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FHA Loan Limits Extended

Nov 30th, 2011
by Mike.
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FHA Loan Limits Extended

On February 18th, President Obama signed The Agricultural Rural Development, Food and Drug Administration and Related Agencies Appropriation Act of 2012. A provision in this bill reinstated the higher mortgage loan limits that expired on October 1st.  The loan limits had been increased back in 2007 in an effort to stimulate the beleaguered housing markets. The expiration of this provision was proving particularly threatening to high cost markets where alternate mortgage financing is not readily available.

Many Democrats in Congress opposed the increase as did the Obama administration because they felt this would enable FHA to continue to gain market share at the same time the administration wanted private lending to take on a bigger role in home mortgage financing. Ultimately, both the House and Senate voted to advance the bill beyond the votes needed to override a Presidential veto.

The new loan limits for FHA now cap out at $729,750 in designated high cost markets. The loan limit in the Houston area which also includes The Woodlands, Conroe, Tomball, Spring, Katy and other parts of the metro area will remain at $271,050 for a single family property, $347,000 for a duplex, $419,525 for a three-family home, and $521,250 for a four family home. The FHA continues to provide a necessary funding source for home buyers who cannot meet the rigid underwriting requirements in effect for conventional loans and has kept the Houston housing market relatively stable. Getting pre-qualified for an FHA loan is a fairly simple process that only takes a few minutes on the phone with one of our loan officers.

Free Credit Repair Workshop for Houston Homebuyers

Oct 11th, 2011
by Mike.
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If your credit not quite good enough to purchase a home now,  consider attending!

This is your chance to receive FREE advice on how you can repair and rebuild your credit with the possibility of purchasing a home in the near future!

Home Loan Specialists, Inc. and National Credit Federation are teaming up to present a FREE workshop for anyone interested in improving their credit scores.

Saturday, October 22, 2011
10:30 a.m. – 12:30 p.m.
Barbara Bush Library | 6817 Cypresswood | Spring, Texas 77379

Printable Credit Repair Flyer

Click here for a printable version of our flyer to share with friends and family!

New HUD Income Limits Now in Effect

Jul 18th, 2011
by Mike.
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Home Loan Specialists, Inc.The U.S. Department of Housing and Urban Development has announced new income limits for Fiscal Year 2011.  These income limits affect qualification for most First Time Homebuyer, Down Payment Assistance, and Mortgage Credit Certificate programs available throughout the state. As an example, the new income limit for a family of four to qualify for down payment assistance in the area would now be $52,800 while the income limit for the TDHCA Bond Porgram 77 would be $75,900 for the same family size.

 The increased income limits will allow more first time homebuyers who meet other qualifying criteria to obtain annual tax credits or down payment and closing cost assistance. For more information on programs that might benefit a first-time homebuyer, please contact us at 832-286-1600.

Good News for Houston!

Jul 13th, 2011
by Mike.
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We knew there was a reason so many of us tolerated this crazy weather!

HousingWire Article about Houston Real Estate

FHA to Lower Allowable Seller Contributions in 2011

Mar 28th, 2011
by Mike.
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In 2010, the Federal Housing Administration restructured the mortgage insurance and lending guidelines surrounding mortgage loans insured by the agency. These changes included minimum credit score requirements for low down payment loans, new up-front and annual mortgage insurance premiums, and a change in the net worth requirements for lenders offering FHA loans. One element that was noticeably absent was a change in the amount a seller can pay toward buyer closing costs. It looks like the day of reckoning is coming.

The FHA had announced in 2010 its intention to decrease allowable seller contributions on insured loans from the current 6% down to 3% in order to bring the loan program in line with conventional loan guidelines. Seller contributions allow buyers to contribute less to a transaction, and enable many first-time and low to moderate income borrowers to buy a home. Thus, this policy is essential to maintaining the recovery in the fragile housing market. As an example, a buyer considering a $150,000 home purchase might have to absorb between $5,000 and $7,500 in closing costs in addition to the FHA’s minimum required 3.5% down payment. Currently the seller could pitch in for all of those closing costs from their sale proceeds but, under the proposal, they would be limited to $4,500.

Real estate agents, builders, and mortgage lenders have voiced concern over this new policy on the heels of other changes to government housing policies. Now, it looks as though the FHA is starting to cave, at least a little bit, in this fight. It appears the agency is going to allow some higher seller-paid closing costs, perhaps 4-5% on smaller loans to allow low-to-moderate income buyers the ability to purchase a home. At the same time, they would limit contributions for higher loan amounts to the previously proposed 3%.

This should salvage most transactions as 6% contributions on higher dollar mortgages are less common than for lower-priced homes. This will, however, hurt some entry leveler buyers in areas that have a higher entry price point, but are not considered by HUD to be a high cost market with higher loan limits.

Ultimately, this proposal is another attempt to unravel the Federal government’s support of the housing market. The FHA will continue to play a vital role as government agencies Fannie Mae and Freddie Mac are phased out in some manner, leaving the private markets in charge of most mortgage lending. Until then, it behooves many home buyers with low down payment resources to buy now or they may be forever holding their peace.

