Previously the monthly mortgage insurance premium was a factor of .55% of the loan amount (if the loan to value was over 95%). As of October 4, the factor has increased to .9% You are probably wondering how this affects the payment. On a $400,000 mortgage, using the old factor of .55% the monthly mortgage insurance would have been $183. Now Using the .9% monthly mortgage insurance factor we are looking at a monthly mortgage insurance payment of $300. This is an increase of $117 a month compared to the previous mortgage insurance for a $400,000 FHA mortgage. The great thing is even though the monthly mortgage insurance is higher the upfront insurance premium has decreased.

- FHA UPFRONT MORTGAGE INSURANCE PREMIUM DECREASED

The Upfront Mortgage Insurance Premium used to be 2.25%. But on October 4, 2010, they dropped it to only 1%. Using the same base loan amount as our previous example of $400,000 and using the old (UFMIP) of 2.25% $9,000 would have been added to the Idaho home buyers loan making the total loan amount $409,000. With the new upfront mortgage insurance premium of 1% we would have a total loan amount of $404,000.

- IDAHO FIRST TIME HOME BUYERS FHA IS STILL YOUR BEST OPTION

FHA mortgages are still the best option for first time home buyers looking to purchase in Idaho. While conventional fannie and freddie guidelines continue to be very tight FHA is still fairly flexible. FHA allows for lower fico (credit scores) as well as as little as 3.5% down payment. FHA also has more of a “makes sense” underwriting philosophy. Many Idaho home buyers are finding FHA to be the best choice even if they have quite a bit of money to put down.

If you have questions about an Idaho FHA mortgage whether you are purchasing or refinancing a home feel free to contact me.

Want to find out more about FHA mortgage insurance changes, then visit Michelle Guth’s site to learn more about Idaho FHA Mortgage Insurance Changes.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

1. Only 3.5% down payment which may include closing cost
2. Down payment and closing costs may be gifted from relative or employer
3. Higher qualifying ratios
4. Higher loan to value ratio
5. Cash out refinance up to 85% LTV
6. Can have a non-occupant co-borrower ( immediate family or established relationship)
7. Upfront MIP(mortgage insurance premium) can be financed
8. No pre-payment penalties
9. If interest rates drop you can do an FHA Streamline Refinance without an Appraisal.
10. Seller may pay up to 3% of Borrowers closing costs if stated in Sales Contract

If you have any questions about FHA Mortgages feel free to contact me.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

Top 10 Boise Idaho Mortgage Links/Articles/Questions

1. FHA Streamline Refinance in Boise, Idaho
2. Idaho FHA Reverse Mortgage
3. Changes Are Coming For Boise, Idaho FHA Mortgages
4. 3 Great Idaho First-Time Home Buyer Mortgage Loans
5. Idaho FHA and VA Manufactured Loan Programs for Refinancing and Purchasing Homes
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.

With today’s volatile lending environment, it’s obviously important for home buyers to get a full loan approval which clearly defines all contingencies that pertain to each unique home buyer’s scenario prior to spending any time looking at new homes with an agent.

Either way, we’ve listed a few of the top things your Idaho real estate agent should keep in mind while showing you new properties:

Caution – Agents Beware of the items below:

Property Type –

High-Rise, Condo, Town House, Single Family Residence, Dome Home or Shoe House… all have specific lending guidelines that can influence down payment, credit score and mortgage insurance requirements.

Residence Type –

Need to sell one home before moving into another? Is a property considered a second home if it’s in the same city?  What if I’m buying a home for my children to live in, it is still considered an investment property?

These are just a few of several possible residence related questions that should be addressed by your real estate agent and Boise Idaho mortgage consultant at the initial loan application.

Rates / Locks –

Mortgage Rates are typically locked for a 30 day period. Rates also have certain adjustments for property type, credit score and down payment which could have a big impact on monthly payments and therefore approvals.

A 1% increase in rate could literally mean the difference between an approval or denial.

Headline News / Employment –

Underwriters watch the news as well.  Borrowers who work in a volatile industry during hard economic times may have to jump through a few extra hoops to prove that their employment and income is secure.

