Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

 

FHA loans seem to be one of the main choice of mortgages in the last 24 months or so. There are many reasons for this. What I hate hearing is that FHA mortgages have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage and the real estate industries. The realization has been that 30% of the subprime mortgages from 2002 to 2006, should have been FHA mortgages, not subprime. But why are FHA loans getting bad press now, stating that they are the most defaulted loans recently?  Read this : We should ABOLISH FHA loans...

 

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3% or even 5% down. In most cases, you were told this, because that particular lender was not FHA approved. Now?  Even with 10% to 20% down and credit scores less than 680, FHA loans in many cases, will be the best mortgage for you. You want to see a shocking example?  Please continue...

 

 

The example below is based on a $300,000 purchase price with 20% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 720, certain fee penalties would apply to you, which would increase your rate and or points.  The FICO (credit score) that I am going to use is 659 and I will still show in this example that FHA loans are cheaper, even with 20% down.  Keep in mind... Don't ever be fooled by that loan officer that says, don't worry, you can refinance later.  This is a bad statement for many reasons that I will write about another time.

 

 

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 660. And many lenders can't do FHA loans under 620. At Infinity Home Mortgage, I can do credit scores down to 600 now. Just beware of those that promise you a mortgage with scores under 620. It can happen, but they aren't as easy as advertised. Please read - Credit scores/FICO scores - I need a 700 credit score? ***

 

 

 

 

 

 

 

 

 

 

 

Disclaimer :  These rates are examples of today's pricing, and the spread shown in the example is real with the same profit margin for both sides. To compare this scenario apples to apples, there are no lender fees and with a half of a point. The conventional rate also includes the penalty for the 659 credit score, hence why there is a half of a point charge, because of the large pricing penalty for the credit score.

 

 

**Some of you might be saying that you will be adding $4,200.00 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, you would have spent $621.00 more in payments in 5 years on the FHA loan. Does this mean that the FHA loan is still worse for you? No, it all comes down to your goals. Read on... In 5 years, your principal balance on the 5% would be $1,574  more than the 5.75% rate.

Here is the kicker and why you need a trusted loan officer to educate you. One important fact to remember.... The FHA monthly mortgage insurance in this scenario will fall off automatically in 5 years. Which means an extra savings of $100 per month. So just in another 15.74 months, you break even basically. Yes, there are smaller numbers to review. What if you stayed in your house for 10 years? How many of you move out of your house in less than 5 years, especially in today's economy. Just food for thought.

 

 

This information basically states you don't automatically do a conventional mortgage with 20% down over a FHA mortgage. Numbers don't lie, but not being educated about such numbers do mislead.

 

 

Lastly, keep in mind, depending on the area that you are buying or refinancing in, that you might not be able to get a conventional loan unless you have 10% down or a 90% LTV. The reason being is the mortgage insurance companies and how they view certain geographical areas and declining market areas.

Which leads me to the issues about Condos. Not only are there restrictions from the MI companies (Mortgage Insurance companies) in regards to what area you live in, but that many lenders won't go above 80% LTV's now on conventional mortgages. On a FHA mortgage for condos, you can still go up to 96.5%, depending on the state, but you still have to make sure that the condo association has been FHA approved. There has been a major change on FHA condo spot approvals.  Please read : FHA condo changes for spot approvals - The spot approval has been extended to 2/1/10.

 

 

Make sure you know about the NEW FHA loan changes : FHA loan changes for 2010 & why they changed. Reasons for these FHA changes and when they go into effect.

 

 

 

For more FHA loans vs conventional loans comparisons :

• FHA loans vs Conventional loans - A true numbers comparison with 5% down -  12-20-08 -Using a 710 credit score
  

• FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score
  

• FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check -  04-03-09  - Would you believe that FHA loans could be cheaper even with 20% down?  Come see why and how.

• FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

• FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09  - A great comparison with a 679 credit score and 5% down.  This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.

• FHA loans vs Conventional loans - Things you need to know with 10% down, especially in regards to Condos - 09-19-09 -

• FHA loans vs Conventional loans - A real comparison with 20% down - Part 1 of 2 - 01-28-10 - Not much of a difference, unless you stay in the house for more than 5 years. Hence why a loan officer should be talking about your goals. So very important, yet many dont ask.

• FHA loans vs Concentional loans - comparing 19% down & 10% down - Don't be cash poor!! - Part 2 of 2 - 01-29-10  I want to show even a bigger difference if you put less down. And even if you decided to put less than 10% down, because cash is king now. You can't predict even next week. And keeping in mind of some misleading rumors, that you need more than 10% down to buy a house.
  

 

 

• And sellers, don't listen to your agents on how bad FHA loans are.

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

_________________________________________________________________________________________

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

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

 

Don’t be CASH POOR – CASH is KING

 

 

FHA loans have been used more in recent years. Many have talked negatively about FHA loans because of their high default rates as of lately. Don't be fooled by chatter that is not backed up by fact and why this is happening.  Please read : Should we ABOLISH FHA loans?

One of the main myths that I wanted to dispell in this blog post is that you don't need 20% to buy a home in today's real estate market or that you need a 720 credit score. These are bad myths and rumors. You can read about it here : Credit scores/FICO scores - I need a 700 credit score?