Cutting Your Houston Mortgage Payment – Part One

Jan 20th, 2011
by Mike.
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Ten Ways to Cut Your Hazard Insurance Premium


If you have a Houston mortgage, you likely also have an escrow account to pay your property taxes and homeowner’s insurance. According to the National Association of Insurance Commissioners, the average homeowner’s insurance premium rose 62% between 2000 and 2007; but while home prices fell almost 30% since mid-2006, insurance premiums have largely remained where they were during the housing bubble. Often, the contributions to this escrow account exceed the principal and interest portion of your loan payment, so taking steps to “right size” your insurance coverage makes a lot of sense. You can easily save hundreds of dollars a year by making some smart choices.

  1. Shop around – It is wise to shop around for your coverage every two years or so. Some insurers can get very uncompetitive when they have been faced with a torrent of claims or have had bad financial results, while others may get much more aggressive in pricing their coverage to gain market share.
  2. Raise your deductible – raising your deductible to 1% can save you hundreds, even thousands, of dollars. Just be sure that you have the resources to fund the deductible if you ever need to make a claim, and ensure you clear any increase with your mortgage lender.
  3. Beef-up security – adding a security system, smoke alarms, and deadbolt locks to your home can save you anywhere from 5–30% on your premium. Be sure to price the cost of your alarm monitoring to ensure you are not just shifting your expenses.
  4. Upgrade your home – adding features to your home that increase safety and reduce the chances for a claim can also save you significant dollars. Reinforcing your roof with hurricane straps or upgrading your plumbing can reduce the chances of a claim and reduce your bill. Be sure to check with your insurer to get an estimate of savings before starting your improvement project.
  5. Combine coverage – Discounts abound for homeowners who are willing to combine auto, homeowners and even personal liability policies. These discounts can make the combined cost of your coverage far lower than they would otherwise cost.
  6. Stick with your current insurer – I know this is flying in the face of being a smart shopper, but often insurers reward their clients that have a claim-free history with discounts. In many cases, the longer you go without a claim, the bigger the discount. Check with your current insurer about an existing client discounts before you switch to another company.
  7. Ask about other discounts – Retirees are often able to get an additional discount on their coverage since they are more likely to be at home to limit the impact of a claim. Members of unions and trade associations can also often secure discounts.
  8. Review your policy coverage – While increased coverage may pay for the increased cost of construction to re-build your home in the event of a disaster, be sure not to go overboard. The land on which your home sits is not covered by your hazard insurance so its value should be excluded from your coverage.
  9. Re-evaluate participation in a state-run plan – The Texas FAIR Plan Association writes coverage for homeowners who are having difficulty in obtaining coverage. In order to qualify, the homeowners must have been declined coverage by at least two private insurers. Doing a little more leg work and seeking out insurance in the standard insurance markets can provide more comprehensive coverage at a potentially lower cost. Check with both the major national franchises such as Farmer’s, Liberty Mutual, and Allstate, as well as an independent agent and lesser known names such as Amica and Safeco.
  10. Improve your credit rating – Clients with good credit can often get an attractive discount on their homeowner’s insurance so improving your credit score can not only get you an attractive Houston mortgage rate, but also an attractive insurance premium.

While we are all looking to save money, keep in mind that your hazard insurance plays an important role in preserving the investment you have in your home. You only know how good your coverage is when you have a claim, so be careful not to cut so many corners that you end up paying more in the end.

Houston Mortgages Just Got More Costly

Jan 13th, 2011
by Mike.
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Getting a conventional mortgage loan in Houston just got more expensive…for everyone. Mortgage giants Fannie Mae and Freddie Mac recently announced a series of loan level pricing adjustments affecting even the most creditworthy borrowers with strong down payments. The government-backed entities claim they have underpriced risk for years and now must impose additional fees to protect against the inherent risks they take in the mortgages they purchase or guarantee.

Fannie Mae and Freddie Mac currently fund or guarantee more than two-thirds of all mortgages originated and have required massive cash infusions from the Federal government to remain solvent. Their financial health is regarded as instrumental to the recovering housing market. Virtually all mortgage loans are priced based upon risk; risks including the amount of down payment, the credit scores of borrowers, the type of property being purchased, and the location of the property being purchased. The premiums charged to borrowers that are perceived as higher risk have increased over the years, but what makes this news so significant is that the higher pricing adjustments apply even to borrowers who make significant down payments and have excellent credit ratings.

For example, a borrower with an 800 credit score, who is putting 20% down on a $250,000 home, will pay an extra .25% of their loan amount in fees or higher rate. Putting that into dollars and cents, this will cost the borrower an extra $500. The larger the loan amount, the larger the adjustment. Less qualified borrowers, or those with smaller down payments, will see adjustments that can amount to .75%. When these costs are added to the existing price adjustments, borrowers can easily be paying thousands of dollars in risk-based fees.