Job changes, periods of unemployment or property location in relation to the subject property are other things to consider that may cause a speed bump in the approval process.

Title / Property Flip –

A Flip is considered a property that has been purchased by an investor and quickly sold to a new buyer within a 30-90 day period.  Generally, an investor will do a little rehab work, fresh paint, landscaping…. and try to re-sell the property for a significant profit margin.

While it seems like a perfectly fair transaction, many lenders have strict guidelines in place that prevent borrowers from obtaining financing on properties that have a previous owner with less than 90 days of documented ownership.

These rules change frequently, and are specific to particular property types, so make sure your agent is aware of all the boundaries associated with your approval letter.

Homeowner’s Association Insurance –

Some lenders require Condos and Town House communities to have sufficient insurance and reserves coverage pertaining to specific ratios on units that are owner occupied vs rented.

It may also take a few weeks and cost up to $300 to receive an HOA Certification, so make sure your Due-Diligence period is set accordingly in the purchase contract.

Appraisal Ordering Procedures –

Appraisal ordering guidelines are changing quite frequently as regulators implement many new consumer protection laws created to prevent future foreclosure epidemics.

Unfortunately, some of the new appraisal regulations have proven to slow the home buying process down, as well as confuse lenders about the true estimate of neighborhood values.

VA, FHA and Conventional loan programs all have separate appraisal ordering policies, so make sure your agent is aware of which loan you’re approved for so that they document any anticipated delays in the purchase contract.

For example, if an appraisal takes three weeks and the average time for an approval is two weeks, then it probably isn’t smart to write a purchase contract with a four week close of escrow.

If you or anyone you know have any questions about the information above feel free to call or email me.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

_________________________________

Related Articles – Home Buying Process:

• Home Buying Process
• First-Time Home Buyer Credit Checklist
• Assembling Your Home Buying Team – Knowing The Players
• Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
• Where Does My Earnest Money Go?
• HOA Hurdles to be Aware of When Looking at New Properties
• What You Need To Know About The Home Inspection Process
• 3 Great Idaho First Time Home Buyer Loan Programs

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

Simple, the underwriter pulls an updated credit report to verify that there hasn’t been any new activity since original approval was issued, and the new findings kill the loan.

This generally won’t happen in a 30 day time-frame, but borrowers should anticipate a new credit report being pulled if the time from an original credit report to funding is more than 60 days.

Purchase transactions involving short sales or foreclosures tend to drag on for several months, so this approval / denial scenario is common.

It’s An Ugly Cycle:

1. Idaho First-Time Home Buyer receives an approval
2. Thinks everything is OK
3. Makes a credit impacting decision (new car, furniture, run up credit card balance)
4. Funder pulls new credit report and denies the loan

In the hopes of stemming the senseless slaughter of perfectly acceptable approvals, we’ve developed a “Ten credit do’s and don’ts” list to help ensure a smoother loan process.

These tips don’t encompass everything a borrower can do prior to and after the Pre-Approval process, however they’re a good representation of the things most likely to help and hurt an approval.

Ten Credit Do’s and Don’ts:

DO continue making your mortgage or rent payments

Remember, you’re trying to buy or refinance your home – one of the first things a lender looks for is responsible payment patterns on your current housing situation.

Even if you plan on closing in the middle of the month, or if you’ve already given notice, continue paying that rent until you’ve signed your final loan documents.

It’s always better to be safe than sorry.

DO stay current on all accounts

Much like the first item, the same goes for your other types of accounts (student loans, credit cards, etc).

Nothing can derail a loan approval faster than a late payment coming in the middle of the loan process.

DON’T make a major purchase (car, boat, big-screen TV, etc…)

This one gets borrowers in trouble more than any other item.

A simple tip: wait until the loan is closed before buying that new car, boat, or TV.

DON’T buy any furniture

This is similar to the previous, but deserves it’s own category as it gets many borrowers in trouble (especially First-Time Home Buyers).

Remember, you’ll have plenty of time to decorate your new home (or spend on your line of credit) AFTER the loan closes.

DON’T open a new credit card

Opening a new credit card dings your credit by adding an additional inquiry to your score, and it may change the mix of credit types within your report (i.e. credit cards, student loans, etc).

