What Does This Mean To You?

USDA Rural Development and its loan program were designed to help improve the economy and quality of life throughout rural America. The program continues to remain a wonderful option for qualifying homebuyers, with zero down payment required.

But a change is coming! Now is the time to contact me, rates remain at all-time lows and home prices are down!

Beginning October 1, for the first time in the history of USDA, the Single Housing Guaranteed Loan Program will have an annual fee. This fee will be calculated based on the guaranteed loan amount and based on the average annual scheduled unpaid principal balance for the life of the loan.

If you’re thinking of purchasing a home and you’re wondering if you may qualify for a USDA loan, give me a call right away. Home loan rates are still very attractive. Let’s see if this program is right for you…before the October 1 fee begins.

Please let me know if I can assist you in any way today! I’m here to help.

Travis Newton

Good Friday! There are some (big) changes to the FHA program beginning on September 7^th, 2010.

FHA is lowering their Up Front Mortgage Insurance (Financed on top of the loan) from 2.25% down to 1%. Yes, this sounds great doesn’t it? Not so much, they are raising the monthly mortgage insurance from .55% to .90%. It may not sound like much, so let’s take a look at the example below:

 How does this affect you? 

$200,000 Purchase price

4.5% Interest Rate (apr 4.71%)

 PRE- September 7^th

Principal interest and mortgage insurance payment: $1,127.16 

AFTER- September 7^th

Principal interest and mortgage insurance payment: $1,172.45 

As you can see the payments will rise by $45.29 in this example. 

If  a borrower is looking for a home now (or on the fence waiting), it’s important to know about these changes. This can alter their “approved for” amount by as much as $10,000!

It’s important to work with someone who understands how these changes will affect you. 

Please let me know if I can help in any way. 

Have a wonderful Weekend!

 Travis

Below you will find the actual letter sent out from David Stevens.

August 5, 2010 LINKS

Over the past week, Congress has taken quick action and passed H.R. 5981.

The bill gives FHA the authority to adjust its annual mortgage insurance premium, yielding approximately $300 million per month in value to the FHA Mutual Mortgage Insurance Fund at a time when its reserves are perilously low.

As I have previously stated in my testimony before Congress, FHA will lower its upfront premium simultaneously with the increase to the annual premium¹. It is our intention that effective on September 7 insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85–‐90 basis points on amortization terms greater than 15 years². A Mortgagee Letter will be forthcoming once President Obama signs the bill into Law schedule, I wanted to immediately inform the industry of our plans so the lending community can begin preparing for the operational and system structure on all new case numbers by September 7, 2010. 

With this authority, FHA is in a better position to address the increased demands of the marketplace and return the MMI fund to congressionally mandated levels without disruption to the housing market. While we appreciate and applaud this recent action, there is still work to be done. HUD remains steadfast in its commitment to comprehensive FHA reform legislation, similar to the FHA Reform Act passed earlier this year by the and risk management efforts.

We hope Congress will take swift action to pass management efforts will not be complete without the ability to monitor lender performance and ensure compliance with our rules.

Although the transition timeframe is short, implementation by September is critical. Thank you in advance for the efforts of you and your organization to make this change happen on such short notice. We appreciate your hard work and continued partnership.  

¹The upfront and annual premium changes do not apply to the following FHA Programs: Title I, HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223 (e) (declining neighborhoods), Section 238(c) (Military Impact areas in Georgia and New York).

My Company is still FUNDING this Program!
One of the biggest difficulties many first-time home buyers face is a lack of down payment and the necessary funds for closing costs. However, even with the widespread availability of “no-money-down programs” evaporating in the credit crisis, one national no-down payment program still remains: USDA Rural Development home loans.

Guaranteed by the United States Department of Agriculture, this program might make you think that you have to buy farmland or live “in the country” to qualify, but this is often not the case. In fact, you might be surprised to see just how many neighborhoods actually do qualify as rural development areas. For this program, the term “rural” really applies to those areas with a lower population or fewer homes, not necessarily those areas and neighborhood far outside of the city.

