FHA Loan Limits Being Reduced for Travis & Williamson County

The maximum FHA loan amount in Travis, Williamson, Hays, Caldwell and Bastrop Counties is projected to decline from $288,750 to $271,050 - a $17,700 decline. The decline, set to occur in October 2011, is meant to reduce the government footprint in housing, but the real estate and mortgage industry fears it could lead to lower prices on an already injured housing market. 

By comparison, the maximum loan amount in Monroe County, Florida will decline by $200,750 to $529,000 and $184,000 in San Joaquin, California, going from $488,750 to $304,750. So the decline is significantly less that experienced by other areas nationwide.

The article does not disclose the maximum Freddie and Fannie loan amount for Austin but Houston and Dallas will remain unchanged at 417,000 - more than likely Austin's conforming limit for non-FHA loans will likewise remain at $417,000. 

See the Wall Street Journal article, Sellers Brace for New Mortgage Caps, here:

http://online.wsj.com/article/SB10001424052702303763404576420101788878440.html?mod=WSJ_hp_LEFTWhatsNewsCollection

7 Things All Borrowers Should Know About FHA Loans

1. FHA loans are not only for lower-income borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans, but borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.

2. FHA loans are not only for first-time buyers. Many people believe FHA loans are available only to first-time home buyers, but this is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.

3. FHA loans are not just small loans; in fact, loan amounts can be as high as almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county though. In Travis and Williamson County, the FHA Loan Limit is $288,750 for single family households, $369,650 for duplex, $446,800 for tri-plex, and $555,300 for four-plex.

4. FHA loans are not affiliated with the section 8 housing program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default.

5. FHA loans are often more affordable than conventional loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5%.

6. FHA-approved condo developments are more desirable to buyers. With 87% of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.

7. FHA loans are assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.

Excerpt taken from: RISMedia

Going Once....Going Twice....SOLD!

After twice being listed by another agent for 184 days and then again for 142 days, I completed the sale of my client's condo on Duval with a full cash offer on 99% of list to sold price in almost half the time. No repairs, no closing costs.  

This was a tricky sale because the Austin condo complex, Stonehaven Condos, is currently not FHA loan-approved. So, the options for lending are restricting because it cuts out a rather large segment of buyers who were hoping to do the FHA minimum, 3.5% down payment.

Secondly, the complex currently has a 69.2% owner-occupancy out of 32 units. What this means is that only 69.2% of the owner's of the units live in them. The rest have been rented out. Most lenders would prefer the owner-occupancy to be at 70% or greater. So, although there were a few lenders willing to accept 51%, it was limiting for buyer's wanting to work with a particular lender/banking institution.

Thirdly, competition. At the time, 5 condos for sale in a small 32 unit complex is pretty substantial competition and we definitely were not the most beautiful one. The goal is flattering picture angles, marketing, and staging that accentuate what you DO have. 

So, despite the challenges and obstacles, the human Dreamweaver dodged the impediments like Keanu dodging bullets in The Matrix. I am happy that I could get the job done for my client, she was so grateful and nice it makes me feel warm inside. After reading this some of you may have tears in your eyes at my uncanny ability to make dreams come true. Sometimes people just start crying when they look at me because like a sixth sense, they know what I can do for them. One time, a mother covered her little boy's eyes and I heard her say, "El es feo!" in Spanish. I don't habla espanol, but I think that meant "He is free" as in talking about my essence and spirit. I'm a soaring eagle. 

If I can assist you in finding a home or getting your home sold, contact me at the info in the sidebar! I'd be happy to help! 

Jeff Goldblum Wants Buyer's To Keep Buying!

Coming this summer, the FHA will lower the maximum amount that seller’s can contribute for buyer’s closing costs. Currently, the seller can pay a maximum of 6% of the sales price towards the buyer’s closing costs. Starting soon, it will be reduced to 3% of the sales price. The change will take place in “early summer,” according to the FHA, but no specific date has been set. Buyer’s closing costs typically range from 3.5-5%, so this is no longer a sufficient amount to fully cover the closing costs.

