FHA Upfront Mortgage Insurance Going Up
When someone applies for a Georgia FHA home loan, they will find out that there are two types of mortgage insurance associated with an FHA loan. The first type is monthly mortgage insurance which is calculated at .55% of the base loan amount. The second type of mortgage insurance is upfront mortgage insurance, which is currently 1.75% of the base loan amount. FHA’s upfront mortgage insurance is typically financed into the loan or basically added to your base loan amount. It was just announced that FHA’s upfront mortgage insurance is going up effective April 5, 2010. It will be going up to 2.25%. With the .5% increase on a $200,000 loan, this will cost you an additional $1,000 that will be added to your loan. In the same $200,000 loan scenario, this will cost you over $5 additional on your payment per month. With the current economy, every dollar counts, so if you are buying soon keep this in mind and get a contract before the end of March.
A few other possible changes to the FHA home loan may be coming as well. Currently a seller can pay up to 6% of a buyers closing cost. It is very likely that this will be reduced to 3%. For smaller loan amounts this will mean more out of pocket expense for buyers. The other change that is being talked about right now is changing the FHA requirement for down-payment. It is currently 3.5% and soon may go to 5%. This could eliminate a lot of potential buyers.
All this being said, lending guidelines are still getting tighter, so now is the time to buy before a new change effects your ability to get a loan.
March’s GA Realtor® of the Month
MaryAnn McReynolds - Prudential Georgia Realty
MaryAnn has been a successful real estate investor for over 15 years. She became a licensed Realtor® in 2003. She focuses a lot of her efforts in the West Georgia market including Douglasville, Villa Rica, Carrolton and other surrounding cities. Her passion is helping people. She works with everyone from first-time homebuyers to experienced investors. She has also been very successful working with residential builders in this tough environment. MaryAnn’s team is now ranking in the top ten for all agents in West Georgia.
Years ago Maryann realized a shift was taking place in how buyers and sellers participate in real estate transactions. She understood that people now go the internet first to educate themselves and search for Georgia real estate. She hired a full time assistant to boost her presence on the web. She is now ranks among the top for Douglasville Real Estate and other cities in West Georgia. This has given her a distinct advantage when listing someone’s home. Sellers know that buyers are visiting her website first to learn about West Georgia homes.
Whether buying or selling a home, contact MaryAnn for your Georgia real estate needs.
MaryAnn McReynolds
Prudential Georgia
www.maryannmc.com
770-891-3314
Proper Disposal of Confidential Information
Guest Post Courtesy of Leigh Clack with Neel & Robinson, Attorneys at Law
Georgia’s law called the Record Disposal Act (OCGA 10-15-1) requires businesses to properly dispose of confidential customer information, including social security numbers and account numbers, in order to prevent identify theft.
Realtors, lenders, and closing attorneys need to be sure to comply with this law. The fines for violations of the law can go up to $10,000.
Proper disposal is by shredding paperwork or by deleting (remove or mark out completely) all confidential information from any documents or computers that can be accessed by anyone else.
Listing Agents: safeguard the payoff information and social security numbers for your sellers, plus any other financial data provided as part of a short sale.
Selling Agents: protect any financial data provided by your buyers to be used for loan approval or information given to provide proof of funds for a cash purchase.
Lenders: almost all information provided by your borrowers must be kept secure, including income tax returns.
Closing Attorneys: pre-closing work and closing documents, especially those containing account numbers and social security numbers, must be kept confidential.
*Reminders to Your Clients:
Remove social security numbers from identification cards, driver’s licenses, and checks.
Social security numbers should not be reflected on any recorded documents from a closing.
IRS liens now include just the last four digits.
Unfortunately, older recorded documents show some social security numbers.
Be aware that death certificates are public records, and show the full social security number (and cause of death) of the deceased. Make sure that this confidential information is deleted if a death certificate is being placed in the real estate records.
Neel & Robinson, Attorneys at Law, LLC
Leigh Clack
404-705-3690
Understanding the Components of Your Credit Score
Guest Post Courtesy of Veracity Credit Consultants
What do consumers know about their credit scores? We have all heard a thing or two about credit, but do the good habits of our day to day financial decisions benefit our credit score? The bottom line is the Credit Scoring world is complex and secretive place. Little of what the average consumer understands or thinks they know about credit is in fact important or relative to benefiting their credit score.