There are several benefits of the USDA loan program besides no money down. The program also does not require private mortgage insurance, and the seller is allowed to pay all of your closing costs and pre-paid items up to 6.00% of the total sales price of the property. And while this is great news for first-time home buyers, it’s important to note that you don’t have to be a first-timer to qualify for a USDA loan.

Other than the location of the property you’re seeking to buy, there is one other limitation to this valuable program that you must consider: your income. Luckily, however, these numbers have recently increased to allow more potential buyers take advantage of this special program. For households in non-high cost areas, with up to four people, the income limit is around $73,600. In households where 5-8 people reside, the income limitation is around $97,150. These income limitations are guidelines and, in some cases, may be exceeded.

As I mentioned, I am currently FUNDING these loans. Most lenders are not taking applications as of now. If you have clients in need of the 100% ZERO Down Financing…Please don’t hesitate to call on me. I’d love to assist you!

WASHINGTON June 16 (Reuters) – The U.S. Senate voted on Wednesday to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.

The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.

Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.

The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.

The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break. (Reporting by Donna Smith; Editing by John O’Callaghan)

 Since the Fed’s Mortgage Backed Securities purchase program ended, the markets have seen much more volatile price swings…and rates overall are off their lows. For potential buyers who are waiting to see if home prices come down a little more, that means the wait could well cost you more money in the long run. Let’s look at an example to see why. Say a home buyer wants to buy a home that costs $300,000. But the buyer wants a better deal on the home, so she delays a transaction until the home is reduced by $10,000.

If, in the meantime however, rates were to rise .75% to 6.00% and the buyer financed 90% of the purchase price, the amount of total payments over a 30-year term would be over $35,000 more than paying the $300,000 purchase price and locking in the 5.25% interest rate. In other words, the buyer would save $10,000 only to end up paying $35,000 more.

 Now these prices and rates are just for the sake of example. But the point is that home prices are already very affordable…and rates are still low for now. So in the end, waiting for a home price to reduce may end up costing you much more than you expect if rates rise.

Since the Fed’s Mortgage Backed Securities purchase program ended, the markets have seen much more volatile price swings…and rates overall are off their lows. For potential buyers who are waiting to see if home prices come down a little more, that means the wait could well cost you more money in the long run.

Let’s look at an example to see why. Say a home buyer wants to buy a home that costs $300,000. But the buyer wants a better deal on the home, so she delays a transaction until the home is reduced by $10,000. If, in the meantime however, rates were to rise .75% to 6.00% and the buyer financed 90% of the purchase price, the amount of total payments a 30-year term would be over $35,000 more than paying the $300,000 purchase price and locking in the 5.25% interest rate. In other words, the buyer would save $10,000 only to end up paying $35,000 more.

Now these prices and rates are just for the sake of example. But the point is that home prices are already very affordable…and rates are still low for now. So in the end, waiting for a home price to reduce may end up costing you much more than you expect if rates rise.

Please give me a call to preview your financing needs. I’m here to help!

Supplement bill HR 5017 (The USDA Bill) Rural Housing Preservation and Stabilization Act of 2010 has passed the House! The majority of the House (85%), voted in favor of HR 5017. Once the bill passes the Senate and is signed into law by the president, we will have an additional 30 billion in funding.

As always thank you for your support in this much needed affordable housing program.

I will keep you updated as soon as this happens!

Travis Newton
Oregon USDA & FHA Expert
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There may be some major changes to the USDA 100% Loan Program in the coming weeks/months. Below is the letter concerning Kanjorski’s Bill.

