Have an FHA Loan? It Might Make Sense to Refinance in 2012

If you have an FHA loan, there hasn’t been a better time to take advantage of lower interest rates, and the government has lowered prices on mortgage insurance to help make it more affordable.

The FHA streamline refinanceprogram has been around for years, but most people don’t realize that the Department of Housing and Urban Development is constantly tweaking the mortgage insurance premiums that are required on FHA loans. As a result of these changes, the FHA streamline guidelines have an impact on whether it makes sense to refinance — not just interest rates.

What’s new?

For years, HUD has required that each FHA borrower pay an up-front mortgage insurance premium as well as a monthly mortgage insurance premium (MIP), and finding the information about guideline changes on these requirements can be difficult.

Currently, the most important date to be aware of when thinking about an FHA streamline refinance isJune 1, 2009. FHA loans that were endorsed (note: the endorsement date is usually a few weeks after your closing date) prior to June 1, 2009, now have different — and lower — mortgage insurance costs than FHAloans that were endorsed after that date.

MIP requirements for FHA streamline loans endorsed prior to June 1, 2009
Up-front MIP = 0.01 percent
Annual (paid monthly) MIP = 0.55 percent

MIP requirements for FHA streamline loans endorsed after June 1, 2009
If your FHA loan was endorsed after June 1, 2009, the MIP calculations can be somewhat confusing. MIP will vary based on loan-to-value ratio and the term of the loan.

• 15-year FHA loan, LTV over 90 percent: 0.60 percent
• 15-year FHA loan, LTV under 90 percent: 0.35 percent
• 15-year fixed-rate loan with LTV of 78 percent or less : no annual MIP
• 30-year FHA loan, LTV over 95 percent: 1.25 percent
• 30-year FHA loan, LTV under 95 percent: 1.20 percent

These are annual amounts and are paid monthly. So for a $100,000 loan with a 0.60 percent annual MIP, it would be 100,000 x .006 = 600 / 12 = $50 per month.

FHA streamline requirements in 2012

Net Tangible Benefit: Each FHA streamline has to pass the Net Tangible Benefit test, and mostlenders use a worksheet to make sure the scenario “makes sense” for the borrower. One specific requirement is that the principal, interest and mortgage insurance portion of your new mortgage payment must go down by 5 percent or more. You would also be eligible if you’re refinancing from anadjustable-rate mortgage into a fixed-rate mortgage.

Loan balance can’t increase to cover closing costs without an appraisal: HUD doesn’t allow you to “roll the costs in” and increase your loan balance on the FHA streamline without an appraisal. The total amount of your new loan can’t be higher than your current principal balance plus the up-front mortgage insurance premium. The most common way for people to pay for closing costs is to be credited by the loan officer for their closing costs, but I have seen some people bring cash to closing as well.

Credit qualifying vs. non-credit qualifying: Some lenders will offer a different interest rate for people who can credit qualify and for people who opt for a non-credit qualifying FHA streamline. Be sure to ask your loan officer if the lender offers a difference in rate between the two.

Credit scores required (generally): Most lenders (although maybe not all) will require a minimumcredit score on an FHA streamline. The most popular minimum credit score I see at lenders today seems to be 640, but be aware that some lenders may have a lower minimum credit score — or maybe even no credit score requirement at all.

FHA streamline for non-owner occupied homes: Many people have become “forced landlords” in the past few years and for whatever reason now have an FHA loan on a property they are currently renting out. The FHA streamline program can be done for these types of situations as long as theowner occupied the home for a least 12 months. When doing this kind of streamline, there is no appraisal option — meaning you can’t finance any of the closing costs except the  up-front MIP.

Late payments: In order to be eligible for the FHA streamline program, most lenders will require that you have made the past 12 payments on your current FHA loan on time.

With the significant reductions in the mortgage insurance premiums for FHA loans endorsed prior to June 1, 2009, it makes sense that many more people are searching for a lender that can help them get a lower interest rate and save a significant amount on their mortgage payment. As with all mortgage programs, be sure to shop around for a good lender; you may be surprised to find not only differences in rates and fees, but also in expertise and service.

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Taxes on your home? Thank Obama in 2013….

I thought you might find this interesting, — maybe even SICKENING! 

The National Association of Realtors is all over this and working to get it repealed, — before it takes effect. But, I am very pleased we aren’t the only ones who know about this ploy to steal billions from unsuspecting homeowners. How many realtors do you think will vote Democratic in 2012? 

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home, etc. When did this happen? It’s in thehealth care bill, — and it goes into effect in 2013. Why 2013? Could it be so that it doesn’t come to light until after the 2012 elections? So, this is ‘change you can believe in’?

Under the new health care bill all real estate transactions will be subject to a 3.8% sales tax. 

If you sell a $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation, — who often downsize their homes. Does this make your November, 2012 vote more important? 

Oh, you weren’t aware that this was in the ObamaCare bill? Guess what; you aren’t alone! There are more than a few members of Congress that weren’t aware of it either. 