Today, credit scores can be a consumer’s biggest asset to build or protect. Understanding the Credit Scoring Models and being on top of the game could save individuals thousands a year and make them a very powerful consumers. A consumer’s credit profile is considered for insurance, mortgages, employment, auto loans, utilities, cell phones and the list goes on and on. Creditors seek current or past account histories to determine personal risk. Here is a basic overview of the 5 components of our credit score:
1. Payment History (35% of credit score / 297.5 points) – This is where positive & perhaps negative payment history is reviewed. To optimize this component of the credit score one must have open accounts and make on time payments to their creditors. The longer that positive payment history is reviewed the more points will be accumulated in this section. Negative payment history (public records, collections, charge offs, late payments) are also assessed in this section. The more derogatory marks that report to the credit bureaus the bigger negative impact on the credit score. This is essentially where most of any type of “credit repair” can help the scores.
2. Debt Ratios (30% of credit score is Revolving Debt / 255 points) – The majority of debt that impacts your credit score are credit cards and HELOCS. By utilizing over 30% of a line of credit’s balance to limit ratio one will lose points for that specific account. Hence, a maxed out credit card will certainly hurt a credit score. There are several ideas how to maximize these ratios and spread debt around to help scores without available cash – consult with a Veracity representative to review your specific profile. Additionally, do not pay collections without consulting with a Veracity representative. In cases, if a collection is paid credit scores can actually go down. If paying or settling on a collection is the best option, there are strategic ways and documentation needed when doing so.
3. Length of Credit History (15% of credit score / 127.5 points) – A consumer’s credit history is an average of only open accounts. In most cases do not close older accounts or open new accounts if not absolutely necessary.
4. New Credit (10% of credit score / 85 points) – This section relates to the amount of times a consumer has their credit pulled (credit inquires) to apply to open a specific account. Understand that every time a creditor pulls your credit it will negatively impact your scores – no matter what you have heard. However, by pulling a credit report from an internet source a consumer will not hurt their scores.
5. Types of Credit (10% of credit score / 85 points) – A consumer can only have revolving, installment, or real estate types of accounts. A good mix of these types of credit is recommended to achieve high credit scores.
Veracity Credit Consultants
1-866-518-2194
February’s GA Realtor® of the Month
Dona Cardenas - Keller Williams Realty
As a top producing agent who has been licensed, and selling real estate since 1993, I have helped hundreds of individuals and families buy and sell their homes over that time. First as a licensed assistant for a top producing agent, then with a team of my own I have helped people buy and sell one of their most expensive commodities. Previously with Re/Max Greater Atlanta for 14years and now with Keller Williams Realty Peachtree Road, I work with a team to maintain my preferred high level of customer service. I am a member of the Atlanta Board of Realtors, the Georgia Association of Realtors and the National Association of Realtors. I have been married for over 16 years to my husband, Gabriel have 2 sons, Nicolas and Alex.
I constantly invest in my real estate career through education and technology. I have obtained my GRI, SFR and E-PRO credentials and am currently working on my CRS credentials, standards that are only obtained by 1/4 of all real estate agents and Realtors® nationwide. I also hold my brokers license known as a broker associate. I am a life time member of the million dollar club. What does all of this mean to my clients? Experience, professionalism and honesty! In my spare time, I like to cook, mountain bike, run, kick-box and hike with my family including our Shepard Huskie, Maggie.
Regards,
Dona Cardenas, E-Pro, SFR, GRI
Associate Broker
Keller Williams Realty
404-556-1414
www.realestateinatlanta.net
Financing Condo’s in Georgia is Getting Tougher
On February 1st a new FHA ruling took effect regarding condos. A Condominium has to be approved by FHA in order to allow for FHA Insurability. There is a list that lenders check to see if condo project is approved. If the project is not approved, lenders would try to get a “spot approval,” so that we could proceed with the loan. Spot approvals are now, no longer allowed. HUD decided they did not want to be in the business of approving condos anymore, so they put the burden back on the lender.
