FHA Hikes Fees on Mortgages

Daily Real Estate News | Tuesday, February 28, 2012

Home buyers with mortgages backed by the Federal Housing Administration will soon see a rise in fees, the agency announced Monday.

The agency is raising its fees in an effort to try to recoup some of its depleted reserves*, which suffered from the rising number of home owners who defaulted on their mortgages. The agency also says it’s raising fees to try to encourage the return of more private capital to the market.

FHA loans allow for smaller down payments, as low as 3.5 percent compared to traditional loans, and they often have less stringent credit requirements, which have made them soar in popularity in recent years. (The agency insures loans but doesn’t issue them.) About 40 percent of all new mortgages for home purchases in 2010 were FHA-backed mortgages.

In particular, FHA will increase two fees that borrowers pay. Starting April 1, it will increase its annual mortgage insurance premium for loans under $625,500, bringing the total cost from 1.15 percent of the loan amount to 1.25 percent. Starting June 1, larger loan premiums will see an increase of 0.35 percent of a percentage point, bringing the total premium costs up to 1.5 percent of the loan amount, The New York Times reports.

FHA also announced it will raise a fee for the upfront mortgage premium by 0.75 of a percentage point, which will now total 1.75 percent of the loan amount.

The New York Times illustrates the impact of the increase in a recent article: For example, a borrower with a 3.5 percent down payment with a mortgage of $193,000 can expect to pay an upfront mortgage premium alone of $3,377, compared to the prior $1,930. That can be rolled into the mortgage.

The new fees will also apply to home owners who want to refinance their mortgages, the agency announced.

The raise in fees is expected to bring in $1.25 billion in additional revenue to the agency through September 2013.

Read NAR's view of the FHA's decision to raise fees.

Source: “Buyers Face Higher Fees at FHA,” The New York Times (Feb. 27, 2012)

* Editor’s Note: FHA maintains two reserve funds. The first provides reserves to cover each mortgage that's insured for 30 years; the second is a congressionally required 2 percent reserve, which FHA draws on first to cover losses. This 2 percent reserve fund has dipped in recent years part because of continuing declines in home values, which increases the amount of reserves (and therefore more quickly depletes the reserve fund) that the agency must maintain for each mortgage. For more on how FHA reserves work, see "Myths and Facts" by NAR’s Government Affairs.

New NAR Partnership Aims to Assist You With Short Sales

New NAR Partnership Aims to Assist You With Short Sales

Techniques That Will Help You Make The Best Real Estate Purchase You Can

Techniques That Will Help You Make The Best Real Estate Purchase You Can

Purchasing a home is probably going to be the biggest financial decision in your life. Always make sure that you're fully informed before you put your money down. Check out this article and find out what you're missing about buying real estate.

When considering the size of the house you would want to get, you should keep in mind what the average buyer is looking for if you want to consider the ease of reselling it in the future. The average buyer is looking for a three or four bedroom house. So this is something you should consider, if you can afford it, since this would help get more potential buyers in your home once you are ready to sell.

It is important to remember when buying a house, you will need extra money for the closing costs, the inspections and future expenses such as buying furniture. Don't forget to add that up when looking at your budget and how much you want to spend. You can qualify for a mortgage that is more then the cost of the house, and use the extra for those expenses.

Make a short list of five to ten things that are important to you in a house, and don't sweat the small stuff. Unless you are building it yourself, it is impossible to find the perfect house with every feature you want. Also, keep your eyes and mind open for improvements you can make after you buy the house.

To make sure you get everything you want out of your real estate purchase, put it in writing. Studies have shown that buyers who write down their goals have a higher chance of reaching them. Writing down details about each home you see will keep them fresh in your mind, and will allow you to evaluate them more objectively.

Buyers Market

If you know that you are going to be moving around a lot in the next few years, do not buy a home. There are a lot of costs involved in the process of both buying and selling a property, so you may end up losing money on your investment. Particularly in a buyers market, this tactic is not a good idea.

Right now is the time to buy! Don't wait too long to take advantage of the buyers market that is going on right now. It is impossible to predict when the market will change, but it will, and you don't want to miss out on the low prices we are seeing today.