You can check this out for yourself at:

http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home

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Selling your home by yourself? IS it SAFE?

Are you a FSBO (For Sale by Owner)? How are you protecting yourself, your house and your family? You post your home online on Craigslist or another site, and how are you being protected from intruders? If I call you saying I am a buyer for your home, how do you know if the buyer is 

1) Qualified

2) Not looking to target your home in a robbery

3) Real

Okay, what am I getting at. Let me get to the point. When you market your home, you have NO real protection. If I, as a potential buyer, call you to ask all about your home, pictures, how I can look at it, you have set your self up for a home robbery. How you say? First as a seller, you are going to “keep” any buyer you get to call you to come look at your marvelous home. I can understand, to you, the seller, you are emotionally attached to your  property. You will give out more information then the buyer may need, such as your work schedule. If you shoot  pictures with your belongings in it, a person can see what valuables you may have. Also, how is the buyer going to come see the home? Are you going to be there? How do the buyers get keys? 

As a Representative of both buyers and sellers, I try to insure that all parties are being protected. I don’t show buyers that are not qualified homes. This eliminates potential frauds going through homes and insuring they are real buyers. To protect my sellers, I put a ARMLS lockbox on the home, to insure that I know who is going into the home and when. It also insures that buyers are going with a licensed agent. 

The short of the story is if you are thinking of selling your home by yourself, for your  protection you should conciser talking to a Realtor to help you. Help you protect your home, and protect yourself from any contract issues! Call or text me today if you have any questions! @480-275-9566

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3 mistakes when buying a new home

I thought there was some great information here for anyone buying or selling a home!

Brand-new doesn't equal problem-free

By Barry Stone
Inman News®

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July 12, 2012

DEAR BARRY: We bought our home when it was brand-new. There had been another buyer before us, but he backed out of the deal because of a foundation problem. The builder disclosed that the problem had been repaired. We were desperate and angry, so we purchased the property. Now we are selling it, and the buyer's home inspector says the foundation was not properly repaired. It seems that we've gotten ourselves into a real mess. What could we have done to prevent this? --Marion
DEAR MARION: You made three critical mistakes when you bought the property. The first was to buy it when you were "desperate and angry." Regardless of why you were feeling that way, a home purchase should never be based on negative emotions. Property is very expensive, and that kind of expenditure should be made only with clear thinking and sober rationale.
The second mistake was to accept the condition of the foundation without written proof of the repair work. Adequate proof would have been an engineering report on the foundation problem and a contractor's receipt for the corrective work.
The final error was purchasing the property without hiring a qualified home inspector. Buyers often assume that a new home does not need a home inspection, and many homeowners have come to regret that unfortunate assumption. Had you hired a home inspector, you might have learned that the foundation was defective. Then you could have had it repaired by the builder, or you could have backed out on the deal.
The question now is whether the home is still covered by the state mandated builders' warranty. You should check with an attorney or with the appropriate state bureaucracy to see where you stand in that regard.
DEAR BARRY: Our buyers hired a home inspector and he has made an expensive mess. While testing the dishwasher, he left room to inspect other parts of the house. We hadn't used the dishwasher in years and the door seals had become dry and cracked. By the time the inspector returned to the kitchen, the floor was flooded, and the hardwood flooring is now warped and must be replaced. Are we stuck with the cost of this repair, or is the home inspector liable? --Ralph
DEAR RALPH: The home inspector has just learned an expensive lesson: Don't leave the room when testing an old dishwasher. Had he remained in the room while the fixture was running, the leaking would have been noticed when it started, and the unit could have been turned off before the flooding occurred.
A good practice for home inspectors is to start the dishwasher first when inspecting a kitchen. That way, the unit can be running while the inspector is evaluating the cooktop, oven, vent hood, sink plumbing, cabinets, countertops, and so on. By the time these other items have been inspected, there will have been time for dishwasher leakage to become apparent.
You should discuss the issue of liability with the inspector, and be sure to ask if he hasinsurance for this kind of accident.

Economists expect 2013 home price rebound

HOMEOWNERSHIP RATE EXPECTED TO DROP IN NEXT FIVE YEARS

By Inman News
Inman News®

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June 25, 2012

After experiencing a slight dip this year, home prices will see modest increases starting in 2013 and through 2016, according to a quarterly survey of more than 100 economists, real estate experts and investment strategists.

The survey, conducted by research and consulting firm Pulsenomics LLC on behalf of real estate search and valuation portal Zillow between May 31-June 14, 2012, asked 114 participants to project the path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years.

When last published May 29, the index showed that national home prices in the first quarter hit a record low, declining 1.9 percent from first-quarter 2011. Prices were down 35.1 percent from their second-quarter 2006 peak, to levels last seen in mid-2002.

The panel of experts surveyed by Pulsenomics said they expect the index, which covers all nine U.S. census divisions, will show a 0.4 percent annual decline at the end of 2012 and then increase by 1.3 percent in 2013. Their projections are more or less similar to what they were in the last quarterly survey in March.

