What is on the chopping block?

• Mortgage interest deduction for primary residences, second homes, second mortgages, and home equity lines of credit.
• Property tax write offs
• Capital gains exclusions when selling a home

What is the cost or savings in 2012?

• Mortgage interest projected to be $107 billion
• Property tax to be $31 billion
• Capital gains exclusion to be at $21 billion
• Total of $159 billion

Don’t let an AVM stop your closing.
Here is what you can do:
1. Remind your lender Texas is a non disclosure state.
2. Have your buyer obtain a copy of the AVM report.
3. Provide comparable sales to back up your agreed sales price.
4. Ask for a second or review appraisal.

A copy of two AVM’s can be viewed in the attachment below.
avm-examples

appraisal-addendum-market-conditions appraisal

The number of FHA mortgages originated is on the rise. Here is a look at why FHA becomes the better option.

The Feds response to prop up the economy and it’s impact on mortgage interest rates.

Tell your clients not to buy anything on credit until they close on their new home!

After several months of speculation the Federal Housing Association (FHA) has finally revealed several changes to their housing program.  These changes are intended to secure the soundness of the mortgages insured by FHA.  Along with increasing the capital requirements for FHA lenders this is the first of many significant changes we will see this year.

1. FHA plans to bolster capital reserves by increasing the up front mortgage insurance premium from 1.75 basis points to 2.25, with plans later in the year to increase the monthly mortgage insurance premium.  The upfront and monthly mortgage insurance premiums are charged in lieu of putting a significant down payment.  A .5 basis point increase will have a minimal impact on a buyers payment structure and in my opinion is a smart and necessary move on FHA’s behalf. The increase in the upfront mortgage insurance premium was released in a mortgagee letter dated January 21st and will go into effect in the spring.

2. For the first time FHA has imposed a minimum credit score requirement of 580. I am glad to hear they imposed a minimum; however, lenders who buy and service FHA mortgages implemented 620 minimum credit score requirements a long time ago.  580 credit score is null and void unless lenders change their internal guidelines.

3. Seller contributions will be reduced from 6% to 3% bringing them in line with conventional loans secured by Fannie Mae and Freddie Mac. The 6% seller contribution limit has always been a positive differentiator for FHA; however, FHA has determined 6% seller contributions artificially inflates the value of a home . This will present a problem for buyers who have a limited amount of cash available for down payment, closing costs and prepaid items. Limiting seller contributions to 3% will force buyers to look for lower priced homes by redirecting cash to close to closing costs and prepaid items. Expect this change to take effect in early summer.

For the time being FHA let stand the minimum down payment of 3.5% .  The coming months are sure to bring more changes as the new FHA commissioner, David Stephens, begins to overhaul the agency.

Now that the merriment of the holiday season is upon us I want to pass along some information in regards to your shopping and credit card habits.  A special “thank you” goes to Stacy London with Houston Capital Mortgage for sharing her insights.

Did you know that:

30% of your credit score is impacted by the category called “amounts owed”.  Credit card balances fall into this category.
20% of your score is impacted by the category called “credit utilization”.
Utilization means the amount of available credit you are using at the time of your score.
Credit utilization rate is calculated by dividing the account’s outstanding balance by the credit limit.
The higher the utilization, the greater the lowering impact to your credit score.
50% of your score is impacted by your holiday shopping habits.

Credit holiday FAQ’s & tips:

Does applying for many new credit accounts at holidays hurt your score more than applying for just one?
Yes, generally the fewer the better.

Should I use just one card for all holiday purchases?
No, it is better to spread out the debt, due to utilization shown above.
1 card “maxed out” is worse then 2 cards each with 50% balances.

What does a “maxed out” card balance do to my score?
If your score is in high 700’s=  score will drop by 25-45 points.
If you score is in the high 600’s= score will drop by 10-30 points.

Ooops I shopped too much, what if I have to pay late after the holidays?
If your score is in high 700’s= score will drop 90-110 points by a late pay.
If your score is in high 600’s= score will drop 60-80 points by a late pay.

In mortgage lending you are your credit score.  A drop below 720 and 680 will make a big difference in the world of financing

If you are curious about how the mortgage meltdown began watch this
Mortgage Mike endorsed video.  It is ten minutes long, easy to
understand, and to the point.  Thank you Rob Rule with Heritage Texas
Properties for sharing.

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