Archive for San Diego Mortgage Programs
Feb 9th 2011
Great news for San Diego home buyers!
H.U.D. has anounced that the loan limits for FHA mortgages in San Diego will stay at last years levels. All home loans under $417,000 or under are considered “conforming” and have the best pricing but for a single family home in San Diego County the maximum loan amount is still $697,500 with up to 96.5% loan to value!
In most cases FHA financing can only be used for owner occupied homes but H.U.D. does allow purchase of up to a 4 unit property with the program as long as the buyer is going to live in one of the units. The San Diego FHA loan limit for a duplex is $892,950, for a tri-plex is $1,079,350 and for a 4 unit building is still at a whopping $1,341,350 all at the same 96.5%.
If you have any questions about using FHA financing for your San Diego home purchase call me at 619-285-2921
January 14 2011
Let me start by stating the fact that 75% of loans in San Diego and across the country are Fannie Mae and Freddie Mac products.
Both GSE’s started with a call “risk-based pricing” to be able to price in risk from borrowers who have lower credit scores. It looks like these fee-based premiums are now for most Freddie Mac and Fannie Mae loans even for borrowers with stellar credit.
Under the new pricing borrower with 800 credit score is putting 24% down will have to pay .25% to fee. To put this in perspective on a $400,000 loan that’s $1000 more in fees. A borrower with a 679 score at 79% loan-to-value would be hit with an astronomical 2.75% fee on the same $400,000 house that’s $11,000 in fees! Some of the other new adders are for condominiums there is a .75% fee and there is an adverse market fee which is pretty much every neighborhood in the country (according to Freddie and Fannie ) of .25%.
I understand the risk-based pricing model is to charge more for borrowers who pose more risk but it seems now that everybody needing a loan is seen as a risk by the GSE’s.
This is only a few of the price increases that make it nearly impossible for San Diego home buyer to get that ” billboard” interest-rate that most companies advertise.
Above is a chart of a few of the price adds that go into effect next week. Please note that none of these ads apply the 10 or 15 year mortgages.
If you or someone you know can use my help or advice on a home mortgage product or guideline please call me at 619-285-2921 or APPLY HERE
Yesterday on the radio show (thank you again Jeff for having me on) I mentioned how home buyers who are waiting to see if San Diego Real Estate prices will drop more might be missing the boat on the total cost of waiting. Here is a quick example on how interest rate can affect the total cost of the home more than home value in this market.
Let’s compare a home with a 5% 30 year fixed mortgage and the same property with a 6% mortgage with a 5% reduction in price. For the example below I used a home priced at $400,000 at 5% interest and the same home at 5% less for the purchase price with the higher rate ( where analysts say rates will be by the end of the year) but the example can be modified for any purchase price and rate range. As you can see the higher purchase price and loan amount has a LOWER payment by $105 per month. I understand that $105 dollars is not a huge amount of money but it might as well be a million dollars if it puts a buyer over the Debt-To-Income level that is needed to qualify for the loan.
In this image you can see that over the life of the loan that $105 per month really adds up to $53,730 in net savings. Hopefully at this point you can see the value of the savings and please note that this is at 0% interest so if the savings was properly invested or even just put in a savings account it would be much more (due to compound interest).
Here is where the real magic happens!! If that extra $105 dollars a month was put toward the mortgage payment you can see that the mortgage would be paid off in 26.42 years instead of 30. this would result in a total savings over the house at a “LOWER” price of $95,766.
For more information on how to reduce the total cost of a new loan or your existing loan (without a refinance) give me a call at the office @619-285-2921.
If you are in front of your radio tonight between 6 and 7 tune in to 107.9 FM to hear the radio show. If not you can hear the show live online at www.my1079.com by clicking the listen now button. I will be speaking about San Diego Real Estate and Mortgage market with Jeff Campbell from Jeff Campbell and Associates and we will be taking questions via his e-mail. Send an e-mail with any questions to myfavoriterealtor(at sign)yahoo.com to have your questions answered on the air.
Another appearance on XETV San Diego 6. This time on San Diego Living I was with John Dupree from Jeff Campbell and Associates going over some big reasons that NOW is the time to buy San Diego Real Estate. There are big changes coming for FHA financing, we still have the home buyer tax credit and a program that should be HUGE in the San Diego market 95% condo financing with a conventional loan. We will also be putting on monthly loan modification and Short Sale workshops free of charge.