Both of these can have a negative impact on your score, and could result in a denial if things are already tight.

DON’T close any credit card accounts

The reverse of the previous item is also true. Closing accounts can have a negative impact on your score (for one – it decreases your capacity which accounts for 30% of your score).

DON’T open a new cell phone account

Cell phone companies pull your credit when you open a new account. If you’re on the border credit-wise, that inquiry could drop your score enough to impact your rate or cause a denial.

DON’T consolidate your debt onto 1 or 2 cards

We’ve already established that additional credit inquiries will hurt your score, but consolidating your credit will also diminish your capacity (the amount of credit you have available), resulting in another hit to your credit.

DON’T pay off collections

Sometimes a lender will require you to pay of a collection prior to closing your loan; other times they will not.

The best rule of thumb is to only pay off collections if absolutely necessary to ensure a loan approval. Otherwise, needlessly paying off collections could have a negative impact on your score.

Consult your loan professional prior to paying off any accounts.

DON’T take out a new loan

This goes for car loans, student loans, additional credit cards, lines of credit, and any other type of loan.

Taking out a new loan can have a negative impact on your credit, but also looks bad to underwriters and investors alike.

…..

Follow these Do’s and Don’ts for a smoother mortgage approval and funding process.

Just remember the simple tip: wait until AFTER the loan closes for any major purchases, loans, consolidations, and new accounts.

If you have any questions about the information above feel free to call or email me.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

_________________________________

Related Credit / Identity Articles:

• Understanding Credit
• Ten Things You Can Do To Protect Your Identity
  
• Is There A Rule-Of-Thumb Regarding The Number Of Credit Lines To Have Open?
• Alternate Sources For Establishing Credit

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

Perhaps you are outgrowing your current house, or have been forced to relocate due to a job transfer?  Regardless of the motivation for keeping one property while purchasing another, let’s address this question with the mortgage approval in mind:

So, Do I Have To Sell?

Yes. No. Maybe. It depends.

Welcome to the wonderful world of mortgage lending. Only in this industry can one simple question elicit four answers…and all of them may be right.

If you are in a financial position where you qualify to afford both your current residence and the proposed payment on your new house, then the simple answer is No!

Qualifying based on your Debt-to-Income Ratio is one thing, but remember to budget for the additional expenses of maintaining multiple properties. Everything from mortgage payments, increased property taxes and hazard insurance to unexpected repairs should be factored into your final decision.

What If I Rent My Current Property?

This scenario presents the “maybe” and the “it depends” answers to the question.

If you’re not quite qualified to carry both mortgages, you may have to rent the other property in order to offset the mortgage payment.

In that scenario, the lender will typically only count 75% of the monthly rent you are proposing to receive.

So if you are going to receive $1000 a month in rent and your current payment is $1500, the lender is going to factor in an additional $750 of monthly liabilities in your overall Debt-to-Income Ratios.

Another detail that can present a huge hurdle is the reserve requirement and equity ratio most lenders have. In some cases, if you are going to rent out your current home, you will need to have at least 25% equity in order to offset your payment with the proposed rent you will receive.

Without that hefty amount of equity, you will have to qualify to afford BOTH mortgage payments. You will also need some significant cash in the bank.

Generally, lenders will require six months reserve on the old property, as well as six month reserves on the new property.

For example, if you have a $1500 payment on your old house and are buying a home with a $2000 monthly payment, you will need over $21,000 in the bank.

Keep in mind, this reserve requirement is incremental to your down payment on the new property.

What If I Can’t Qualify Based On Both Mortgage Payments?

This answer is pretty straightforward, and doesn’t require a financial calculator to figure out.

If you are in this situation, then you will have to sell your current home before buying a new one.

If you aren’t sure of the value of the home or how your local market is performing, give us a ring and we’ll happily refer you to a great real estate agent that is in tune with property values in your neighborhood.

…..

As you can tell, purchasing one home while living in another can be a very complicated transaction.  Please feel free to contact us anytime so we can review your specific situation and suggest the proper action plan.

