Raleigh housing market ranks first - Business - NewsObserver.com

Raleigh housing market ranks first - Business - NewsObserver.com

New FHA rules coming

FHA has faced large losses due to economic conditions and people losing jobs. In order to help with some of the losses they are increasing the upfront mortgage insurance to 2.25% from the current 1.75%. This is not the first time FHA has increased the mortgage insurance. At one point in the 1990's the rate was 3.25%. This increase makes no difference in the amount of cash needed at closing and works out to be on average 4.00 more per month. FHA is a great way to buy a home if you have less than perfect credit scores, and have limited cash.

Tax Transcript

As banks continue to look at losses there are more layers of rules and documentation being required.

Most lenders now require that a tax transcript be pulled from the IRS. If you have a loss from a business that you or your spouse work at part time that will be now subtracted from your income.

How to improve your credit

I get calls everyday from potential buyers asking me to check their credit. What lenders are looking for in a credit profile has changed and the word is not really out. A lender is looking for at least 3 active credit tradelines that have been open for at least 12 months.

For a little while we heard close your credit cards you aren't using. Well now that is not the case. Even if you rarely use a store credit card it is probably better to just leave it open showing that you have good credit with that store. The other major change is never use more than 30% of the credit limit that you do have with a charge. That means if you have a 1000.00 credit limit don't charge more than 300.00 and then pay the balance in full every month.

This week recap

Well here we are two weeks into 2010. Interest rates are moderating under 5.00% for the A+ borrowers. Both Fannie and Freddie are working on changes to guidelines further tightening the lending restrictions. FHA is also expected to raise the downpayment requirements and most likely the mortgage insurance rates.

If you have a buyer who is thinking of buying before the 8,000 tax credit expires the end of April I would suggest buying soon. The downpayment might go up from 3.5% to 5%. That is significant for first time buyers.

Call or email me anytime and I will pre approve your buyer in a few minutes.

Enjoy the nice weather.

Happy New Year! Tomorrow the changes start.

Well 2009 has been an interesting year. I am always optimistic that rates will remain low, and lending rules will ease up a little from the knee jerk reaction of 2 years ago. It hasn't happened yet but I will continue to hope.

As of tomorrow the new Good Faith Estimate (GFE) will be mandatory. This was created to simplify the lending process and give consumers a way to shop for a mortgage. The old GFE was one page and the new one is 3 pages. To add to the confusion the new 3 page GFE doesn't even have the monthly payment on it. This is going to be a time of trial and error working out the kinks in the new forms.

All of this new paperwork is to prevent buyers from being tricked into a bad mortgage loan. Well the best way to make sure that doesn't happen is to use a lender who is knowledgeable, honest and local. I look forward to a great 2010 helping you and your clients. Thank you for a great 2009.

Bookmark and read daily

I am going to try to post all news on this blog site. So I am going to have a contest. The first 5 people who come into my office and tell me thephrase listed at the end of this post will recieve a prize.

Thank you for your attention.

"Together we will have a successful 2010"