Before the conventional mortgage loan market collapsed, approximately 10% of home buyers utilized FHA financing.   Conventional loans were king.  Borrowers who had less than perfect credit and little money down could utilize the FHA programs to purchase a home.  FHA required 3 percent down and the seller could contribute up to 6 percent in seller paid closing costs. A buyer who purchased a $200,000 home with the seller paying 6% in seller paid closing costs needed only $6,000 in down payment and about $1,000 in additional cash to cover buyer paid closing costs.

Today approximately 41% of all loans originated by mortgage banks are issued and insured by FHA. The reason for the sudden use of FHA insured loans is due to the stringent conventional mortgage guidelines and lack of insurability of conventional loans where the buyer does not have 20% for down payment.   Today a buyer who wants to use a conventional loan to purchase a home needs a  680 credit score and the combined housing and credit debt ratio cannot exceed 41 percent of the buyers gross income.

FHA will in some instances allow a higher debt ratio if the borrower has good quality risk factors such as great credit, cash reserves in the bank and job stability. FHA now requires borrowers to be on their current job at least 6 months.
Due to the number of defaults on loans in the past year FHA loans are changing. Today FHA requires only 3.5% down however this will be changing. FHA will require 5% to 10% down when utilizing an FHA loan.  They are taking away the ability for a seller to contribute 6% to assist the buyer to pay closing costs. The seller will be able to contribute up to 3.5%, the same as a conventional loan. Also the upfront mortgage premium is going to be increased from 1.75% to 2.25%.

If you are a home buyer and utilizing FHA now is the time to purchase that home before these changes go into effect! Remember you must be under contract by April 30, 2010 and settle by June 30th, 2010 to also take advantage of the tax credit!

Matt Spinn
Lone Star Financing
13812 N Hwy 183, Ste B4
Austin, TX 78750
Phone - 877-381-6592

Apply online http://www.matt.lonestarfinancing.com

Filed under: Uncategorized | No Comments »

Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

The Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

This is a great time to buy for first time home buyers and home owners that have owned their homes for more than five (5) years.  Couple this with historic interest rates and this equates to a fertile opportunity for many buyers.

Matt Spinn
Production Manager
Lone Star Financing
13812 N Highway 183 Ste B4
Austin, TX 78750-1238

Main: 800.585.6886
Cell:   512-663-5515
Fax:   512.590.8715

Daily Rates on Twitter.com/LoneStarRates
Apply Online Matt.LoneStarFinancing.com

Filed under: Uncategorized | 1 Comment »

Historically, owning a home has always been a good, sound investment and even though our economy is going through some rough times and home values have fluctuated the past year or two, owning a home continues to be a smart investment. A few reasons to support home purchasing as a good investment is due to low rates, decrease in home pricing, and government backed incentive programs. 

You may be thinking, “yeah, right”. We all watch the news, read the papers, and the housing market is down, defaults and foreclosures are up and banks are making it more and more difficult to get loans without “A Paper” credit.  
While good credit is a must, it doesn’t have to be perfect. Most of the time, having a 620 will open several doors for you. In addition to that, if you have a job and a regular paycheck, you’ll find that there are plenty of options for you to consider with a new mortgage and rates, while not at the same low point from maybe a year ago, are still great!
If you consider that on average, home values go up 5-8% every year, the return investment of a home can be much higher than buying stock. Let’s say you purchase a $100,000 home and put 10% or $10,000 down. At a 5% annual growth rate, that $100,000 home would be valued at $105,000 its first year.  Earning 50% of your initial down payment back in the first year is a great return! If you’ve ever played with money in the stock market, you know that’s not only a rare find but one you definitely want to jump on. It’s difficult finding investments with that sort of return.

Here’s another way to look at it over a longer time span:  If you had put $10,000 into the stock market in 1996, the average annual S&P return would make that investment worth a little over $21,000. That’s an increase of only a little more than $11,000. The median home price in 1996 was $140,000. Today, that home would have gained almost $100,000 in value.

Now is definitely a good time to take advantage of the market and reap all the benefits of home ownership.  This market is providing a unique opportunity for people to get the biggest bang for their buck and you don’t want this ship to pass you by! Please feel free to contact me directly for more information or to get pre-qualified for your new home purchase. Tiffany (@) lonestarfinancing.com

Filed under: Uncategorized | No Comments »

On July 30, 2009 legislation went into effect that is impacting the timeliness in which Texas Mortgage Companies can close a mortgage loan.  This new law is called HERA which stands for new Housing and Economic Recovery Act. This piece of legislation is intended to protect the borrower from deceptive lending practices.  If your broker/lender is not educated on this new law, it can cause numerous delays.  As a Texas Mortgage Banker, Lone Star Financing and our mortgage team has embraced the new laws and changes that shape our industry. 

