Tuesday, November 27, 2012

FHA Mortgage Insurance Is Going Up


FHA will be raising their mortgage insurance rates sometime in 2013.  For loans with the minimum down payment of 3.5%, the annual mortgage insurance rate will go up from 1.25% to 1.35%.  For a $200,000 loan, that means the monthly payment will go up by $16.67. 

Also, FHA has announced that the mortgage insurance will no longer go away when the borrower has 22% equity in the property.  Instead, it will remain in effect until the loan is paid in full.

It is important to keep in mind that with FHA loans, the mortgage insurance is based on the remaining loan balance, so even though the mortgage insurance will not go away, it will go down each year. 

Many people will say that these new rules are the end of the FHA loan program, but they are mistaken.  FHA loans will remain an excellent choice for borrowers who want to minimize their down payment. 

These new rules are ONLY for new FHA loans, and a start date has not been announced yet, other than sometime in 2013.  If you already have an FHA loan, or are in the process of getting one at the moment, nothing will change.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Crazy New Fannie Mae Underwriting Guidelines


On November 13, Fannie Mae changed the rules for getting a cash-out refinance for people with 5-10 financed properties.  Effective immediately, you can no longer get a cash-out refinance on a second home or an investment property if you have more than 4 financed properties.  The only exception to this is if you purchased the property within the previous 6 months.

This is a Fannie Mae rule, so any lender that sells their loans to Fannie Mae has to follow it. 

What does this mean for someone who has equity in an investment property?  It means you can't touch it - at least not with a Fannie Mae loan.  You might still be able to get a home equity line of credit (HELOC), but forget about a low interest fixed-rate mortgage. 

This only applies if you have more than 4 financed properties, and it does not apply to primary residences.

When investment banks get back into the mortgage market and provide an alternative to Fannie Mae, this will surely change, but that's not going to happen until Congress can stop bickering and defines which loans Fannie Mae is going to be allowed to purchase in the future. 


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Is Changing Loan Programs Allowed?


A lot of people ask us if it's OK to change loan programs after they have signed a sales contract to buy a house.  For example, can someone change from an FHA loan to a conventional loan?

Although the sales contract may stipulate which types of loans are acceptable, we have NEVER seen a seller back out of a deal because the buyer wanted to change the type of loan.  If a buyer wants to change loans and it is a concern, the best thing to do would be to get an amendment to the contract signed by both the buyer and the seller, stating that the loan type has changed. 

The lender does not care about this part of the contract at all, so there's no need to amend the contract to satisfy lender requirements.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Allowable Seller-Paid Closing Costs


When purchasing a house, the seller is allowed to pay for some of the buyer's closing costs, but there are limits to how much the seller can pay.  Here are the maximum amounts the seller can pay for various types of loans:

Conventional Loans
  • Primary residence or second home with less than 10% down = 3% of the purchase price
  • Primary residence or second home with between 10% and 24.99% down = 6% of the purchase price
  • Primary residence or second home with 25% or more down = 9% of the purchase price
  • Investment property = 2% of the purchase price 
FHA Loans
  • Primary residence only (down payment does not matter) = 6% of the purchase price 
VA Loans
  • Primary residence only (down payment does not matter) = no limit

Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:



By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.

Thursday, November 1, 2012

When Does Mortgage Insurance Go Away?


What is mortgage insurance?  When do you have to get it?  When does it go away?

Here's what you need to know:

Mortgage insurance is an insurance policy that you must have if you get a mortgage for more than 80% of the value of your property.  You, as the borrower, pay for it, and the lender gets paid if you go into foreclosure.  You do not get any money from the mortgage insurance policy - only the lender gets paid.

The value to you is that it allows you to buy a house with less than 20% down.  You only need 3% down with a conventional loan and 3.5% down with an FHA loan - as long as you have a mortgage insurance policy.

Mortgage insurance automatically goes away when you have 22% equity in your house, based on the original purchase price.  As an example, if you paid $200,000 for your house, then the mortgage insurance would go away automatically when you pay down your mortgage to $156,000.

If you have a conventional loan (a non-government loan) and you can get an appraisal showing that you have 20% equity in your house, then you can ask the lender to drop the mortgage insurance early.  Instead of needing 22% equity, you might be able to get rid of the mortgage insurance when you have only 20% equity.

If you have an FHA loan, then you cannot get rid of the mortgage insurance early by proving you have 20% equity.  You must wait until you have 22% equity.  Also, with FHA loans, you must pay for mortgage insurance for a minimum of 5 years, regardless of the size of  your down payment.  This is why it makes no sense to get an FHA loan if you have 20% down. 

If you have very good credit, it is possible to get two loans when you buy a house.  The first loan would be for 80% of the sales price, and the second loan would be for 10% of the sales price.  You would need 10% down if you did things this way.  Because neither of the loans would be more than 80% of the sales price, you would not have to pay for mortgage insurance.

Some lenders will tell you that they will sell you a loan without mortgage insurance, but they are not really telling you the truth (imagine that!).  What they are doing is charging you a higher interest rate, and then using the extra profit they are making to buy mortgage insurance.  It is called lender-paid mortgage insurance and is rarely a good deal because you end up paying a higher interest rate for the next 30 years.  That costs you thousands of dollars more than getting a mortgage insurance policy that goes away when you have 22% equity.  Watch out for lenders who try to sell you loans like this.  They are deceiving you if they don't explain that you are paying a higher interest rate forever.

By the way, if you get a VA loan (only for veterans, members of the active military, National Guard, or Reserves), you do not have to pay any mortgage insurance, even if you have no money down.  That is a benefit of serving the country, so if you qualify for a VA loan, you really should get one.

We sell all types of loans - give us a call if you have any questions.


Getting a loan approved is easy - if you know what to do.  The Mortgage Experts know what to do!!!

Make sure you check out our web site:




By the way, don't forget to refinance your current mortgage.  Rates are very, very low right now.  Don't miss out!  Call us today to get the details for your particular situation.