New Home Buyers Could See A Big Jump In Their Mortgage Payments Soon

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By Jason Boone

 

Over the last 12 months many home buyers with poor or subpar credit have been able to purchase homes in Bend and across the United States especially if they had credit scores under 680.

 

Although there have been many opportunities for home buyers with low credit scores to purchase homes that could change soon if changes are made to mortgage insurance premium requirements which would increase premiums for home buyers with credit scores of 700 or lower by as much as 0.65 percentage points or more.

 

What Is Mortgage Insurance?

 

BPMI or “Traditional Mortgage Insurance” is a default insurance on mortgage loans provided by private insurance companies and paid for by borrowers. BPMI allows borrowers to obtain a mortgage without having to provide 20% down payment, by covering the lender for the added risk of a high loan-to-value (LTV) mortgage.

 

The US Homeowners Protection Act of 1998 allows for borrowers to request PMI cancellation when the amount owed is reduced to a certain level. The Act requires cancellation of borrower-paid mortgage insurance when a certain date is reached. This date is when the loan is scheduled to reach 78% of the original appraised value or sales price is reached, whichever is less, based on the original amortization schedule for fixed-rate loans and the current amortization schedule for adjustable-rate mortgages. BPMI can, under certain circumstances, be cancelled earlier by the servicer ordering a new appraisal showing that the loan balance is less than 80% of the home’s value due to appreciation.

 

This generally requires at least two years of on-time payments. Each investor’s LTV requirements for PMI cancellation differ based on the age of the loan and current or original occupancy of the home. While the Act applies only to single family primary residences at closing, the investors Fannie Mae and Freddie Mac allow mortgage servicers to follow the same rules for secondary residences. Investment properties typically require lower LTVs.

 

There is a growing trend for BPMI to be used with the Fannie Mae 3% down payment program. In some cases, the Lender is giving the borrower a credit to cover the cost of BPMI.

 

Source – Wikipedia


 

Time To Buy Now

 

If you’ve been thinking about buying a home in Bend don’t wait for proposed changes to mortgage insurance to go into effect it’s time to buy now.

 

Contact me today at (541) 383-1426 or email me at jason@sgbend.com to learn more about the latest homes for sale in Bend.

What Exactly Is A Qualified Mortgage?

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New Rules Set The Standard For Mortgages 

There’s no denying that the mortgage market has changed over the years following the collapse of the Real Estate market as the Federal Government has worked harder at protecting consumers and as of January 10th 2014 new mortgage rules are expected to be enacted that will change what the Federal Government calls a qualified mortgage.

What to Expect

For a mortgage to be considered a “Qualified Mortgage” it must have the following features:

  • Low costs that are paid up-front, especially for mortgage loans that are over $100,000, the fees for these mortgages cannot be greater than three percent of the total mortgage loan.
  • Qualified mortgages must offer safer mortgage features and not offer features that can hurt the home buyer like: negative amortization or interest only payments.
  • Mortgages that can be considered to be qualified must not exceed 30 years in length and they must offer set payments instead of “balloon payments” that sometimes can occur in mortgages.

Lender Expectations

With new mortgage rules and regulations there are also tougher guidelines for consumers to meet when applying for mortgage loans compared to pre 2007 when most lenders didn’t verify a consumer’s income or ability to pay.

These days’ consumers must be able to prove that they have the ability to pay their mortgage loan and lenders will specifically want to verify that a consumer’s debt isn’t greater than 43 percent of their monthly pre-tax income.

Difficult but Not Impossible

Although many lenders will be following the new mortgage rules there will still be some smaller credit unions and banks who will approve mortgage loans but the top qualifying factor will continue to be the borrower’s ability to pay back their mortgage and insuring that they have a debt-to-income ratio that doesn’t exceed 43 percent.

To learn more about the latest mortgage rules, or to view Bend Oregon homes for sale, contact me today by calling (541) 383-1426.

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Will Lower Loan Limits Help Or Hurt Bend Oregon Home Buyers?

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There’s no denying that the Bend Oregon Real Estate market is changing constantly, and 2013 has been a great example of this, since at the beginning of this year we had a sellers-market, thanks to rising home values, and high demand for homes, but now we are entering a buyers-market since there are traditionally fewer people searching for homes during the fall and affordable mortgage interest rates present many home buying opportunities for buyers.

Will The Growth Continue?

Even though the Real Estate market has continued it’s year-over-year growth many people have wondered how long that will last, especially once the Federal Housing Finance Agency decides to lower the loan limits on what lenders Freddie Mac and Fannie Mae offer to their customers.

Gary Thomas, the president of the National Association of Realtors met with the United States Senate Banking Committee last week to discuss the goals of the Federal Housing Finance Agency and how lowering loan limits will have an adverse effect on mortgage loans of all sizes across the United States since loan limits won’t just be affected in high cost areas, regular loan limits are going to be affected as well, essentially making it more difficult for the average home buyer to get a mortgage.

Many “Moving Parts”

Thanks to his testimony, Gary Thomas has been able to keep Senators like Sherrod Brown (D-Ohio) focused how the Real Estate market has many “moving parts” and how focusing exclusively on one aspect of Real Estate like mortgage finance reform, while not focusing on the Real Estate market as a whole, will ultimately hurt and not help the Real Estate market, especially as we get closer to 2014.

What are your thoughts on the Federal Housing Finance Agency’s goal to lower loan limits for Freddie Mac and Fannie Mae? Feel free to leave me a comment!

For more information on the state of the 2013 Bend Oregon Real Estate market, or to view the latest homes for sale in Bend, contact me today by calling (541) 383-1426.

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