The process of approving condos can be very expensive and time consuming, so lenders are trying to figure out how to best handle this. If you are considering buying or selling a condo, this is something you will need to research upfront. This change is a major opportunity for condo complexes that are already approved. Agents need to advertise the fact that their condo is FHA approved. If you need help figuring out if a condo is approved, contact me and I will look it up for you.
Getting a condo FHA approved that is not on the list can take up to 6 weeks. Agents need to find out right away if a Georgia condo is approved before listing a condo or showing a condo. A lot of condos are not on the list. I would dare to say more Atlanta condos are not on the list than are. Call me today to find out.
Save Money on Your GA Insurance Premiums
Today’s Guest Blog Post Courtesy of Richard Wilson with Allstate
The current economy is leaving many consumers with questions on how to save money on their household insurance cost. The following suggestions are guaranteed ways to save, however, I do not recommend any changes until you speak with your personal agent.
Are you ticket and accident free in the last three years, consider taking a defensive driving course or on-line safety course. Many of these courses will only take approximately 8 hours to complete and cost on average less than $75. In fact if your company will accept an on-line safety course there is a great one available at www.aarp.com that will cost $19.95 or $15.95 for current members. The best part is there is no age requirement for this course. Make sure you talk to your agent to see if you qualify for these discounts before you spend your hard earned money. The major companies in the industry require no accidents and a clean driving record for the last three years to be eligible. Once you provide a copy of your certificate of completion you will save an average of 10% on the at-fault coverage (liability and collision) which are usually the more expensive coverage on your policy and the discounts are good for 3 years on your eligible vehicle. This is a great way to save especially if you have multiple cars and multiple drivers that qualify.
Are you taking advantage of your company’s multi-policy discount, this is a no brainer? Your insurance carrier is going to save you on all your policies just for allowing them to insure them and not the competition. For instance if you have home with company A and auto with company B, why not compare the two against each other to see which would be a greater benefit. Some companies offer a combined discount of 30% or more in some cases and to put the icing on the cake, this is a discount that you will never lose, unless you change carriers, no matter how many tickets, accidents, or claims you have. Besides, the savings, imagine the time you can save when you have a situation arise, if you can handle all of your policies by making one simple phone call.
Do you have an emergency fund? If your answer is yes, consider increasing your deductibles on all of your policies. Insurance companies are willing to part a great percentage of your premium if you self insure for a greater portion of the risk. An emergency fund is for an emergency so why do you continue to carry a low deductible in the event of an accident, fire, or storm. These would all be considered emergencies and therefore if you have set aside the money, take advantage of the savings. Contact your agent and find out what maximizing your deductibles can do for you, in many cases, it will save you hundreds of dollars per year on your premium that could be well spent elsewhere.
These are some tips for further savings on your insurance for the years to come. Again, always discuss your options with your personal agent, to make sure they are right for you, but, I can guarantee savings with the above tips no matter what company you are with. If you have further questions or would like a personal review of your insurance, feel free to contact me via email at rwinsurance@gmail.com.
Richard Wilson
5 Useful Tips for First Time Home Mortgage Borrowers
Today’s guest blog post courtesy of MortgageFit:
Shopping around for a home mortgage can be confusing. It’s not unusual to get worried about performing something new for the first time. This applies to taking out your first home mortgage as well.
Luckily, there are some easy tips that you can follow to ensure you’re geared up prior to searching for your first home loan. Given below are 5 simple tips that can assist first time home buyers:
1) Lock your home loan interest rate
Mortgage rates can go up or down on an everyday or hourly basis. Talk about your interest rate expectations with the loan officer and try to understand how rises and falls in your interest rate might affect your monthly loan payment and your ability to become eligible for that loan. To save yourself from interest rate hikes, request for a rate lock, which can preserve a particular interest rate for you for a specific period of time. If you’ve made a decision to lock your rate, just ensure that your lock-in period doesn’t run out before the date of closing.
