South Orange County Blog from Bob Phillips

Get Your FHA Mortgage Application Started — Fees Increase 1/2 Percent Starting Monday, April 5, 2010

Posted in home affordability, mortgage rates, Real estate, Refinances by southorangecounty on March 30, 2010

FHA closing costs increase by 1/2 percent April 5 2010

Starting Monday, April 5, 2010, getting an FHA mortgage will be more expensive for borrowers.

In new guidelines set forth earlier this year, the FHA announced plans to raise additional revenue and reduce the overall risk of its mortgage portfolio. 

The changes include the following:

  1. Increase Upfront Mortgage Insurance Premiums from 1.75% to 2.25% for everyone
  2. A plan to reduce seller concessions from 6 percent to 3 percent
  3. An increase in minimum downpayment for FICOs 580 or lower

For your own loan, to avoid being subject to higher loan costs, make sure to have your FHA Case Number assigned prior to Monday, April 5, 2010.  That means you’ll want to give a full mortgage application before the weekend so your lender can register your loan in time for the deadline.

But don’t leave your application to the last minute.

Friday is Good Friday so most banks will be closed. Your true FHA deadline, therefore, is Thursday April 1.

Also worth noting is that the FHA isn’t done with its changes.

In its policy statement, the group also announced its plans to petition Congress to raise monthly mortgage insurance premiums.  The FHA’s formal request, in summary:

  1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
  2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, the FHA reserves the right to change its projections.  Either way, it means higher costs for consumers. 

The best plan, therefore, is to get your FHA mortgage into underwriting ahead of the switches because borrowing money will be harder, and more costly.

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Banks Raise Mortgage Qualification Standards

Posted in home affordability, mortgage rates, Real estate, Refinances by southorangecounty on November 12, 2009

Fed Senior Loan Officer Survey Q3 2009


Despite the economy’s improvement and prodding from Congress, banks don’t seem ready to open their purse strings just yet.


Nationally, mortgage approval standards are tightening.


The data comes from a quarterly survey the Federal Reserve sends to its member banks.  The Fed asks senior bank loan officers around the country whether “prime” residential mortgage guidelines had tightened in the last 3 months.


For the period July-September 2009:



  • Roughly 1 in 4 banks said guidelines tightened
  • Roughly 3 in 4 banks said guidelines were “basically unchanged”

Just one bank said its guidelines had loosened.


Combine the Fed’s survey with recent underwriting updates from the FHA and from Fannie Mae and it becomes clear that mortgage lenders are much more cautious about their loans than they were, say, 2 years ago.


Today’s borrowers face a host of hurdles including:



  • Higher minimum FICO scores
  • Larger downpayment requirements for purchases
  • Larger equity positions for refinances
  • Lower debt-to-income ratios

In other words, mortgage rates may stay low into 2010, but that won’t matter to homeowners that don’t meet minimum eligibility standards.  With each passing quarter, that list gets smaller.


Therefore, if you’re on the fence about whether now is a good time to buy a home, remember that, along with an increase in mortgage approval standards, home values are rising, too. 


Acting sooner is probably better than acting later.

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FHA Streamline Refinance Program : There are 5 Days Left

Posted in home affordability, mortgage rates, Real estate, Refinances by southorangecounty on November 10, 2009

Changing FHA Streamline Refi programConsider this a last call for FHA Streamline Refinances.  Starting next Tuesday, the popular rate-lowering program gets strict on borrowers.


There’s 5 days left.


Under the current streamline refi guidelines, FHA homeowners have minimal program eligibility requirements.



  • FICO scores must be 620 or higher
  • The refinance must provide a “tangible benefit”
  • No mortgage lates allowed in the last 12 months

Beyond that, everything else goes, practically.  There’s no income, asset, or job verification with the current FHA Streamline program. Neither is there an appraisal requirement.  It doesn’t matter if you’re 50% underwater.


Until next week, that is. 


Beginning November 17, FHA Streamline Refinance applicants must show evidence of income and employment, plus proof of cash required to close. Furthermore, the FHA is limited loan-to-values to 97.75% for homeowners that want to “roll closing costs” into their mortgage.


In areas of declining home values, this may render refinancing impossible.


There’s more changes, too, as highlighted by the Federal Housing Commissioner. Read up for yourself, or ask a mortgage professional for help.


If you’re a homeowner and you’re currently financed through the FHA, it may be prudent to explore the possibility of an FHA Streamline Refi.  Mortgage rates are low right now and FHA guidelines are loose.


Starting next week, FHA Streamlines will be a completely different beast.

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The FHA Is Changing Its Streamline Refinance Guidelines November 2009

Posted in home affordability, Real estate, Refinances by southorangecounty on October 7, 2009

New FHA Streamline Refinance guidelinesBeginning November 17, 2009, the FHA will make it harder to qualify for its popular Streamline Refinance program.


Available exclusively to homeowners with existing FHA home loans, the streamline program is meant to help homeowners reduce mortgage payments as simply as possible.


As such, the program carries minimum eligibility requirements.


In fact, the FHA Streamline Refinance is more notable for what it doesn’t require from applicants.



  • There’s no income verification
  • There’s no asset verification
  • There’s no employment verification
  • There’s no appraisal required

The two biggest qualifiers, really, are that the homeowner meets a minimum credit score and that the new loan doesn’t exceed the original balance of the old loan.


The new program guidelines, however, are much stricter. 


Effective next month, among other requirements, applicants must show evidence of employment and income, plus proof of cash required at closing. 


Furthermore, homeowners can’t finance closing costs into the mortgage without a complete home appraisal.  In areas of declining value, this may render refinancing with the FHA impossible.


Therefore, if you’re a homeowner with an FHA mortgage, consider contacting your loan officer before the November 17 deadline to explore your Streamline Refinance options.  Mortgage rates are low and you never know for what you’ll qualify.


The worst thing you can do is to wait too long to find out.  Once the deadline passes, the old guidelines will be history.

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FHA Cash Out Refinances Getting More Strict As Of April 1, 2009

Posted in Real estate, Refinances by southorangecounty on March 27, 2009

FHA cash out refinances reduce to 85 percent April 1 2009If you’re in want of a cash out refinance, the most liberal cash-out program in town is about to make qualification more difficult. 


Effective April 1, 2009, the FHA is reducing the maximum loan-to-value on cash-out refinances by 10 percent, dropping the loan size limit from 95% of the home’s value to 85%.


In its official press release, the FHA says it’s making the change to “limit its exposure to undue risk”. 


It also lists the following cash-out requirements:



  • With less than 12 months since the purchase date, a home’s value cannot exceed its original purchase price — even if home improvements were made.
  • A homeowner must be current on his mortgage payments to qualify
  • A second, verifying appraisal may be necessary, depending on loan traits
  • Co-signers may not be added to the mortgage note in order to qualify

The last day to register a FHA 95% cash out refinance is Tuesday, March 31, 2009.  The loan does not need to be “locked” — only registered


So, if you know that a 95% cash out FHA refinance is in your future, talk to your loan officer before Wednesday morning about registration.

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