Inspecting real estate in Nashville, TN...
     Electrical problems, both large and small, are sone of the issues that I find while inspecting properties in the Nashville real estate market. Other than the rust on the plug face, all looks well. The trained eye of the inspector not only focuses on the rust, but the burn mark on the upper left corner of the outlet.   
     While not a "deal killer" when GFI (ground fault interrupter) outlets get burned, it is best to replace them to prevent future failures. Replacing this $20 item can be the difference between serious injury or death.

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When is it a good time to buy a home?

Important interest rate info below. Please read ...

 

 

First time homebuyers have been blessed with low mortgage interest rates and the first time homebuyer tax credit.  We have heard so many times in the last 12 months that now is a great time to buy. But is this true?  So when is it a great time to buy as a first time home buyer or even a regular borrower?

Let me keep it simple.  The best time to buy a home is when you are ready to buy. It should not be an impulse, for those that buy when they are sad or happy. Or just because your friend or neighbor bought a house. Or to keep up with the Jones's.

In the last 2 years, buyers have been very lucky with low interest rates in the high 4's to mid 5's and because of the first time home buyers tax credit. What it comes down to is knowing the future and the what ifs. No, I don't have a crystal ball, but the writing could be on the wall. Let's explore some.

 

 

 

The Federal Reserve implemented a plan to help keep mortgage interest rates low. It was a way to keep buyers' fears low and hopefully to help stimulate the economy.  Here is a press release from Nov. 2008 - Federal Reserve announcement in buying mortgage-backed securities & GSE's - This was the original plan. What is the plan now?  There is news that this plan will come to a halt. And I feel that all buyers and anyone related to the real estate market, should know now and not later. And not be told as it is actually happens.

So what does this all have to do, especially with first time homebuyers?  I hate to be the bearer of bad news, but this needs to be talked about and now. Interest rates could climb higher in the next several months or so. 

 

 

 

Is time running out to buy a home?

 

 

No, time is not running out. People will always buy homes.  But it should come with careful consideration and planning. And much of this planning should come from a very knowledgeable loan officer.  You should not just buy because you could get a tax credit or because mortgage rates are low.

Here is a question and answer fact sheet put out by the Federal Reserve. FAQs: Purchasing Direct Obligations of Housing-Related GSEs - And here is an excerpt specifically stating the Feds backing out the direct obligations.

 

 

 

 

 

 

 

 

Lastly, you have the first time homebuyer tax credit which is due to expire with homes under contract by April 30th, and that close before June 30th. Detailed information on the home buyers tax credit can be found here : Tax Credit for home buyers -

 

Summary :  There should be no need for panic. I wanted to supply information and educate, because if you a serious first time homebuyer or any other type of buyer, you should not be sitting on the fence, waiting for interest rates to drop or home prices to drop even further.

One fear of mine is that we could see rates go up as high as 7% by the end of the 3rd quarter. Let's just play devils advocate and say they go from 5% to 6%. On a $250,000 loan, your payment would go from $1,342.05 to $1,498.88 a month.  That is a monthly difference of $156.83.  That turns out to be a grand total of $1,881.96 a year.

 

 

 

 

Again, I don’t believe in negative news to instill fear and or panic. But I do believe that many should be aware of this. If you are a serious buyer, just don’t be caught with your pants down or listening to someone else that might not understand the value of our economic issues.

And keep in mind that you don't need 20% down or credit scores above 700.

Please read : FHA loans with 3.5% down  &  Rumors why FHA loans are bad 

 

 

 

                    

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

 

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

When can I drop my Mortgage Insurance on my home in Franklin Tennessee?

When can I drop my Mortgage Insurance on my home in Franklin Tennessee?  This is a question I hear frequently primarily due to the loss of the 80/20 or 100% purchase loan.  In today's market if you do not have 20% to put down you are going to pay some form on Mortgage Insurance.  Either Primary Mortgage Insurance (PMI) on the Conventional Loan or Mortgage insurance Premium (MIP) on the FHA side.  The exceptions are with VA Loans and USDA/Rural loans. 

What is Mortgage Insurance?

Private Mortgage Insurance is a policy that covers the mortgage company in the event the home buyer defaults on the mortgage note. It is commonly referred to as "MI" and is usually obtained through the mortgage company.

Mortgage Insurance does not cover the real property but rather the Mortgage Note. It comes under the category of Contract Performance Insurance and is in the Property and Casualty line. The term "private mortgage insurance" differentiates it from government insurance. Loan products such as FHA, VA and USDA Rural Housing loans also carry insurance but it is from the government and is built into the cost of the loan, rather than being purchased separately.

So how do I get rid of it? 

Fannie Mae and Freddie pretty say you can request the lender drop the PMI once the balance of the loan reaches 80% of the appraised value of the property at the time of the loan.  There is no seasoning requirement.  An important thing to note is that the payment must be current with no 30 days past due in the previous 12 months and no 60 days past due in the preceding 24 months.  In accordance with the Homeowners Protection Act (HPA) of 1999 provides for the automatic termination of PMI at the 78% Loan to value of the original valuation at the time of the loan.  See the chart provided by Genworth Financial.

What about MIP?  The government Insurance?

MIP is the HUD funded Mortgage Insurance provided for FHA Loans.  It is designed to encourage lenders to make credit available in areas and to borrowers who might not otherwise qualify for conventional loans on affordable terms.   FHA loans have become a larger percentage of the total market as they have lower down payment requirements and currently there are few adjustments to the rate for lower credit scores. 

There are two forms for this insurance.  The UP/Front MIP which is rolled on top of the loan amount and the monthly premium.  The borrower can request the monthly premium be removed when the loan to value reaches 78% of the value at the time of the loan.  However they must have a 5 year history of good payments.   Like PMI, MIP is automatically removed at 78% loan to value as long as there is 60 month payment history IAW the HPA of 1999. 

The difference regarding removal of the mortgage insurance is this.  Conventional has a 12 month payment history and FHA requires 60 month payment history. 

 

 

You can reach me me at 615-243-1301 or lee.barroll@fcmhomeloans.com.  And subscribe to my blog if you like what you see.