Below is a summary of what the HERA law entails.

1.       Other than a credit report fee, no upfront fees can be collected until 4 days after the initial disclosures have been signed by the borrower.  This change prevents Texas mortgage lenders from collecting any sort of upfront fee just to look at your file.

2.       Along with the collecting of upfront fees, the appraisal cannot be ordered until the fourth day after the initial disclosures have been signed by the borrower.

3.       The borrower is to receive a copy of the appraisal three days prior to closing.  This prevents the borrower from having to send a letter requesting a copy of the appraisal that they paid for.

4.       A final good faith estimate and truth in lending must also be signed three days prior to closing.  If the APR changes by more than .125%, the borrower must resign and date the good faith estimate and truth in lending.  This creates a new three day wait period.  This is in place to prevent initial undisclosed fee changes at closing.  There is nothing worse than going to closing and seeing added fees to your settlement statement.

Now that you understand the new potential delays let me tell you how it can affect your potential client.  The first issue comes up when there is an inspection contingency period in the contract that states you have 10 days to inspect the property once you are in escrow.  With close to 10 day delays on the mortgage side of the transaction with the new HERA law, canceling a transaction due to waiting periods can ultimately cause problems or a loss of your option money.

The second potential problem for you client falls with the lock period.  It is difficult for most Texas Mortgage Companies to lock in the client’s rate for 30 days with no signed documents from the borrower.  Again there are too many delay periods.

Here is the solution to the problem, get PRE-APPROVED first.  This will prevent future delays to your client’s loan process.  With pre-approved clients, Lone Star Financing can close your client’s loan in 30 days or less.

In my opinion the government did need to step in and try to undo the problems facing the mortgage industry today.  HERA may sound like a big problem but in all actuality if you know how to work with the law, everyone ends up pleased.  As I mentioned before, this is nothing new to our group.  If you are a borrower or realtor and have any concerns or questions regarding the new HERA laws, please feel free to email, call or leave a comment below and I look forward to responding to your questions.  
 

Rachel McGuire
Mortgage Banker # 80385
512-750-9197

Rachel (@) lonstarfinancing.com 

Filed under: Uncategorized | No Comments »

Already working with a mortgage broker or lender?  Send us your competing Good Faith Estimate and our mortgage consultants will help educate you so that you are armed with the information needed to make an informed decision and insure the best rates and closing costs for your next home loan. 

In today’s mortgage industry it can be very difficult to compare “apples to apples” when reviewing Good Faith Estimates from multiple mortgage companies.  There are many ways to structure loans by modifying fees and rates and nothing ever seems as straight forward as it should be.  At Lone Star Financing our goal is to be up front with our rates and fees and educate our customers until they are confident they secured the best loan at the best possible rates and closing costs.

At Lone Star Financing our mission is to find the best mortgage loan types that offer the best lending scenarios for each individual’s situation. As a “broker banker” Lone Star Financing offers many competitive advantages over competing companies. Lone Star Financing offers direct wholesale lending. As a “mortgage banker” Lone Star Financing is able to offer direct wholesale lending prices just like Bank of America, Wells Fargo, Citibank and other major banks.  But as a mortgage “broker banker” Lone Star Financing also has the abilities to broker your loan to other major mortgage lenders in Texas. So should one of the Lone Star Financing correspondent lenders not be able to provide a certain rate or product, then we are able to search outside of our bank to find other loan products that best fit our clients needs.  This ability as a mortgage broker-banker gives Lone Star Financing more loan products and the best possible rates for our customers.

So how does Lone Star Financing offer better rates than the major banks?  As a mortgage bank ourselves, we are able to offer the same direct wholesale prices to our customers as the major banks, but because Lone Star Financing is privately owned and doesn’t have the bureaucracy and overhead as larger banks (we don’t have board member’s and shareholders to satisfy) we are able to reduce our fees and rates even further than the major banks.  Couple this competitive advantage with the fact we also have the ability to broker loans to secondary markets and it simply means that Lone Star Financing can offer more loan products with better pricing. This includes both major banks as well as the traditional mortgage broker companies.

This is why we aren’t afraid to go head to head with competing GFE’s. In fact we encourage it and the reason we offer free consultation and GFE reviews. If you aren’t shopping your Good Faith Estimates, then chances are you are paying more in either fees or a higher rate and leaving money on the table. Call us today and one of our friendly loan consultants will review your Good Faith Estimate at no cost and help arm you with the information you need in order to know whether your GFE is out of line or has any hidden fees that you should negotiate. 

Read more on Why You Need a Good Faith Estimate.

Filed under: Good Faith Estimates, Uncategorized | No Comments »