Posts Tagged insurance

FHA to raise monthly mortgage insurance premiums… Again.

HUD has announced that it will once again raise the FHA monthly mortgage insurance premium. As you may recall it increased last Fall from 0.55% annually of the loan amount to 0.90% annually of the loan amount for loans equal to or greater than 95% loan-to-value. The minimum down payment for FHA loans is 3.5% leaving an LTV of 96.5, so most FHA loans originated fall into this 0.90% category.

For all loans originated on or after April 18, 2011 the new FHA mortgage insurance rate will be 1.15%.

FHA monthly mortgage insurance premiums are figured like this:

Loan balance X MI rate = Annual amount / 12 months = monthly MI payment.


$200,000 loan balance X 0.90% = $1,800 annually / 12 months = $150.00 a month MI payment.

With the increase the equation will look like this:

$200,000 X 1.15% = $2,300 / 12 = $191.67 a month mortgage insurance payment.

What this will effectively do is reduce the amount of loan you will qualify for by about $10,000 or so.

So, if you’re looking at buying a new home or refinancing, be sure to get your loan approval done before April 18th and save yourself some money.

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FHA allows “flipping” through 2011

Until last year FHA would not insure loans on homes that had been owned less than 90 days in an effort to thwart property inflation through flipping schemes.  However, last year in an effort to stimulate home sales and reduce the inventory of foreclosed homes on the market HUD waived the 90 day rule, allowing real estate investors to be able to sell homes that they had owned for less than 3 months to buyers utilizing FHA insured loans with only a 3.5% down payment.

HUD has announced that they are extending this waiver through 2011.  The following conditions apply to the sale of these homes:

  • It must be an arms-length transaction with no identity of interest between the buyer and seller.
  • The seller holds title to the property.
  • There are no sales of the property or multiple transfers of title within the previous 12 months.
  • The property has been marketed openly and fairly.
  • If the selling price of the property is more than 20% above the purchase price the seller must provide proof of repairs, rehabilitation and renovation costs and/or a second appraisal to substantiate the increase in value.
  • A property inspection is done and the report is provided to the buyer before they close on their loan.

This is great news for anyone looking to take advantage of the current marketplace and either looking to get a great deal on a home or for real estate investors looking to pick-up more properties this year.

As always, feel free to contact me with any questions you may have.

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Utah Real Estate and Mortgage News

Utah ranked 6th in foreclosures nationwide

According to RealtyTrac Inc., Utah ranked sixth nationally in foreclosures during the third quarter of 2010.  According to their figures 1 in every 88 homes in Utah were in some state of the foreclosure process during this time compared to the national average of 1 in every 129 homes.

But it’s not all that bleak.  Utah traditionally lags behind the rest of the nation economically so we’re now at the same point everywhere else was over a year ago, and nationally the foreclosure rate was down 21% from the third quarter of 2009.  So it’s getting better all the way around.

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Bought a foreclosure? Title insurance could save you

With the current allegations of foreclosure fraud on the bank and loan servicer levels can you be really sure you own that sweet deal of a foreclosure you just bought?

The issue at hand here is “who really owns the home you just bought?”  It turns-out that in some cases banks have committed fraud in the foreclosure process by manufacturing missing documents needed to foreclose on a home. Documents like the original Note and other missing loan documents, forging peoples signatures in the process.

Loan servicing rights can change companies several times throughout a loan’s life.  Every time it does a hard copy of the original Note (you have a copy in your closing documents the title company gave you) is supposed to go to the new servicer.

It rarely did.

Now, banks are unsure who really owns the loan and thus who has the right to foreclose on the property.

Although I’m very outspoken about the reasons behind the current economic crises and foreclosures, I do believe that if someone is in violation of their contract with the bank to repay the loan that the bank has the right to foreclose on them. But, this has to be done with due process of law. The XIV Amendment insures us of this right.  This is a whole other topic, though.

The point here is, remember that title insurance policy that was part of your closing costs? That $600 to $1,500 charge? Well that policy is what will protect your right to the house you just bought.  Title insurance insures past events on the property.  So even if the title wasn’t clear with a previous lender at the time you bought the house, you’re not going to lose your home.

All lenders require a title insurance policy be purchased when you buy or refinance a home for that reason. It protects their interest just as it protects yours. But if you bought the property with cash and didn’t opt to pay for title insurance, than you may have reason to be concerned because you may not own the property because the bank you bought it from may not have owned it and thus had the right to sell it to you, and there is no insurance to pay-out damages to the rightful holder of the Note.

The moral of the story? Title insurance is cheap protection on your property. Always get it.

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