FHA is one of the most, if not the most, popular ways that first-time homebuyers finance their purchase. FHA stands for Federal Housing administration, a division of HUD (housing and urban development) that ensures loans to homebuyers with low down payments. These down payments at 3.5% of home price would probably not be made by banks without the federal guarantee.
So, what is MIP? MIP stands for Mortgage Insurance Premium, charged by FHA when approving a loan. The money from MIP goes into a pool that helps fund the federal guarantees for loans against default by the home owners. There are two different MIP charges: Upfront and Monthly.
The upfront MIP charger from loans is 1.675% of loan amount. So, if you had a loan amount of $100,000, you'd have an upfront MIP charge of $1,675. FHA does allow this upfront premium, however, to be rolled into the loan amount. So the actual loan amount stated on all of your documents would be $101,675.
In addition to the upfront MIP, there is a monthly premium that you will pay to go into the same mortgage insurance fund. This amount has an interest of 1.25%. To find out what the monthly MIP charge is, you'd multiply the amount by 1.25% and divide the amount by 12. Therefore, the MIP amount on a loan of $100,000 would be $1,250, which divided by twelve would be around $104.17 a month.
Because the monthly fee has gone up dramatically in the past few years, the issue has come up that many think that FHA financing is too expensive for some buyers. In our next article we'll discuss other financing ways that don't have this MIP.
Wednesday, December 12, 2012
Monday, November 26, 2012
Wednesday, October 31, 2012
The Things to Bring Along with You
Many times we've encouraged first time buyers, well all buyers really, to make full loan approval prior to ending their search for their new home. So, assuming that you're taking that advice and that you're going to meet with a loan officer to make loan applications, there are some things that you need to take along with you (besides a pen).
Below is a list sent to us by one of our lender friends of things you need to bring, including financial documents. This will provide you with a checklist for you as you make your way towards your new home.
Below is a list sent to us by one of our lender friends of things you need to bring, including financial documents. This will provide you with a checklist for you as you make your way towards your new home.
- Copies of 2011 & 2010 Tax Returns including ALL W-2's and/or 1099's (if Tax Returns are not completed then we will need a copy of the extension & 209 Tax Return)
- Copies of one month of your most recent Pay Stubs
- Complete Copies of two months of your most recent bank statements
- Most recent 401K and/or Investment Statements
- Divorce Decree (if applicable)
- Social Security Award Letter(s) (if applicable)
- Bankruptcy Petition and Bankruptcy Discharge Papers (if applicable)
- Gift Letter, copy of Cashiers Check and Bank Statement from Donor (if applicable)
- Copy of Real Estate Sales Contract (sale and/or purchase)
- Name and phone number of Insurance Agent
Wednesday, October 3, 2012
Location, Location, Location
So, what is the oldest
rule in the book about real estate? Location. Location. Location.
This should be the
case when you're buying your first home as much as it is when you're building a
parcel of land on which to build the world's largest office building. Location
is going to be important to you for a number of reasons including a location
that is close to work or schools, or just generally meets your needs for a
house. But it is also the case that location is extremely important in terms of
both resale value and desirability by future buyers (which is just
another factor of resale value).
While it is necessary
for everyone to find an area that suits their basic needs, in terms of resale
value, do your best to find an area with increasing popularity and therefore
value. One of the great parts of this is that you're not attempting to base
your value for a certain area on its value now but on the perceived value in
the future. Therefore, a neighborhood made up of newly constructed homes may be
higher-priced right now, but 10 years down the road if that same neighborhood
were full of foreclosures, while at the same time a currently lower-priced
neighborhood made up of older homes becomes in high demand because of its area
and the character of homes, a buyer would be better off buying one of those
older homes right now.
The bottom line is,
you should be looking at homes that suits your needs the best. But don't forget
to put location in the equation as well. It could reap great rewards down the
road.
Monday, September 17, 2012
Tuesday, August 21, 2012
Really? Again?
Surely we've talked about this before, but it's happened again- we talked to another lender who wouldn't order an appraisal on a contract until the inspections were done.
In Springfield, using the Springfield contract, a buyer is responsible for paying for and ordering both the credit report and the appraisal with the default position being 7 days from the effective date of the contract.
Therefore, waiting until after inspections may place a buyer in default on the contract, meaning that they haven't met their obligations. Even if this decision is made by a lender, the lender may have unintentionally placed the buyer in default on the contract, and if an agreement is not reached between the buyers and the sellers over inspections or any other matters, the seller could come back and hold the buyer for breach of contract because they didn't pay for and order the appraisal to be done within the course of the contract.
Now, of course, the reason that buyers (or lenders on behalf of buyers) wait to order an appraisal is because once you order an appraisal, you have to pay for it, and if the inspections identify a number of problems on the property and the buyer either doesn't want to complete the purchase or cannot come to an agreement with the seller as to the repairs to be made, it would save money to not order the appraisal if the deal isn't going to work anyway.
Well, the reason it's important to order the appraisal early is that it doesn't serve anyone if the appraisal doesn't get done on time or to be done right before closing. Then, if there's an issue with the appraisal, there's no time to react to it, and the deal may die because of failure to close. The Springfield contract also contains big, bold print at the end of the inspection paragraph that says "hey, just because you've got this inspection contingency doesn't mean that the buyer is free of other obligations" such as financing for just this reason.
It's just as important when buying any house, but especially your first one, to work with someone who knows what the contract says, to prevent issues from happening just like this.
For more information, visit us on the web at www.springfieldfirsthome.com or simply call or text us at 417.872.9222.
In Springfield, using the Springfield contract, a buyer is responsible for paying for and ordering both the credit report and the appraisal with the default position being 7 days from the effective date of the contract.
Therefore, waiting until after inspections may place a buyer in default on the contract, meaning that they haven't met their obligations. Even if this decision is made by a lender, the lender may have unintentionally placed the buyer in default on the contract, and if an agreement is not reached between the buyers and the sellers over inspections or any other matters, the seller could come back and hold the buyer for breach of contract because they didn't pay for and order the appraisal to be done within the course of the contract.
Now, of course, the reason that buyers (or lenders on behalf of buyers) wait to order an appraisal is because once you order an appraisal, you have to pay for it, and if the inspections identify a number of problems on the property and the buyer either doesn't want to complete the purchase or cannot come to an agreement with the seller as to the repairs to be made, it would save money to not order the appraisal if the deal isn't going to work anyway.
Well, the reason it's important to order the appraisal early is that it doesn't serve anyone if the appraisal doesn't get done on time or to be done right before closing. Then, if there's an issue with the appraisal, there's no time to react to it, and the deal may die because of failure to close. The Springfield contract also contains big, bold print at the end of the inspection paragraph that says "hey, just because you've got this inspection contingency doesn't mean that the buyer is free of other obligations" such as financing for just this reason.
It's just as important when buying any house, but especially your first one, to work with someone who knows what the contract says, to prevent issues from happening just like this.
For more information, visit us on the web at www.springfieldfirsthome.com or simply call or text us at 417.872.9222.
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