Make Good Mortgage Decisions

Finding the Perfect Home ... or Husband

Face it, finding the perfect house is tough. Even with all of the choices out there today, it can be hard to find the one that is 'just right.' My famous line to buyers is this: Finding the perfect house is kind of like a woman looking for the perfect husband...if you could take a little piece of each one and put it all together then, voila, perfection.

Lion_tamer But let's be realistic, honey...that ain't happenin' !

So what is today's cultivated woman to do? Lower her standards? Never!

My advice is, figure out what faults you can live with and then TRAIN HIM.  ( =) c'mon guys, stay with me here)

Finding the perfect house can be approached in the same way. Find that one that has the best combination of must-have features and lack of fatal flaws, and then fix it to your liking.

Better still, save your cash and finance the alterations!

Enter the FHA 203(k) Streamlined Mortgage.

This  program has been around for a couple of years but has been very under-utilized. Recent changes in the loan limits, guidelines and processes for FHA loans in general have made it a much more desirable program, especially in today's lending environment. What makes the Streamlined(k) mortgage so special is its ability to facilitate 'simple' repairs or improvements to a home...up to $35,000 worth.

Eligible improvements include some of the most common home repair issues we encounter here in the Poconos like:

Other improvements which could be financed include:

  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc
  •   Accessibility improvements for persons with disabilities
  •   Lead-based paint stabilization or abatement of lead-based paint hazards

Basically the rule of thumb is, as long as there are no structural changes or proposals that require engineering or architect reports, they are probably finance-able under this program. Simply providing bids, estimates or projected invoices is all the additional documentation required for this loan. An appraisal will be done to ensure the as-fixed value of the property, and the program allows up to six months after closing to complete the work.

There ya have it, the solution to your house-hunting's easier than teaching your husband to put his socks in to the hamper!

For more information on the FHA Streamlined(k), please contact Bill Cullen at Hometown Security Mortgage (570)424.1289.

FHA Loan Limits Increased

This is good news for homeowners who are in trouble because of an adjusting ARM or other sub-prime mortgage, and could help them avoid foreclosure.

It is also a boon to many home buyers who now have a larger selection of homes because of the higher loan limits.

FHA is an affordable alternative for those borrowers who do not qualify for regular conventional programs, without exposing them to the risks involved in the creative financing that created the problems we hear so much about these days.

Here in Monroe County, the limit for a single family home is raised to $271,050, well above the average sale price here. In Carbon, Northampton & Lehigh, the limit is $402,500, and in Pike County, $729,750. There are higher loan limits available for multi-unit properties.

These new loan limits expire at the end of 2008 so there is some incentive for owners and potential buyers to complete their transactions this year as the limits could revert to the 'old' limits of $200,160 in Monroe County, $305,666 in Carbon, Northampton & Lehigh, and $362,790 in Pike.

Need a recommendation for a local FHA loan expert? Click here.
For more info on the changes, read the HUD announcement.
For info on FHA loan limits in other areas, search here.

Free Foreclosure Prevention Advice

Hope_now_logocolor_3The Hope Now Alliance is a program which offers free counseling to homeowners in jeopardy of defaulting on their mortgages. Whether the borrower is already behind in payments, is facing problems when the adjustable mortgage rate resets, or is able to stay current once the rate resets, help and advice is available.

The first step is to call the 24/7 hotline at 888.995.HOPE (888.995.4673).

HUD-approved counselors are on hand to gather information on the homeowner's situation and to determine eligibility for various options. The call will take around 45 minutes and the caller can expect the counselor to recommend action steps if the information gathering goes well, or a follow-up call if income and debt information is not readily available.

Recommendations vary based on individual circumstances, but options include refinancing, temporary rate freezes, and loss mitigation strategies such as a short sale or deed in lieu of foreclosure. Most often, the best advice is to be pro-active and not avoid the situation because of fear or anxiety.

When homeowners call they will NOT be judged or even billed for the really is intended as a free resource for troubled borrowers to get the help they need, as it is in everyone's interest to rectify these problems quickly.

My best advice to you is MAKE THE CALL.

Further reading:

Avoiding Foreclosure in PA

FHA Refinancing

Representative Kanjorski's 2/4/08 Announcement Re: Fed Funding For Counseling

Mortgage Interest Rate Trends

Thank you to Jay Thompson, Facebook friend and fellow real estate blogger, for compiling this chart comparing 30 year fixed mortgage rates for the past 30-odd years and allowing me to share it with my readers. If you visit his site, you will find additional charts detailing home loan rates for 15 year fixed and ARMs.

30_year_fixed_mortgage_rate_compa_2 I think we are all aware that current mortgage rates are, and have been for years, the lowest ever. With the Fed poised to lower rates yet again very soon, one must wonder how long this low cycle will last. If things stay in line with the apparent 6-9 year cycle shown on this chart, not for very long-another couple of years, maybe. But that is just speculation. 

I do wish I could figure out though, why this positive aspect of the real estate market does not get as much play in the media as the negative generalizations we are bombarded with every day? Why are we (they) not encouraging average-Josephina consumer out there to take advantage of the incredibly good home financing rates that are available right now?

Think you have good credit? Better think again.

What has previously been thought of as a decent credit score is about to change.  At least from a mortgage application perspective.  I've asked PREB (Poconos Real Estate Blog) Guest Author, Andy Williams, to explain the details.

The days of unethical sales practices by some of the less-reputable mortgage representatives are numbered as the home financing market gets another dose of reality. Practices such as less than full disclosure about the cost of loans through the hiding of fees and rate manipulation have been very common in the past.  Hopefully this most recent change will make this 'sales tactic' much harder to pull off and level the playing field a bit. Consumers should find it easier to compare apples to apples and spot the rotten ones more easily and earlier on in the process.  This way they can direct their business back toward the good guys like Andy where it belongs. - L

From the Desk of:
Abacus Regional Mortgage


All Fannie Mae lenders will be changing to tiered pricing.  Some have already changed and others will follow by the 2nd quarter of 2008.  The tiered pricing effects borrowers with credit scores below 680.  The pricing refers to the points charged by a lender. If a borrFicoower has a score lower than 680, the pricing will be roughly as follows:

< 620         +2.0 points
620-660      +1.75 points
661-679      + .75 points

Remember, 1 point equals 1% of the mortgage amount, so on a $200,000 mortgage for a borrower with a credit score of 650, the loan could cost $3,500 more.

If the borrower doesn't have the money to pay the points, they can opt to pay a higher interest rate to absorb the cost of the points.  The cost of .5 in price equates to roughly .125% in interest rate.  For example, if they score a 619, the 2.0 pt. add-on may be absorbed into the interest rate by adding .5% to the interest rate.  If the going rate is 6.25%, adding .5% would increase the rate to 6.75%.

This may only effect the Fannie Mae lenders, with the local banks still not charging any sort of surcharges for credit scores lower than 680.  We will have to wait and see how this all plays out.

Now more than ever it is important to choose your mortgage broker very carefully.  I am proud to offer proven market expertise and I am dedicated to helping you determine what loan is right for you. Call me for the straight answers. - Andy