For more information give me a call at (619)285-2921
For everyone that has been waiting for the perfect time to buy real estate in San Diego and get a San Diego home mortgage NOW is the time due to 3 BIG factors.
Loans are going to get a lot more expensive in coming months for a few reasons.
- The federal government has announced that they will stop buying mortgage backed securities as of March 30th
- To take advantage of the 1st time homebuyers tax credit buyers must be in contract by April 30th
- On April 5th FHA will be raising the upfront MIP from 1.75 to 2.25 and there has been talk of also raising the monthly insurance premiums and the amount of down payment needed.
1. The rate reduction plan is going away!
This plan is something that you might not have been aware of, for the past 13 months the FEDs have been spending a huge amount of money to keep mortgage rates low is San Diego and the rest of the country. The money 1.25 trillion (YES WITH A T) dollars that was set aside is almost gone and the government has made the announcement that they will no longer buy the securities to help the market. We can’t really guess where mortgage rates in San Diego will go but the Deputy Chief of Freddie Mac said “interest rates are bound to rise to 6% in 2010 because private buyers will demand a higher rate of return on securities than the FED did”. Mark Zandi the chief economist at Moodys has said publicly that 6% “sounds about right”. It is very important for buyers to understand that the rate on a mortgage has much more bearing on cost then the price of a home so later in the week I will be posting an example to show this.
2. You MUST be in contract for your new San Diego home by April 30th to get the $8,000 in FREE government money!
It seems like most people know that to get the incentive to buy a home from Uncle Sam you need to close escrow by June 30th this year but many people don’t know that the property MUST be in escrow by the end of April. The last time the credit was extended the government said that there will NOT be any more extensions of the tax credit so the time to get qualified for your San Diego home mortgage and start shopping for your new home.
3. FHA is losing money by the minute and needs to raise funds!
Some projections are saying that FHA will have to pay out on up to 25% of the loans that they insured in the last 2 years. With already low reserves the FHA needs to increase its cash holdings in order to pay out claims. One way that they are doing this is by increasing their upfront Mortgage Insurance Premium from 1.75% to 2.25% on any FHA loan originated after April 5th. This “small” percentage increase might not sound like much but on a $350,000 San Diego mortgage it is $1750 more paid by the buyer. I’m sure like me you can think of a million other things to spend that money on . This week HUD is also asking Congress to increase the monthly mortgage insurance and down payment requirements for the FHA program.
Later in the week I will also be posting an example of how this will affect monthly and over all payments.
If you have any questions about this information or any other San Diego mortgage or real estate questions feel free to give me a call at (619)285-2921
Here is another short video from Kim at Credit Plus on how to make sure your FICO score is as high as possible. Having a high score is more important than ever when you are applying for a credit card, car loan or a new San Diego home mortgage. If you have any questions give me a call at the office at (619)285-2921 for a complimentary credit a debt evaluation.
The segment from last Thursday of John Dupree of Jeff Campbell and Associates talking about short sales. I was giving some information about high loan to value and 100% financing options for San Diego home buyers and the avaliability of high LTV San Diego Mortgage loans.
My last 2 posts have been about some long needed changes to conventional Fannie Mae loans. Although the changes will make it harder for some people to qualify for a San Diego Home mortgage loan it will help stabilize the local real estate market for the future. It looks like FHA insured loans will follow suit according to information put out this week.
At this point 60% of the mortgages that I am doing in San Diego are FHA due to the lax restrictions on down payment and credit scoring. FHA has recently came out and said that the reserve amounts that they have on hand is well below the mandated 2% so many people have said that trouble is waiting just around the corner for the insurance program. Now it looks like steps are being taken to strengthen the reserves.
The Federal Housing Administration is now asking for the mortgage insurance premiums that they collect be increased. They are also asking for the minimum FICO score requirements to be raised from 580 to 620.
The upfront mortgage insurance premium is usually financed into the loan and is currently set at 1.75% of the loan amount for all San Diego home mortgage loans with FHA financing. With the new fee’s that are being proposed the percentage will be higher and it will no longer be able to be financed. This can and will affect the buying power of people looking to buy real estate in San Diego. Right now the minimum down payment for a FHA home mortgage is 3.5% if they change the upfront premium to 2% that would effectively make the required down payment 5.5%.
Besides the upfront changes Housing Secretary Shaun Donovan will be asking Congress to raise the annual (monthly payment for annual premium) from 55 basis points where it is currently capped. This change will affect the DTI (debt to income ratio) of perspective home buyers and how much home they can afford.
I will make sure to keep you updated as more information is released.