embarking on this venture. Literally hundreds of loan programs are available, and it is important to find the one that best fits your personal long-term goals.

First and foremost, you must have a certified mortgage planner in your corner that is willing to take the time to know what your long-term goals are. Communication is the key factor here. Curious prospective Delaware home buyers sometimes turn to Internet-based services just to see what current mortgage interest rates are. But a faceless web site will not take the prospect’s future financial planning into consideration or guide the potential borrower through the many nuances of the loan process. When shopping for a home loan, be wary of web-based services that offer programs to reel prospects in with attractive rates that are based upon unrealistic time frames. Keep Reading...

Mortgage Brokers – Proof that Less Costly Option for Sub-Prime Borrowers

John Thomas July 7, 2007 Tags:

Study Reveals Brokers Are Less Costly Option For Sub-Prime Borrowers
New Study Finds Factual Evidence That Consumers Pay Less With a Broker

Washington, DC. October 18, 2006  Brokers are a more cost-effective option for consumers in the subprime home loan market, according to a joint study released by economists at George Washington and Oklahoma State universities.

The study compared sub-prime loans originated by brokers and traditional lenders such as banks between 1995 and 2003. Its findings reveal that the reason brokers originate more than 50 percent of all residential loans is that they are a more efficient and cost-effective option for consumers. Keep Reading...

Real Estate Investing Seminar July 26th

John Thomas July 6, 2007 Tags:

Free Delaware Real Estate Investment Seminar on Thursday, July 26th from 6:30 PM to 8:30 PM at Primary Residential Mortgage’s Office in New Castle, DE.   The Seminar is for New Real Estate Investors. The seminar will show participates how to analyze potential investments, how to acquire the proper financing, what loan programs are available for investors with the current mortgage market and much more. Each participates will receive a Free Audio CD on Real Estate Investing and a Free Investors Kit which includes most forms needed to get started in Investing. Please Call 302-703-0727 and ask for John Thomas to register. The seminar will be at 42 Reads Way, New Castle, DE 19720. Keep Reading...

MTA Index – What is it?

John Thomas July 3, 2007 Tags:

MTA
Monthly Treasury Average (1 year MTA)

This index is determined by averaging one-year Treasury bills each month over the prior 12 month time period. This is an index used to set the cost of various variable-rate loans, particularly adjustable-rate mortgages. The use of the 1-Year MTA as a loan index is relatively new. The MTA generally fluctuates more than the 11th District Cost-of-Funds Index (COFI ­ see below), although they both track each other closely.

Note:
The MTA index is often used in what is commonly referred to as “Option ARMs”. This product type can create terrific cash flow and payment stability for your customer in the early years of the loan but requires education on the consequences of the different payment options, such as negative amortization. Keep Reading...

Financial News for June 2007

John Thomas June 27, 2007 Tags:

Financial News for June 2007

Construction of new homes in May 2007 fell to a seasonally adjusted annual rate of 1.47 million units, a 2.1% drop from April 2007 and a 24.2% decline from a year ago, the Commerce Department reported June 19, 2007. The decrease matched economists’ expectations and reflected weakness in the South and West, which offset construction gains made in the Northeast and Midwest.

Housing permits, considered a good barometer of future activity, rose 3% in May 2007, but the increase followed a 7.1% plunge in April 2007. Last month’s stronger activity originated from a rebound in permits for apartment construction. Meanwhile, mortgage applications for single-family homes fell 1.8% and have been down four of the past five months. Keep Reading...

Federal Reserve Hold Key Interest at 5.25% in May 2007 Meeting

John Thomas June 1, 2007

Federal Reserve Hold Key Interest at 5.25% in May 2007 Meeting

The minutes from the Federal Reserve meeting on May 9, 2007 were released on Wednesday May 30th.  The Feds were concerned about the downturn in the housing market was more extreme than expected.  Even though housing is worse than expected, the Feds were still very concerned with core inflation.  The Feds felt core inflation is still uncomfortably high.  The Feds voted to hold the Feds Funds Rate  steady at 5.25%.  This was the 7th straight meeting that the Feds held the interest rate steady.

After viewing the minutes of the meeting, many economist believe the Central Bank will keep interest rates unchanged for the rest of the year. Keep Reading...