_________________________________

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

Related Articles – Mortgage Approval Process:

• Basic Mortgage Terms
• How Much Can I Afford?
• Common Documents Required For A Mortgage Pre-Approval
• Top 8 Questions To Ask Your Lender During Application Process
• What’s The Difference Between An Investment Property, Second Home and Primary Residence?
• Seven Items Real Estate Agents Need To Know About Your Mortgage Approval

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

A basic and very obvious question that most Idaho First-Time home Buyers ask once their purchase contract gets accepted.

According to Wikipedia:

Earnest Money – an earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase.

When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.

An Earnest Money Deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract.

For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents.

In most cases, the Earnest Money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs.

*It’s important to keep in mind that the EMD may actually be cashed at the time escrow is opened, so make sure your funds are from the proper sources.

The Process:

1. Earnest Money is submitted to an escrow company with the accepted purchase contract
2. At the close of escrow, the EMD is credited towards the down payment and / or closing costs
3. If there are no closing costs or down payment, the EMD is refunded back to the buyer

Who Doesn’t Get Your Earnest Money:

• Selling Real Estate Agent – A conflict of interest
• Sellers – Too risky
• Buying Agent – They shouldn’t have your money in their account

If you have any questions about the above article please feel free to contact us.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

_________________________________

Related Articles – Closing Process / Costs

• Closing Process – Overview
• Closing Costs – Overview
• Talk the Talk – Know the Mortgage Lingo at Closing
• Making Sure Your Cash-To-Close Comes From The Proper Source

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

Buying a home in Boise Idaho versus renting is a big decision that takes careful consideration.

While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion.

Yes, there are some tax advantages of owning real estate, as well as the potential to earn equity or pay a mortgage note off after several years.

However, let’s address some of the more obvious topics of discussion first.

Benefits Of Renting:

Lower Acquisition Cost –

Unless you’re able to qualify for a mortgage loan with zero down and have your closing costs paid for by the seller, a typical investment to purchase a home is around 3.5% – 7% of the purchase price for down payment and closing costs on an FHA mortgage, and an average of 13% – 23% for a home secured by conventional financing.

Compared to the cost of about 1-3 month’s rent payment, it’s obvious that renting a home makes financial sense in the short-term.

Lower Qualifying Standards –

While the FHA and other government insured mortgage programs have more flexible credit / qualifying guidelines than most traditional home loan programs, there is certainly a lot less paperwork and personally invasive probing required by most landlords and property management companies.

Generally proof of employment / income and a decent credit history (or a good explanation) is needed to rent a home.

Freedom To Move –

It’s easy to find a home through a reputable property management company, move in that weekend and then leave a year later when the rental contract expires.  Not being tied down by a long-term mortgage liability is ideal for people new to a community, in a career that keeps them on the go or for parents with children that prefer a certain school district.

Plus, if you’re planning on moving in the next 3-5 years, then it may become cost-prohibitive due to the amount of equity you’ll have to gain in the short-run just to cover the cost of paying an agent, buyer closing costs, transfer taxes…. so that you can at least break even at closing.

Less Maintenance and Cost –

If something breaks, a simple call to the property management company will generally solve the issue in 48 hours or less.  Plus, renters don’t have to carry expensive homeowners insurance, pay property taxes or worry about interest rates adjusting.

Benefits of Owning:

Pets Are Allowed –

Well, according to the rules and regulations of your county or neighborhood HOA, you can pretty much have as many domestic and exotic pets without having to pay extra deposits.

It may seem like a funny benefit to mention first, but the millions of dog and cat lovers would definitely rank this towards the top of their list.

Pink and Purple Walls –

Yep, you can paint the inside of your house any color you choose. Depending on whether or not there is an HOA in place, you could probably do the same thing on the home’s exterior.  Landscaping, flooring, built-in shelving… it’s your property to renovate and rehab to your liking.

Peace-of-Mind and Security –

The only way you would be forced to move is if the bank forecloses on your property due to a default in mortgage payments.

So basically, you don’t have to worry about a landlord’s financial ability to make mortgage payments on time. Plus, you can stay in your own property as long as you wish.