This to me sounds backwards. The purpose of the tax credits, low interest rates, and all of this adjustment to lending practices was to get people into homes. Of course, they need to be able to afford the home and be well-qualified to maintain payments, but why regulate closing costs? If a buyer asks for closing costs to be paid it doesn't mean they aren’t well-qualified. It just means they are trying to minimize out-of-pocket spending. If the seller has sufficient equity in his home, it makes no difference if they pay the buyer’s closing costs because it will just come off the bottom line pay out. It can just come out in negotiations. For instance, house is listed for $200,000. Buyer offers $202,500 with $5,500 in closing costs and as long as it appraises, it works. See what I did there? I’m a wizard.

I just don’t see the point of lowering seller contributions right now. Especially when the government was throwing $8,000 non-repayable at people to buy. It’s an abrupt change from seemingly doing anything they can to get people in, to making it difficult with a rise in FHA mortgage insurance premiums and now reduction in seller contributions.

It’s one of those things we may never understand, like why Hollywood doesn’t put Jeff Goldblum in more movies. The guy hasn’t been in a big time role since Jurassic Park in 1997! He’s The Fly! Jeff and I once had an intimate, one-on-one conversation, no joke. Let me take you back to a time when I was enrolled at Calvin College in Grand Rapids, Michigan. I worked part-time at a market research firm as a Senior Research Specialist. One day we were doing a survey on a certain hospital branch (confidential) in California and calling Los Angeles-area residents. Well, my system auto-dialed a man named ‘Jeff’ and I swear it was Jeff Goldblum.

Jeff Goldblum has a very distinct voice, he probably lives somewhere in Los Angeles, and this guy’s name was Jeff! All of that equals that I spoke to a movie star. Jealous? The guy was super nice, very intelligent, and we spoke for about 30 minutes about my college life, living in California, the health care system, and he even gave me relationship advice that led to me breaking up with my girlfriend! Jeff said, “She’s no good. You can do better and you deserve better, Chris.” When Jeff Goldblum gives you advice, you listen. He sounded EXACTLY like Jeff. I feel after our conversation I’m comfortable enough for a first-name-basis relationship. Jeff has a nice voice. It’s different, but rhythmic.

You’re probably wanting to know, “Why didn’t you just ask if it was Jeff Goldblum if you guys are like best friends?” Well, easy answer. Jeff doesn’t need to be hounded. Talking to some market research guy in Michigan is the only place Jeff can find anonymity and be unrecognized for a brief moment. Who am I to destroy and violate that with my accusations? Hollywood hasn’t been nice to Jeff lately, so I took it upon myself to do him a favor. So long-story-short, ever since that day, I’ve been a Jeff Goldblum fan and I know for a fact that Jeff would agree that seller contributions should not be reduced.

Mortgage Insurance Premiums Rise

Monday (April 5th) marked the increase of mortgage insurance premiums by the Federal Housing Administration. Mortgage insurance premiums on FHA-backed loans will rise to 2.25% of the loan amount from 1.75%. That amounts to an additional $500 for every $100,000 borrowed. On a $200,000 FHA loan, a borrower will now pay $4,500 upfront in insurance costs, compared to $3,500 before. However, these insurance premiums can be rolled into the new loan, just as before.

I see the point of the higher mortgage insurance because the FHA wants to boost reserves and to avoid a possible taxpayer bailout of the mortgage insurance agency. However, this along with other FHA changes this summer (ex. 50% reduction in the maximum amount of seller contributions toward buyer closing costs) and the $8,000 and $6,500 tax credits expiring soon, it’s an abrupt switch from being extremely buyer friendly one month to grandma smacking your hand with a spoon when you reach for seconds.

“Ah-ah-ah, Mr. America. We've stuffed you long enough. You’ve gotten too comfortable and fat. Now we have to limit you and teach you portion control.” With all this money being spent and used to bail out we’re going to be squeezed in the future like a stress reliever man until our eyes pop out. That money the government hands out comes from somewhere, they just want to redistribute it how they see fit.