2) Think about an FHA loan
If you’re buying a home for the first time, you might wish to shop for an FHA mortgage, which is a loan that is backed by the Federal Housing Administration or FHA. FHA loans frequently come with competitive interest rates and lower down payments. It’s easier to qualify for FHA loans than other types of loans. The minimum amount of down payment for an FHA loan is just 3.5% of the purchasing price of the house. However, these loans necessitate that you buy private mortgage insurance (PMI).
3) Avail the tax credit
If you haven’t purchased a home in the last three years, then you might be eligible for the Federal First Time Home Buyer Tax Credit of up to $8,000. This credit is reimbursable which implies you’d even receive a rebate of sorts from the Federal government if your amount of outstanding taxes is lower than the total amount of the credit. The credit is dependent on income limitations.
4) Train yourself
A basic 15 or 30-year fixed rate mortgage is quite simple to understand. However, other types of loans might be more complex to understand. If you want to go for an adjustable rate mortgage (ARM) or other unusual types of loan products, you should explore them and ensure that you comprehensively understand how these loans work prior to signing the loan agreement.
5) Shop around
Loan products, interest rates and loan terms differ among lenders. This suggests that all borrowers whether first time or not, must shop around for loan offers. Make questions about the pros and cons of every loan offer and make sure to compare the approximate closing costs, quoted points and interest rates on various loans.
Following the above mentioned tips would help you choose a home loan that’s most suitable for your personal situation.
Changes Coming to GA FHA Loans
On January 2oth, FHA announced they will be making some changes in the upcoming months. They are looking to strengthen FHA’s capital reserves, which have diminished over the past several years due to the high number of foreclosures. They plan to make changes in 4 different areas:
- Mortgage Insurance Premium (MIP) will be increased from 1.75% to 2.25%. On a $100,000 loan this would mean a $500 increase in the upfront MIP premium. This will supposedly take place in the spring.
- They will require 10% down if a borrower has a 580 score or less. We are not yet sure what kind of effect that this will have. Most lenders already require a 620 credit score, so this may not affect anything or it may cause lenders to loosen up their requirements on scores. Time will tell on this one. It is anticipated this will take place in early summer.
- Reduce seller concessions from 6% to 3%. FHA feels that the current 6% level is creating incentives to inflate appraised value. This is also supposed to take place in early summer.
- FHA wants to increase enforcement on FHA lenders. They plan to do this by publicly reporting lender performance, monitoring lender performance and compliance. They are also trying to get legislative approval to increase enforcement on FHA lenders. FHA wants to make lenders liable for loans they originate and underwrite.
One final thing FHA has been testing the water with is raising the 3.5% down-payment to 5%. This will definitely eliminate a lot of potential buyers. This is not official yet, but may be coming soon.
All of these changes will most likely make it more difficult for buyers to obtain a Georgia FHA loan in an already tight credit market. If you are thinking about getting a home, now is the time to do so. The credit markets continue to tighten and there does not appear to be relief in sight.
A Better Credit Rating = A Better Insurance Premium
Insurance companies are protecting their profitability by incorporating an insurance score as one of their key rating factors. An insurance score is different from your credit score. Companies use certain elements from your credit history, not your credit score, in order to predict the likelihood of future insurance losses. An insurance score is usually calculated based on some of the following information:
1. Your Payment History: Have you made late payments or missed a payment?
2. Your Length of Credit History: How long have you been using credit?
3. Your current balance on each account compared to your highest previous balance.
4. Total Number of Credit Accounts
5. Number of Credit Inquiries (in some states and soft inquires do not count)
6. In some states Bankruptcies, foreclosures and other collection account activity.
It is important to know that the types of credit information used in determining your insurance score can vary from state to state and company to company. However, the last decade has proven that more and more insurance companies are going to an insurance scoring system in calculating their rating factors.
Before you shop for your next insurance policy, be sure to check your credit reports for any errors as it may be beneficial for you to have these items corrected prior to buying a new policy. An insurance score is a snapshot of your current situation as of the day you obtain your policy, so if your situation changes, make sure you contact you company for their policy on re-calculating your insurance score. In many cases this can save the consumer hundreds of dollars as your score may have improved significantly since the time you first opened your policy.
For additional questions please do not hesitate to contact me via email or phone.
Richard Wilson
404.388.1471
rwinsurance@gmail.com
