FHA issued Mortgagee Letter ML 2010-28 today which announces the new Mortgage Insurance Premium structure which takes effect with FHA case numbers assigned on or after October 4th, 2010.  It has been widely anticipated that FHA would LOWER the Upfront Mortgage Insuance Premium and RAISE the annual premium paid monthly.  For most purchase transactions the Upfront Premium paid is being reduced to 1% of the loan amount (down from 2.25%).  However the monthly fee a homeowner will pay is increasing from .55% to .9%. 

Here are some examples of how that will impact a homeowner’s mortgage payment:

$100,000 loan amount:  Old fee$45.83/month to New Fee $75/month (increase of $30 per month)

$200,000 loan amount: Old fee $91.66/month to New fee $150/month (increase of  $58.34 per month)

$300,000 loan amount: Old fee $137.50/month to New fee $225/month (increase of $87.50 per month)

FHA Home Loans which are a very popular home loan choice are backed by the U.S. Government through the US Department of Housing and Urban Devlopment (HUD).  FHA Loans have better interest rates, require lower downpayments and have lower credit score requirements than Conventional Home Loans.  Mortgage Insurance is a premium paid by the homeowner to insure thair loan againt default.  FHA loans are insured by paying a One-Time upfront fee which can be financed as well as paying a monthly premium which stays in effect until the loan is paid down to 78% of its original balance.

The New FHA premiums are as follows:

Effective for FHA loans for which the case number is assigned on or after October 4, 2010, FHA will increase the annual premiums collected on a monthly basis. For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length of the mortgage according to the following schedule:

 The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected according to the following schedule.

If you are considering a 15 year mortgage FHA is a great way to go because you can obtain a 10% down home loan with no monthly mortgage insurance.

There is still time to initiate your FHA purchase or Refinance before the new premiums go into effect.  Now is a great time to buy.  Take advantage of today’s record low rates and beat the clock on increasing FHA Mortgage Insurance Premiums.

For the latest rates and loan pre-approval information call Todd Starr at New American Mortgage at 757-773-5503.

The Federal Reserve Open Market Committee (FOMC) released their much anticipated Interest Rate Decision and Policy statement today.  As was widely expected they left the Fed Funds Rate at 0 to .25%.  Mortgage Rates reacted positively to the news that the Feds believe that inflation will remain subdued.  Inflatation is the enemy of low interest rates.  The FOMC statement left the key words “extended period” of low rates in place which was rate friendly news.  There are still concerns that an extended recovery can’t continue without a stronger jobs outlook.  The Feds will do everything in their power to avoid a “Double Dip” Recession.  Apparently there is some concern since they did announce they will re-invest the proceeds from its maturing mortgage bonds back into long term government debt.  Treasury Bonds rallied on the news which was positive for Mortgage Rates.

For now it looks like the best mortgage rates since the 1950s will stay around for a bit longer.  If you or anyone you know is considering a home purchase or refinance now is the time to act.  There is a lot of buzz out there surrounding what will happen with the direction of mortgage rates.  My advice is to act now.  Mortgage Rates haven’t been this low for over 50 years.

There are many factors that determine the exact rate you will receive such as credit score, downpayment amount, equity position, and type of loan program.  Please give me a call at 757-773-5503 to discuss the best rates available for your situation.  We specialize in all types of mortgage financing such as FHA, VA, Conventional, 203k rehad, and Reverse Mortgages.

The Senate stayed late last night to finally approve an extension of the settlement date provision.  The Home Buyer Credit deadlines stated that Home Buyers must be under contract by April 30th and must close their transaction and go to settlement by June 30th.  Congress has now approved an extension of the settlement date deadline.  Home Buyers that were under contract by April 30th, 2010 now have until September 30th, 2010 to go to settlement.  There were fears the senate would not be able to approve the extension before recessing for the July 4th Holiday.  The Home Buyer Tax Credit extension was tied to a controversial unemployment benefits package.  Realizing the urgent need to approve the extension the bills were finally separated and the vote to approve the Tax Credit Extension passed unanimously. It now goes to the President for final approval.

Great News for Home Buyers Experiencing Mortgage Processing Delays

This is extremely good news for Home Buyers experiencing processing and underwriting delays with their lender.  Many mortgage lenders have become extremely bogged down with processing delays.  The rush of buyers seeking to beat the tax credit deadline collided with June’s Record Low Interest Rates.  Many Mortgage Lenders have been unable to keep up. Many Home Buyers are feeling stuck with a lender providing poor service and unwilling to re-negotiate to today’s record low rates.  Many mortgage borrowers were feeling stuck because switching mortgage lenders might jeopardize their tax credit.  In early June, New American Mortgage saw an influx of applications fr0m borrowers switching from other lenders because of processing delays.  New American Mortgage anticipated the mortgage demand and aggressively increased our operations staff.  We are currently able to take on Rush processing requests and are able to get you to settlement in 2 weeks or less.

My Advice to Buyers Unable to Settle by June 30th – Take Another Look at Your Options

New American Mortgage is a Direct Endorsement FHA and VA Home Mortgage Lender.  If you are unhappy with your current mortgage lender and have missed the June 30th deadline then consider switching lenders.  You now have time back on your side. Take advantage of today’s record low rates and still get your Tax Credit.   Call Todd Starr at 757-703-5503 or email me at todd.starr@newamerican.com to discuss your options.