Tax Benefits -

The US government has created certain tax incentives making it possible for many homeowners to exceed the standard yearly deduction.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

The following three components of your home mortgage may be tax deductible:

a) Interest on your home mortgage
b) Property Taxes
c) Origination / Discount Points

Stability -

Remaining in one neighborhood for several years lets you and your family establish lasting friendships, as well as offers your children the benefit of educational continuity.

Appreciation of Property -

Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

Forced Saving -

The monthly payment helps in repayment of the principal amount. Also when you sell you can generally take up to $250,000 ($500,000 for married couple) as gain without owing any federal income tax.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

Increased Net Worth

Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

While the available tax advantages and potential for earned equity are generally highlighted by most industry professionals as the top reasons to own real estate, it’s important to remember that markets go through cycles.

However, owning real estate that appreciates more than the rate of inflation may help contribute towards your overall investment portfolio, provided your maintenance and mortgage costs are kept low.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

_________________________________

Related Articles – Home Buying Process:

• Home Buying Process
• First-Time Home Buyer Credit Checklist
• Assembling Your Home Buying Team – Knowing The Players
• Seven Things Your Agent Should Know About Your Mortgage Approval
• Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
• Where Does My Earnest Money Go?
• HOA Hurdles to be Aware of When Looking at New Properties
• What You Need To Know About The Home Inspection Process
• Idaho First Time Home Buyer Frequently Asked Questions
  

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

The FHA Mortgage Insurance Premium is an important part of every FHA loan.

There are actually two types of Mortgage Insurance Premiums associated with FHA loans:

1.  Up Front Mortgage Insurance Premium (UFMIP) – financed into the total loan amount at the initial time of funding

2.  Monthly Mortgage Insurance Premium – paid monthly along with Principal, Interest, Taxes and Insurance

Conventional loans that are higher than 80% Loan-to-Value also require mortgage insurance, but at a relatively higher rate than FHA Mortgage Insurance Premiums.

Mortgage Insurance is a very important part of every FHA loan since a loan that only requires a 3.5% down payment is generally viewed by lenders as a risky proposition.

Without FHA around to insure the lender against a loss if a default occurs, high LTV loan programs such as FHA would not exist.

Calculating FHA Mortgage Insurance Premiums:

Up Front Mortgage Insurance Premium (UFMIP)

UFMIP varies based on the term of the loan and Loan-to-Value.

For most FHA loans, the UFMIP is equal to 2.25%  of the Base FHA Loan amount (effective April 5, 2010).

For Example:

>> If John purchases a home for $100,000 with 3.5% down, his base FHA loan amount would be $96,500

>> The UFMIP of 2.25% is multiplied by $96,500, equaling $2,171

>> This amount is added to the base loan, for a total FHA loan of $98,671

Monthly Mortgage Insurance (MMI):

• Equal to .55% of the loan amount divided by 12 – when the Loan-to-Value is greater than 95% and the term is greater than 15 years

• Equal to .50% of the loan amount divided by 12 – when the Loan-to-Value is less than or equal to 95%, and the term is greater than 15 years

• Equal to .25% of the loan amount divided by 12 – when the Loan-to-Value is between 80% – 90%, and the term is greater than 15 years

• No MMI when the loan to value is less than 90% on a 15 year term

The Monthly Mortgage Insurance Premium is not a permanent part of the loan, and it will drop off over time.

For mortgages with terms greater than 15 years, the MMI will be canceled when the Loan-to-Value reaches 78%, as long as the borrower has been making payments for at least 5 years.

For mortgages with terms 15 years or less and a Loan -to-Value loan to value ratios 90% or greater, the MMI will be canceled when the loan to value reaches 78%.  *There is not a 5 year requirement like there is for longer term loans.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

_________________________________

Related Articles – Mortgage Approval Process:

• Basic Mortgage Terms
• How Much Can I Afford?
• Common Documents Required For A Mortgage Pre-Approval
• Top 8 Questions To Ask Your Lender During Application Process
• What’s The Difference Between An Investment Property, Second Home and Primary Residence?
• Seven Items Real Estate Agents Need To Know About Your Mortgage Approval

