New FHA Refinance Program - Expanded Reverse Mortgage Limits

Since the Housing and Economic Recovery Act of 2008 became law in late July, making changes to refinance programs and reverse mortgages. Some highlights:

• FHA now allows a loan equal to 100% of the home's appraised value
• HECM reverse mortgages can have a loan limit of $417,000, which is the same as the loan limit for "forward" mortgages

All this adds up to big benefits for homeowners that need to refinance, or for Senior homeowners wishing to add the benefits of a reverse mortgage to their financial lives (no more mortgage payments, money for expenses or projects, deferred interest).

For more information, contact me at 1-888-462-3533 or 503-362-3533, or at carolhannibal@meridianmortgageinc.com .

Deadline for Use of Down Payment Assistance Programs Approaches

The Housing Act of 2008 eliminates seller-funded down payment assistance for transactions receiving final lender approval after September 30th. However, secondary market pressures are creating advance deadlines for borrowers wishing to use these programs.

Most lenders are requiring that loan applications involving seller-funded down payment assistance be submitted for credit approval by Friday, August 29th, and are requiring that loan documents be issued before October 1st.

Borrowers wishing to take action should call me at 503-362-3533 or 1-888-462-3533 as soon as possible in order to protect their access to this program.

New Housing Law - A Mixed Bag?

HR 3221, also known as the Foreclosure Prevention Act of 2008, makes several changes that affect potential home buyers. The law goes into effect on October 1, 2008.

This law eliminates the use of certain down payment assistance grants funded indirectly from gifts made out of the proceeds of home sales. This means that if a home buyer doesn't have the ability to make their own down payment from their savings or retirement plan, a family gift, or a loan, that they cannot purchase a home. Most "zero-down" mortgage programs were eliminated at the end of March 2008, and many people have difficulty qualifying for conventional (non-FHA, non-VA) low down-payment loan programs.

Additionally, the law increases the down payment requirement for FHA loans from 3% of the sales price, to 3.5% of the appraised value of the home being purchased. It's therefore possible for a buyer with an FHA loan to be required to put down more than 3.5% of the home's sales price, if the home appraises for more than the sales price.

There are some federally-funded down payment assistance programs for first-time homebuyers, but the income limits in these plans make it difficult for borrowers with the income needed to afford a home in the current market place to use the programs. The same can be said of Rural Housing loan programs, which do not involve a down payment. Many times, the income limits and geographical restrictions of Rural Housing loan programs make them a solution for only a fraction of home buyers.

The law also creates tax credits for first-time homebuyers of 10% of the purchase price of the home, up to $7,500, for sales closed between April 10th, 2008 and July 1st, 2009. There is a "recapture" provision on this credit, however, that may apply if the home is sold or rented out in the first eighteen years after it's purchased.

For up-to-date loan program information, please feel free to call me at 503-362-3533.

FHA Foreclosure Avoidance Product Coming Soon

Effective August 31, 2007, HUD has a new program to help homeowners affected by increased mortgage payments due to the end of their fixed rate periods on adjustable rate loans.

To qualify, eligible homeowners must meet the following five criteria:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset
2. Interest rates must have or will reset between June 2005 and December 2008
3. Three percent cash or equity in the home
4. A sustained history of employment
5. Sufficient income to make the mortgage payment

Contact Meridian Mortgage, Inc. for professional mortgage services.

Fannie Mae has made some changes to its innovative Community Lending suite of first-time homebuyers programs.

Pricing parameter changes, which affect the rate consumers pay on their mortgages, will result in slightly higher rates for consumers selecting these programs than existed before June 15, 2007.

Additionally, certain lower-level underwriting approvals have been eliminated from eligibility for the Community Lending programs.

However, it still will be possible for first-time homebuyers to obtain a good mortgage loan and afford to own a home.

For more information, please contact me at CarolApproves.com or 503-362-3533.