Foreclosure

With so many foreclosure homes on the market today, people with large sums of cash at their disposal, may want to consider investing is these properties. By purchasing them at auction, you get a home for pennies on the dollar that can be fixed up and flipped for a profit or put on the rental market for steady monthly income.

Many people think if they endure foreclosure that they will not be able to buy another home for a long time. While foreclosures do tend to stay on credit reports for 7 years, government agencies are willing to allow home loans after three years to people that lost a home to foreclosure under hardship circumstances.

Approach potential sellers with an offer to buy. A good way to find an investment property is to look for owners who put little to no effort into the maintenance of their property. This may be a sign of financial distress, estate probate, foreclosure or a corporate owner. All of these entities are going to be willing to entertain offers on the property and in some cases you will find this to be a great cost-saver.

When looking at possibly purchasing a home that is in foreclosure, keep in mind that just because you make an offer at the listing price, it does not mean that it will be approved. In fact banks that are trying to sell foreclosed homes expect people to bid for it and expect the price to go up. With this approach, it will help you look at things realistically.


Debbie Leon
HomeLife Professional Realty

www.servingashevillerealestate.com

debbie@homelifepr.com

Easy Sales Tips For Your Real Estate

Selling your home can be a daunting task.  There is so much to do and so much to think about.  If you are feeling overwhelmed by the process, or by just the thought of it, this article has some advice for you.  Below are some great tips and ideas for ways to make the whole process easier.

Work on removing clutter from your closets when you are staging your house for sale. This will make your closets look bigger and roomier. In fact, storage space is a selling point for a house. Buyers will no doubt open your closets to see if there is enough space for their belongings.

If you are selling your house then you should make your property very accessible to potential buyers.  Trying to find parking or finding the home hard to get into may make a potential buyer change their mind about taking a look at your property and look for something else.

When you are setting a price for your house, do not set it too high above the average price of a comparable home in your neighborhood, with the hope that you will have more room to haggle. If your house is overpriced when it comes on the market, buyer's agents will be less likely to show it to their clients, and you might miss some selling opportunities.

When selling your house, the kitchen is one of the most important rooms that potential buyers will look at. Make sure the counters are empty, and the cabinets are clean, but not full. If they see full cabinets this tells them that there is not enough room for all their things.

Selling your home doesn't have to be the nightmare the some people experience.  That's why this article has given you such great advice.  There are ways that you can increase your profit, decrease the time it takes to sell and keep your sanity in the process. Hopefully this article has shown you that.

For more information about buying or selling a home in the Asheville, NC area visit www.homelifeprofessionalrealty.com

Put your money where your value is…

Everyone has heard that first impressions are lasting impressions and that is never truer than in real estate.  Curb appeal can make or break a house, but if you're considering making some improvements you may wonder what updates will provide the biggest bang for your buck. According to Remodeling magazine's annual Cost vs. Value Report, the following are the top five projects that will pay you back at closing…

Entry Door Replacement.  Average cost to replace an existing door and lockset with a new steel door and lock is $1,218. Resale Value: $1,243. Cost Recouped: 102.1%

Garage Door Replacement. Average cost to replace an existing garage door with a 4-section door on new galvanized steel tracks is $1,291. Resale Value: $1,033. Cost Recouped: 83.9%

Siding Replacement. Average cost to replace 1,250 square feet of existing siding with new fiber cement siding and required trim is $13,382. Resale Value: $10,707. Cost Recouped: 80.0%

Minor Kitchen Remodel. Average cost to replace cabinet fronts and hardware, wall oven and cooktop, laminate countertops, sink and faucet, flooring and to paint the trim and walls is $21,695. Resale Value: $15,790. Cost Recouped: 72.8%

Deck Addition. Average cost to add a 16' x 20' wood deck, complete with three stairs and railing system is $10,973. Resale Value: $7,986. Cost Recouped: 72.8%

If your thinking of buying or selling give me a call first. Being informed about today changing market is important. Find out what you may not know you need to know.

To search the local MLS for active listings visit http://www.redslipperhomesrealty.com/

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