Top 10 Boise Idaho Mortgage Links/Articles/Questions

1. FHA Streamline Refinance in Boise, Idaho
2. Idaho FHA Reverse Mortgage
3. Changes Are Coming For Boise, Idaho FHA Mortgages
4. 3 Great Idaho First-Time Home Buyer Mortgage Loans
5. Idaho FHA and VA Manufactured Loan Programs for Refinancing and Purchasing Homes
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

Since there are so many rules and steps to follow, here is a simple list of Do’s and Don’ts to keep in mind throughout the mortgage approval process:

DO:

• Continue working at your current job
• Stay current on all your accounts
• Keep making your house or rent payments
• Keep your insurance payments current
• Continue to maintain your credit as usual
• Call us if you have any questions

DON’T

• Make any major purchases (Car, Boat, Jet Ski, Home Theater…)
• Apply for new credit
• Open new credit cards
• Transfer any balances from one credit or bank acct to another
• Pay off any charge-off accts or collections
• Take out furniture loans
• Close any credit cards
• Max out your credit cards
• Consolidate credit debt

Basically, while you are in the process of getting a new mortgage, keep your financial status as stable as possible until the loan is funded and recorded.

Any number of minor changes could easily raise a red flag or cause a negative impact on a credit score that may result in a denied loan.

Most importantly, check with your loan officer on even the simplest questions to make sure your loan approval is successful.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

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It’s a great question, and you don’t have to be a mortgage professional or a real estate agent to understand the answer.

The distinction lies in the purpose of the two valuations and who is responsible for creating them.

Appraisals:

The purpose of an appraisal is to make sure that an independent non-interested third party verifies the “most likely” sale price based on the market value and condition of the home.

Appraisals are meant to be a realistic determination of the value of a home if it were to sell in the current market, in its current condition.

In addition, appraisers are governed by rules intended to standardize the subjective process of determining a home’s value.

Some of the key factors appraisers look at are: location, above ground size, room count, bathroom count, style of home, condition of property, amenities, and market conditions such as how long it takes for home to sell and if values are increasing, decreasing or steady.

Appraisers are also asked to look only at comparable sales within a certain distance, usually one mile except in rural areas, and within a specified period of time, which is 3 months in the current market.

Listing Prices:

Listing prices on the other hand are influenced by the real estate agent, and set by interested and often emotional sellers.

Sellers are not held by any rules when they list a home. In some cases, sellers take what they paid for the house, add what they have spent on improvements and even add amount for profit.

Often times, sellers will list their home based on the amount needed to pay for the real estate agent, closing costs and cover the amount of the mortgages.

Extra low prices are generally the result of an extra motivated seller that has to sell and move in a rush, so they’ll list their property below market comps in order to be the most competitive.

Throw in bank owned homes (foreclosed properties), and listing prices may be all over the place without a logical explanation due to an asset manager making decisions from another part of the country.

The Verdict:

While list price is never a good indication of what a home in your neighborhood is worth, appraisals are not an exact science that will determine the true value of your home either.

Some will argue that a home is worth what people will pay for it, so there’s obviously a little room for personal interpretation.  Either way, the bank securing that piece of real estate for a mortgage loan generally always has the final opinion that matters the most.

Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com

Top 10 Boise Idaho First Time Home Buyer Mortgage Links/Articles/Questions

1. 3 Great Idaho First-Time Home Buyer Loans
2. Idaho Housing and Finance Association Zero Down 100% Financing for First-Time Home Buyers
3. Idaho USDA Rural Development (RD) Zero Down 100% Financing First Time Home Buyer Loan
4. Idaho VA 100% Home Financing Loans
5. Idaho First-Time Home Buyer Frequently Asked Questions
6. Jumbo Mortgage Financing for Boise, Idaho Properties
7. Conventional Home Loans For Boise Idaho Borrowers
8. VA Mortgage Loans in Boise Idaho
9. Boise Idaho Reverse Mortgage Senior Loans
10. FHA Mortgage Loans in Boise Idaho

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Related Appraisal Articles:

• Mortgage 101 – Appraisal Basics
• What Do Appraisers Look For When Determining A Property’s Value?
  
• Five Myths About Home Values
• How Do Mortgage Companies Value A Property That Hasn’t Been Built Yet?