April 22, 2010                                                 

 KANJORSKI BILL PRESERVING AFFORDABLE MORTGAGES IN AMERICA’S HEARTLAND PASSES IN COMMITTEE

Washington, DC – Today, the House Financial Services Committee unanimously passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010, introduced by Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.  This action clears the bill for consideration by the U.S. House of Representatives, which is expected to take up the bill as early as next week.  The bill ensures the continued access of rural homebuyers to affordable mortgages through the U.S. Department of Agriculture’s (USDA) loan guarantee program.  The financial crisis has spiked consumer interest in the program, tripling the number of loans annually made since 2006.  Because demand continues to grow, the program will exhaust its federal funding within days.   H.R. 5017 would, at no cost to the taxpayers, solve this problem by making the program self funded, enabling families living in rural communities to continue to access these much needed loan guarantees.

“Since its creation in 1987, USDA’s affordable rural home loan guarantee program has helped hundreds of thousands of families to realize the American dream of homeownership, including many in Northeastern Pennsylvania,” said Chairman Kanjorski.  “As a result of the unprecedented demand, the program is now unfortunately running out of money.  At no cost to taxpayers, my bill will preserve the access of millions of families living in America’s heartland to needed USDA loan guarantees, so that they can continue to buy homes with affordable mortgages.  Without action, too many families in rural America will have no options for getting home loans.  We cannot allow that to happen.”

“As a result of this program, I was able to purchase my first home which I have wanted all my life,” said Virgie Spruiell from Bushkill, Pennsylvania.  “I enjoy it every day and it is a blessing.  I greatly appreciate Chairman Kanjorski’s efforts to enable the program to continue so that other people can access these guaranteed home loans just as I did.  It has had helped me tremendously.”

Chairman Kanjorski’s legislation will correct the Section 502 Single Family Housing Guaranteed Loan Program funding shortfall by enabling the program to pay for itself, rather than relying on federal funding.  In order to pay for the program, lenders will pay up to a 4 percent fee on new home mortgages.  As a result of these changes, financing of the program will move from a combination of government funding and industry fees to a self-sustaining initiative.

The USDA’s Rural Housing Service manages the Section 502 program, which provides a vital source of mortgage credit for people living in rural communities.  Low- and moderate-income individuals and families in rural communities often have fewer mortgage credit options than those households in urban areas.  The program aims to fill that void and lower the costs of homeownership by giving rural areas access to a home loan guarantee program.  These guarantees decrease the exposure of home lenders to defaults so that they will underwrite more mortgages.  In 2009, loans made under the program averaged $112,000.  To qualify for the program, borrowers must have good credit and reliable incomes to sustain homeownership. 

Please contact me with any questions you may have.

Travis Newton

503.931.4490

ML137

Boosted by a soon-to-expire $8,000 and $6,500 Tax Credit, low mortgage rates and favorable weather, sales of new homes surged 27% in March to a seasonally adjusted annual rate of 411,000 after hitting a record low in February, the Commerce Department estimated Friday. It was the largest percentage gain in sales since April 1963, the government said. It was the highest sales pace since July, and much stronger than the 335,000 expected by economists surveyed.

See, there is some great news out there!

As always, please contact me with any questions you may have.

I can be reached at 503.931.4490.

Travis Newton

Sr. Mortgage Baker

Oregon FHA & USDA Expert

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Early last month we were told by a few USDA officials that the funds may not last through the end of April. With the new bill being introduced to Congress (http://oregonfhaloans.wordpress.com/2010/04/14/usda-update-and-its-a-good-one/) we may not have any funding lapses anyway.  With that said, here is an update on the 2010 Fiscal Year Funds:

The total amount allocated was $13,533,633,697. As of April 19th, 2010, we have used $11,797,934,866 of those funds, which leaves $1,645,879,942 available for purchases. 

This *should* get us through the end of the month and the $8000 tax credit rush.

There are many changes to the USDA program being discussed. As always I will forward that info as soon as I receive it.

Funding information as of April 19^th, 2010

USDA Funds Utilization Data

Total FY2010 Allocation = $13,533,633,697

Total YTD FY 2010 Obligations (Funded Loans) = $11,797,934,886

Total available Funds for purchase transactions: $1,645,879,942

Please contact me with any questions or concerns. I can be reached at 503.931.4490.

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