The effect of this change to the borrower is that they either have to come up with more money to secure a given mortgage rate, or they must accept a higher rate. A rate that is just 1/8th of a percent higher can easily reduce the amount of mortgage a borrower qualifies for by thousands of dollars. What we will see here is that conventional loans that are often reserved for higher qualified borrowers are becoming more expensive than government loans. The “law of unintended consequences” may lead some borrowers who would otherwise plan to put more money down, to decide against such a plan. Stay tuned for more changes!!

Government Mortgage Loan Limits to Remain Unchanged for 2011

Jan 10th, 2011
by Mike.
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The Federal Housing Finance Agency has announced that conforming loan limits in Texas will remain unchanged for 2011. This announcement affects conventional loans underwritten to Fannie Mae and Freddie Mac standards, FHA loans, and VA home loan guarantees. There had been significant speculation that lower loan limits for FHA were in the works as a result of an expiration of temporary increases and lowered home values. Conventional loans in Texas will continue to be available up to $417,000 through September 30, 2011. The $271,050 limit on single family FHA loans will also be extended to September 30th. VA loans do not have a formal loan limit, but instead guarantees 25% of loans made up to $417,000 through September 30th for veterans who have their full entitlement available. Loan limits for 2012 will be announced later in the year.

In 2008, Congress expanded the loan limits on FHA loans in response to the housing crisis. This provision allowed the government to provide more guarantees in higher cost locales which would have been crushed if credit became unavailable. This expansion temporarily allowed guarantees up to 125% of median home prices instead of 115%. Furthermore, the current base loan limits were set during boom housing years and would likely be reduced if the traditional metric were used since housing prices around the country have declined.

Another cause for concern over extending the increased loan limits is the default rate. Statistics released by the Federal Houston Administration indicate that larger FHA backed loans have higher delinquency rates than smaller loans which appear to reinforce the perception that the increased loan amounts have led to more defaults.

Fortunately, much of this debate only affects some of the higher cost areas of the country. Due to affordable housing prices, Texas has historically qualified for FHA’s floor limit and did not necessarily benefit from the expanded loan limits mentioned above.

New Rebate Program is a Gift to Texans Buying New Appliances

Dec 16th, 2010
by Mike.
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Just in time for the holidays!

Beginning December 20th, Texans can participate in the new $18.5 million Texas Appliance Mail-In Rebate Program and receive money back when they purchase eligible Energy Star® appliances.

Rules:

  1. You can apply for two appliance rebates and two recycling bonus rebates per household (this includes any rebates you received from the April program).
  2. You can only qualify for one rebate per appliance category (for example, you may not apply for two dishwasher rebates).
  3. Rebates are available on a first-come, first-served basis until all funds are distributed.

How to apply:

  1. Purchase a qualifying Energy Star® appliance starting December 20th from a Texas retailer or contractor and retain your receipt.
  2. Install the new appliance in your valid Texas residential address.
  3. Properly dispose of or recycle the old appliance of the same type that is being replaced.
  4. Completely fill out one rebate application per purchase, including the appliance disposal or recycling information.
  5. Complete the checklist at the bottom of the Rebate Application Form to ensure you have fulfilled all of the rebate requirements.
  6. Make a copy of the application and supporting documents for your files.
  7. Mail the completed application form with your receipt and any other required documentation, such as disposal or recycling verification, to:
Texas Appliance Mail-In Rebate Program
Support Center
P.O. Box 2013
Austin, Texas 78768
Application forms will be filed according to the postmark date on the rebate application envelope. If a postmark is missing, the application will be placed in the queue based on the day it arrives at the processing facility.

Allow six to eight weeks for verification and processing of your rebate application.

Mortgage Insurance Premiums on FHA Loans will Increase on October 4th

Sep 2nd, 2010
by Mike.
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The Federal Housing Administration has announced that monthly mortgage insurance premiums on FHA-insured mortgage loans will increase from the current rate of .50-.55%, to .85-.90% on October 4th. This premium is paid monthly by borrowers as part of their mortgage payment. The increase amounts to 63% hike in annual premiums. Homebuyers who go under contract and obtain FHA case numbers through their lender prior to October 4th will be grandfathered in at the lower rate.

The annual premium increase was originally scheduled to go into effect September 7th, but was delayed to afford lenders more time to adapt their systems.

To put this premium increase into perspective, a borrower purchasing a $200,000 home with the minimum required 3.5% down payment, would see a monthly payment that is $59.55 higher if their case number is assigned after October 4th. Over ten years this difference represents a total increased cost of $7,146 to the borrower. In addition to increasing overall borrowing costs, the hike has the potential to disqualify some buyers at the margin as this increase may push their debt ratios above the maximum allowable limits.

Ironically, some borrowers may benefit from this new structure if they plan to be in their home three years or less as the up-front mortgage insurance premium charged by FHA will be reduced from 2.25% to 1%. If they pay this premium in cash at closing, they would stand to gain a net financial benefit from the change. It is imperative that borrowers consult their mortgage planning professional in advance of their purchase in order to evaluate the cost or benefit of the new premium structure based upon their home financing plans.

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