Joe's Blog

The Federal Housing Administration has two types of loan programs for distressed homes.  The first program is for homes that are in need of relatively minor cosmetic repairs.  This program caps the total amount that you can increase your loan by $35,000.  The minimum amount of the repairs has to be at least $5,000.  The second loan program is for repairs that are higher in expense.  There is no cap on the amount of the repairs as long as the purchase price plus the repairs are within the loan limits of your particular county. 

Qualifying for these loans is similar to qualifying for any other type of FHA loan.  You need to have a down payment or investment of 3.5 percent of the purchase price.  You must be able to substantiate your income for the past two years with tax returns and W-2's.  If you are self employed, typically you will need a two year history and tax returns will be required.  As with any FHA loans, you can receive a gift for your down payment and closing costs. 

Thinking About Refinancing Your Home?

You May Qualify for HARP

When the stimulus package was passed, millions of homeowners felt disenchanted. While the package focuses on homeowners in foreclosure, it offers nothing for the homeowner who is responsible and current with their loan payment. To compensate for this oversight, the U.S. Department of Treasury recently launched the Home Affordable Refinance Program (HARP). HARP was created specifically to provide access to low-cost refinancing for responsible homebuyers with no equity in their home; due to the decline in home prices.

Not everyone qualifies for HARP. The program only benefits homeowners with loans owned or guaranteed by Freddie Mac and Fannie Mae, which are Government Sponsored Enterprises. At LoanSmart, we can assist homeowners with determining if they qualify for HARP by researching to find out if their loan is owned by either Freddie Mac or Fannie Mae.

 HARP will offer a huge advantage to homeowners with first and second mortgages.  HARP will allow for refinancing of the first mortgage up to 105 percent of the current home value, with the second mortgage remaining in place.  This program is a win win situation for homeowners who qualify and LoanSmart is committed to helping homeowners take advantage of this golden opportunity.  HARP should not be confused with loan modification programs, which are geared to help at-risk homeowners.

One thing that the President and Congress can agree on is that a major part of the recovery has to do with homeownership.  That is why the powers that be have included an $8000.00 tax credit for single individuals earning up to $75,000 and for married couples that earn up to $150,000 per year.   For those earning more than these amounts, you will still receive a credit for purchasing.  Now, please be clear that this is a credit which is different than a deduction.  That means that if at the end of 09 you are even and will not recieve a refund, you will now be elgible to recieve a refund of $8000.00 if you purchase this year.  That, coupled with historically low interest rates and 2002 prices, may be just what is needed to get the purchase market moving.

In addition to the credit, the bill provides for higher loan limits as well.  In fact, the new high balance conforming limit will be moved up from $625,000 to $729,750.  This will allow people to purchase a property for $729,750 with only a ten percent down payment at a highly competitive interest rate. 

Lastly, the Congress voted to raise the limits on reverse mortgages which are mortgages designed specifically for seniors age 62 and older.  This new limit will allow many seniors who were unable to qualify to now qualify and recieve more of their home equity to help support their retirement income.

Generally speaking, lenders are only going to consider loan modifications with people who are in jeopardy of foreclosure and where the value of their home is worth less than their current loan.  Even this fact does not insure that the lender will work with you.  First of all, lenders are inundated right now and are far less motivated in most cases to modify than the average client.  Also, the process is complicated by the fact that many lenders do not own the loans but are merely servicing the loans for others.  In my opinion, it can be next to impossible for the average person to try and get their loan modified by themselves.  For most people, they need the help of a loan modification company who can work on your behalf.  These firms specialize in this and can act on your behalf with the lender.  Reputable firms will review your case without charging you and attempt to provide you with the information necessary to see if a potential modification may be attainable for you.  The first step is to fill out a financial checklist and then to have a consultation.  Please contact me and I can give you more specifics on this process.

Last week the President signed in to law the Housing and Economic Recovery Act.  A few pertinent items in the bill as it relates to purchasing are as follows: First of all, new buyers will receive a $7500.00 tax credit for purchasing for the tax year that they purchase.  The credit is then paid back over a fifteen year period at 500 dollars per year.  Basically, it is an interest free loan for fifteen years.  In addition, FHA, is doing away with 100 percent financing as of September 30th.  Many borrowers with the help of non profits and loan officers, have been able to finance 100 percent of the sales price with the seller crediting back the down payment to the buyer via a 501C non profit corporation.  Well, that is all but gone.  So if you want to take advantage of 100 percent, it has to be done by September 30th of this year.  Lastly, it appears that the mortgage insurance premium that FHA charges the borrower to secure an FHA loan will increase.  Overall, the fee that most borrowers pay for the upfront mortgage insurance premium is between 1.25 and 1.5.  In the near future, that premium looks like it will go up to a flat 3 percent.  There will be more to come regarding this legislation.  There are 796 pages to the legislation so we will keep you posted as time goes on.

Joe Engle

FHA is absolutely the best deal going for first time home buyers or home buyers who want to put a small percentage down for down payment.  The FHA loan alllows you to put as little as 3 percent down when buying or refinacing.  Also, FHA insures loans up to $729,750.  Rates are competitve and the approval process is not that difficult.  The key is getting approved and selecting a purchase price that fits within your budget.  In addition, unlike conventional loans where you need A plus credit to get approved, the FHA loan allows for less than a perfect credit history in the past.  For people who currently have a subprime loan, FHA can also be a viable solution.  I recently refinanced a couple with a credit score below 600.  This couple got out of their high interest subprime loan and got the FHA loan that was fixed and with a great interest rate.

Joe

LoanSmart, Inc.

FOR IMMEDIATE RELEASE Contact: Joe Engle

805-915-2600, ext. 108

joe@loansmartinc.com

LoanSmart, Inc. Now

Processing FHA Loans

Loan limits increased to $729,750

(Thousand Oaks, CA) June 24, 2008 – LoanSmart, Inc. is now processing FHA loans. FHA loans have not been available to homebuyers in California for the last 10 years because of their low dollar limits. However, with the recent passing of the Economic Stimulus Act of 2008 by Congress, limits were raised from $362,790 to $729,750. “In a declining market this is especially good news,” said Joe Engle, president of LoanSmart, Inc. “This opens up lots of opportunities for homebuyers, as well as current homeowners looking to refinance.”

FHA loans are government insured and offer buyers competitive rates. They feature more flexible credit guidelines than that of conventional loans and allows up to 100 percent financing with down payment assistance. Additionally, down payments as low as only three percent are accepted. “In many cases, FHA loans are the best available loan options. This should help to boost the California real estate market,” said Engle.

For those considering applying for FHA loans, LoanSmart offers buyer readiness reviews and reverse mortgage readiness reviews for all prospective clients. “With every client, our first priority is ensuring they fully understand the loan process and readiness is a big piece of the puzzle,” said Engle.

LoanSmart processes VA loans as well, which are similar to FHA loans. VA loans are federally guaranteed. Just as with FHA loans, a VA loan allows home purchases with no down payment up to $417,000; with a down payment veterans can be approved for higher loan amounts.

Other services provided by LoanSmart include, reverse mortgages, credit education, loan modification and property tax relief. LoanSmart has been a vital part of the Ventura County business community for the last six years, processing residential and commercial loans. The company recently relocated to 3623 Old Conejo Rd., #204, Thousand Oaks, CA 91320. For more information about FHA Loans contact LoanSmart, Inc. at 905-915-2600 or visit www.loansmartinc.com.

LoanSmart, Inc. is the smart way to shop for your residential and commercial loans.

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