Yesterday, I wrote a post about comparing a FHA mortgage to a Conventional mortgage with 20% down. FHA loans vs Conventional loans - A real comparison with 20% down. - Overall, it all comes down to the borrowers needs and goals. Yet not all loan officers dig this deeply. Usually because the focus is lost when the borrower wants to know the mortgage interest rate and fees. More on that in a post on Sunday.

 

 

 

What is the big fuss of putting 20% down other than you don't have mortgage insurance? Here is my chart from yesterday.

 

Loan comparison of 20% down between FHA loans and Conventional loans

SCENARIO # 1

 

 

 

 

 

 

 

 

 

 

 

In regards to scenario #1, this is great if you have 20% down. But is it? Please read why going with a conventional loan with 20% down still might not be your best option. 20% down comparison between FHA loans and Conventional Loans   Hint: Goals - 

 

 

Dropping the down payment by 1%, making it 19% down and not 20% down.

Scenario # 2

 

 

 

 

 

 

 

 

 

 

 

Scenario # 2 - There is no large difference except that your monthly mortgage payment is lower on a FHA loan when putting less than 20% down. **Conventional mortgage insurance is not standard as it use to be. Meaning that these figures could change depending on the insurance company, the fico score, and in some cases, where you purchase the property.**

 

 

Loan comparison of 10% down between FHA loans and Conventional loans

Scenario # 3

 

 

 

 

 

 

 

 

 

 

 

As you can see, when you put less than 20% down, and depending on your credit scores, FHA mortgages will be much cheaper in the monthly mortgage payment. I give a better description and understanding of the differences in this blog post : 10% down comparison and understanding the upfront mortgage insurance on FHA loans vs conventional loans.

My whole point to this post though is about cash, cash savings, and reserves. And in today's economy, cash is king. Let's look at it this way.

 

 

Loan comparison – Conventional loan w/20% down vs FHA loan w/10% down

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overall, there is no true correct answer. It first must come down to how comfortable you are in your finances. But here is a clear indication that just because you put down 10% more, which is an additional $30,000, doesn't mean your payment drops as signficantly as many of you might think. (this will vary depending on loan amounts) Don't get me wrong, saving an additional $186.71 a month can be huge. But at the same time, you could keep $30,000 in your pocket instead. If you want to try and compare apples to apples, just take the difference out of the monies that you saved from your 10% down payment. Set aside $11,200 in a seperate account to lower your payment. It would still leave you with $18,794 now, after closing. 

One word of advice.... you don't have to try and pay down your mortgage as soon as possible.  Yes, this is a good security blanket for so many. But you also don't know what the future holds for you.  Besides, you could take $10,000 of your money left over and invest it in several areas that would give you a better return of 7% to 8%, especially since you are paying 5% on your mortgage. But you would need to speak to a financial consultant about this.

 

 

Summary : No matter how much cash you have or don't have, this is how your loan officer should help you understand your mortgage and financial situation. Cash can be king and be useful in unknown emergencies. Don't always fall for those commercials that scream, "don't let the banks rip you off, learn how to pay off your mortgage quickly".(you don't need these programs, such as the mortgage accelerator programs... you can do this on your own)

On another note, I am not saying that your loan officer needs to show you this exact breakdown. But it's more than just about the best interest rate and or fees. What is the best program for you based on your goals and the mortgage program. I will be talking about this over the weekend. Stay tuned. 

Knowledge is Power... And don't forget that you can still put down 3.5% with FHA loans, as opposed to conventional loans needing 5% to 10% down.

 

 

Disclaimer :  The rates are examples in today's market, aren't any form of advertising, and aren't for solicitation of new business. It's merely to educate the consumer. And the spread shown in these examples are real as in the profit margins for both sides, in order to compare apples to apples. The conventional rate also includes the penalty for the 659 credit score and down payments. This is because of the large pricing penalty for the credit score.

 

 

 

For more FHA loans vs conventional loans comparisons :

• FHA loans vs Conventional loans - A true numbers comparison with 5% down -  12-20-08 -Using a 710 credit score
  

• FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score
  

• FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check -  04-03-09  - Would you believe that FHA loans could be cheaper even with 20% down?  Come see why and how.

• FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

• FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09  - A great comparison with a 679 credit score and 5% down.  This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.

• FHA loans vs Conventional loans - Things you need to know with 10% down, especially in regards to Condos - 09-19-09 -

• FHA loans vs Conventional loans - A real comparison with 20% down - Part 1 of 2 - 01-28-10 - Not much of a difference, unless you stay in the house for more than 5 years. Hence why a loan officer should be talking about your goals. So very important, yet many dont ask.

• FHA loans vs Concentional loans - comparing 19% down & 10% down - Don't be cash poor!! - Part 2 of 2 - 01-29-10 I want to show even a bigger difference if you put less down. And even if you decided to put less than 10% down, because cash is king now. You can't predict even next week. And keeping in mind of some misleading rumors, that you need more than 10% down to buy a house.
  

