Tired of Paying FHA Mortgage Insurance?

Many Maine homeowners ask me how they can remove FHA monthly mortgage insurance premiums with their mortgages.

FHA insures mortgages so that lenders will be encouraged to make more mortgages available for people. The FHA mortgage insurance agreement is between FHA and the mortgage company, so you must contact your mortgage company and ask them what they require to drop the insurance. Most mortgage companies will want you to have a substantial amount of equity in your home.

If the periodic (monthly) mortgage insurance premiums are paid up for an FHA case before schedule (i.e., accelerated payments were made and the unpaid principal balance is 78% or less), the month and year the last monthly insurance premium is assessed (final bill date) can be changed by the servicer or holder of the mortgage.  However cancellation of the monthly premium can only be used for active risk-based cases that have a closing date after December 31, 2000 and a case number assignment date before June 3, 2013 and meet the eligibility requirements described in Mortgagee Letter 2000-46 (with Attachment).

For mortgages with an FHA case number assignment date on or after June 3, 2013, the FHA insurance can be terminated by the servicer or holder if the mortgage is paid in full before the maturity date.

To learn more about FHA mortgage insurance or anything mortgage related, reach out to me today  – seth@northstarmortgage.net  207-831-1903

FHA Plays a Critical Role in Home Financing

The Federal Housing Administration plays a critical role in the nation’s housing financing system, providing safe, affordable mortgage financing to consumers in all markets during all economic conditions, the National Association of REALTORS® said in testimony today.

Click to read more: REALTOR® Magazine-Daily News-FHA Plays a Critical Role in Home Financing.

FHA’s new mortgage insurance premium structure change goes into effect October 4, 2010

FHA has announced it will make changes to it’s Mortgage Insurance Program. These changes will take effect for all new FHA case numbers issued as of October 4, 2010.

FHA loans require both an upfront mortgage insurance fee and a monthly mortgage insurance fee. The FHA has announced a change to these fees for all new FHA case numbers issued as of October 4th. 2010

The Upfront insurance fee is financed into your loan, added to the base loan amount once your down payment is deducted.

FHA case numbers can be ordered once a contract to purchase has been made and the loan application is signed.

Current FHA Policy, through October 3rd, 2010

Upfront mortgage insurance 2.25%

Monthly mortgage insurance 0.55%

New FHA Policy, as of October 4, 2010

Upfront mortgage insurance 1.0%

Monthly mortgage insurance 0.90%

What effect this will have to a borrower: While the loan amount will be lower due to the reduced Upfront MI cost, the monthly payment will be higher.

Typical loan scenario for a home price of $200,000

Net increase of (3.73%) $40.76 in your monthly payment.

Sales Price: $200,000 less FHA required down payment of $7,000 (3.5%) =

Base loan amount of $193,000

Current MI policy: $193,000 + Upfront mi 2.25% ($4,342) = total loan amount of $197,342

$197,342 @ 4.5% 30 year fixed rate = monthly principal & interest payment of $999.90 + monthly mi at .55% is $91.67 for a total of $1,091.67

New MI policy $193,000 + Upfront mi 1.0% ($1,930) = total loan amount of $194,930

$194,930 @ 4.5% 30 year fixed rate = monthly principal & interest payment of $987.68 + monthly mi at .90% is $144.75 for a total of $1,132.43

FHA loans have been a great way for Maine homeowners to qualify for high loan to value mortgages.  With these new changes, look for Private Mortgage Insurance companies to become very aggressive with perhaps much lower monthly mortgage insurance rates.

To learn more about FHA and Private mortgage insurance, contact your Maine Mortgage Specialist today.

FHA Underwater Refinance Option Now Available

FHA Underwater Refinance Option Now Available

Can’t refinance out of your high interest rate because your neighbors are being foreclosed and destroying your homes value?

In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today will begin providing an additional refinancing option for underwater borrowers. Originally announced in March, this enhancement of Federal Housing Administration (FHA) refinance program will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lien holders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – also known as being ‘underwater’ – because their local markets saw large declines in home values. As announced earlier this year, this change as well as other programs that have been put in place will help the Obama Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.

Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance. In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent and a combined loan-to-value ratio no greater than 115 percent.

To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.

Gov’t launches plan to help “underwater” borrowers

WASHINGTON – The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.

The Federal Housing Administration will allow lenders to give these borrowers refinanced loans if the lender agrees to forgive at least 10 percent of the original mortgage amount.

The plan, which was announced in March, is being made available starting Tuesday.

The FHA said in a document published last month that between 500,000 and 1.5 million homeowners are projected to be helped.

However, the Obama administration’s previous efforts to stem foreclosures have fallen far short of expectations. Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners.

As of the end of June, there were 11 million U.S. homes, or 23 percent of those with a mortgage with so-called underwater mortgages, according to real estate data provider CoreLogic.

What documents are needed for your Maine Home Loan?

Document Checklist and Instructions

A properly documented loan application makes your loan process go smoothly. This checklist will help you gather your paperwork.

Complete and sign the residential loan application, Form 1003, and the attached loan info sheet, credit authorization and fair lending notice. Page 4 of the application is a continuation page in case you need additional space for your assets or liabilities. If you make a mistake while filling out the application cross it out, and make a change. Do NOT use whiteout.

If you are salaried: provide W-2’s for the previous two years and one month of paystubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)

If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.

To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.

If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.

If applicable, provide a copy of your divorce decree and settlement agreement.

If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident provide a copy of your H-1 or L-1 visa.

If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.

If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note. (This should be with your closing loan documents.)

By providing all documentation early, you make your mortgage specialist job much easier and ensure there are no  issues before closing.