The economists surveyed largely agreed on the trajectory of national home prices for first-time in the history of the survey, which dates to May 2010, Zillow said. The most optimistic quartile of panelists predicted an average 1 percent increase in home prices this year, while the most pessimistic expected a 2 percent decline. Most agreed that after the first quarter’s decrease, home prices will rise for the rest of 2012, Zillow said.

Nonetheless, 56 percent of respondents believe the national homeowership rate in five years will be lower than the rate in the first quarter: 65.4 percent. One in five projected the rate would be at or below 63 percent. The lowest rate on record is 62.9 percent, hit in 1965. 

“It’s good to start to see some convergence of expectations among economists, as it lends further support to the claim that a bottom is real,” said Stan Humphries, Zillow’s chief economist, in a statement.

“However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of foreclosed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise.”

When compared to economists’ projections two years ago, the expected pace of the housing recovery is now considerably weaker.

“In June 2010, the average cumulative appreciation in U.S. home prices expected by our panel was 10.3 percent for the years 2012 through 2014,” said Terry Loebs, founder of Pulsenomics, in a statement. 

“Now, two years later, the average prediction among our experts for the same period is just 3.5 percent. This translates into $1.25 trillion less housing wealth than expected nationally over the coming three years.”

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Phoenix tops list of 10 turnaround markets

By Inman News
Inman News®

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May 09, 2012

Editor's note: Realtor.com's "Top Turnaround Towns" list is compiled using an algorithm that considers year-over-year median price appreciation, drop in year-over-year age of inventory, reduction of inventory levels compared to a year ago and year-over-year changes in unemployment rate. All data, unless otherwise indicated, reflect analysis on a quarterly basis.
It's sunny and international in Realtor.com's "Top Turnaround Towns" for the first quarter of 2012. Seven of the top 10 metros on the list are found in Florida. Seven also made the cut in a recent Inman News analysis of public records that identified the top 10 U.S. hot spots for global buyers.
Miami, Orlando and Naples -- No. 2, No. 3 and No. 5, respectively, on the Realtor.com turnaround list -- all ranked in the top 10 on the Inman News list of hot markets for global investors. Orlando, despite having lower and fresher inventory than a year ago, might be in the most precarious position of the three, having experienced 9,330 foreclosure filings (one for every 101 homes) in the first quarter.
Regardless, the fact that Phoenix and parts of Florida hit especially hard by the downturn are beginning to perform well lends an optimistic tone to the springtime buying season.
"By all indications, the 2012 housing market is unfolding as we expected, and we're encouraged with the progress local markets are making," said Steve Berkowitz, CEO of Realtor.com operator Move Inc.
The Miami area is especially hot, even though it lost its No. 1 ranking on the list this quarter to the Phoenix-Mesa, Ariz., metro. In March 2012, according to the Miami Association of Realtors, 65 percent of all home sales in Miami-Dade County were all-cash, and for-sale inventory dropped 48 percent from last year's first quarter. Median list prices saw a year-over-year jump of 24 percent.
The fast-rising Phoenix-Mesa, Ariz., metro continues its remarkable turnaround as No. 1 on the list, up from No.4 in the third quarter of 2011 and No. 2 in the fourth quarter of 2011. Just two years ago, in 2010, it topped the nation's metros with 55,732 bank repossessions in that year.
A substantial reduction in year-over-year for-sale inventory (48 percent), a sharp year-over-year drop in median age of inventory (33 percent) and the largest year-over-year median list price increase (27 percent) of any of the 146 metros Realtor.com tracks for the report landed the Phoenix-Mesa metro in the No. 1 spot. It also has a very good relative unemployment rate at 7.8 percent (February 2012).
Oakland, Calif., makes a surprise appearance on the list at No. 6, thanks to brisk home sales compared to a year ago (46 percent faster) and a steep year-over-year drop (48 percent) in for-sale inventory. From March 2011 to March 2012, the feisty, restaurant-rich Bay Area city had the largest drop (52 percent) of for-sale inventory in any of the 146 metros Realtor.com tracks for its top turnaround markets report.
With a low foreclosure rate in its county (one in every 519 homes) and a relatively strong unemployment rate (8.7 percent), the Boise, Idaho, metro continued its steady climb on the top turnaround towns list to No. 4. The Potato State capital had a year-over-year 37 percent drop in for-sale inventory and a near chart-topping 17 percent year-over-year increase in median list price on for-sale homes.
See Realtor.com's full 25 metro "Top Turnaround Towns" report here.

Location: Phoenix-Mesa, Ariz.

Year-over-year median list price change (%)	26.94%
Year-over-year median age of inventory change (%)	-32.94%
Year-over-year inventory change (%)	-48.04%
Unemployment rate (Feb 2012) (%)	7.8%

Phoenix airport and city skyline at sunset via Shutterstock