 

 

• Make sure you know about the NEW FHA loan changes : FHA loan changes for 2010 & why they changed. Reasons for these FHA changes and when they go into effect.

• And sellers, don't listen to your agents on how bad FHA loans are.

 

 

 

                    

                                                                                               FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

_________________________________________________________________________________________

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

All information is deemed reliable but is not guaranteed.

Via Sharon Tara New Hampshire Home Stager (Sharon Tara Transformations):

Putting your house on the market?  One of the most important decisions you will make is choosing the professionals who will help you sell.  Not all Realtors and Home Stagers are created equal. 

Just because they are professional, it doesn't mean they are proficient.

In order to choose the right professionals, you are going to have to invest some time. 

This is not a decision to take lightly. 

You are going to have to ask a lot of questions. 

Get your ASK in gear if you want to get your house sold!

When choosing a professional, it is best to interview at least three candidates.  Don't be afraid to ask a lot of questions...you are depending on them to help sell your greatest asset.

Questions to ask Realtors include:

• Are you full or part time? 
• Do you work predominantly with buyers or sellers?
• How knowledgeable are you with my area?
• Do you have a website and/or blog?  How often do you update your website or blog?
• How do you intend to market my property other than listing it on MLS? 
• Will my property be listed on your website? 
• Do you use video?
• What will the cost be?  Are there any fees beyond your commission?
• Will I be working directly with you or with an assistant?
• Can you provide references?

Questions to ask a Home Stager include:

• How long have you been in business? 
• Do you specialize in occupied or vacant properties?
• Are you familiar with my area and do you know the target buyer for my home?
• Do you have a portfolio of your work? 
• Are the photos of your actual work, or do you use stock photos?
• Do you provide digital photos of your completed work?  What is the cost?
• Are you registered with the state?
• Are you fully insured?
• What are your rates? 
• Can you provide references? 

 NOTE:  At this time there is no independent organization that certifies or licenses home stagers, and no government oversight regulating home staging business practices.  If a home stager has a designation after their name, it comes from whatever training courses they have taken.  

Ask questions to get answers to what is important to you.  You are not looking for the "best" realtor or stager.  You are looking for the best realtor or stager for you.  Make your selection based on the answers given and how comfortable the people make you feel.

 

CLICK HERE  TO RECEIVE FUTURE POSTS AUTOMATICALLY VIA YOUR EMAIL

Professional Home Staging services for the New Hampshire Seacoast

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Via Amy Jones (Chandler, Arizona RE/Max Excalibur):

We qualify our buyers before showing them a home, right? But are you qualifying the short sale listings you're showing them? If not, you may be wasting your time. 

By contacting the listing agent and asking them a few basic questions prior to showing their listings you'll  accomplish 2 things.

1. You'll save you and your buyers some and frustration time by not showing or writing an offer on a property that's not going to qualify as a short sale and consequently will never close.
2. Listing Agents will get a clue and finally start doing their homework before taking any listing and slapping "short sale" on it.

When I meet with buyers looking for a home in Chandler, AZ, my first visit with them will include some counseling about the types of properties available for sale in our area. 

1. Traditional resales
2. New home construction
3. Short Sales
4. REO's

I will explain the process with each type of sale.  When we cover short sales, I'll go over my list of questions that I will ask any listing agent prior to showing a short sale listing and explain the reasons for each question and I'll obtain the buyers approval to eliminate Short Sale listings based on my findings so we're not wasting time. 

I will tell you that buyers agree 100% of the time.  Buyers do not want to sit around waiting on a short sale that's not going to close and loose the opportunity to find one that will.

Here are a few questions I ask any short sale listing agent (and another reason why listing agents should be responding to inquiries in a timely manner.  If they don't respond...I don't show).

1. Do you have any offers?
2. Have you submitted any offers to the lender(s)?
3. How many offers will you be submitting to the lender(s)? If it's more than one, the interview is over and I'm moving on to the next property.
4. Have you prequalified the seller and do they have a hardship?
5. Have you reviewed their financials and do they have an income shortfall?
6. Have you verified the parties on the Title and Deed?
7. What stage of foreclosure is the property in?
8. How many lenders are involved?

The answers to these questions will determine whether or not we'll look at the property. Some of the answers will give me an idea of how long the process will take and depending on how long my buyer is willing to wait, whether or not we'll look at the property. 

The answers will also be a very good indicator of whether or not the listing agent knows what he/she is doing.  I'm willing to help a listing agent along, if certain criteria are met, but if the agent has not done their homework, they've just flunked my interview and we're moving on.

________________________________________________________________________

Amy Jones, Realtor, ABR, CNE, EPro, CDPE
Chandler, Sun Lakes, Ahwatukee, Gilbert, Tempe & Mesa
Named one of the "Top 50 Real Estate Agents" by the Phoenix Business Journal 

RE/Max Excalibur
4921 S. Alma School Rd
Chandler, Arizona
Direct~480-250-3857

Visit www.AmySellsAZ.com for more information including free MLS search.
Visit www.PhoenixArizonaRealEstateBlog.com  for a comprehensive Phoenix Area Blog.
Visit www.SunLakesBlog.com about living in Sun Lakes, AZ.