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If you are considering buying or refinancing a home in Sonoma County, you should know that the Federal Housing Administration (FHA) will soon increase mortgage insurance premiums on FHA home loans.

The Department of Housing and Urban Development (HUD) announced it would increase the annual mortgage insurance premium (MIP) by 0.10% for FHA loans under $625,500. This would raise the fee from 1.15% to 1.25% of the total loan amount. This annual premium increase — which is broken down into monthly payments — takes effect April 1, 2012.

In addition, HUD announced it would raise the FHA’s upfront annual mortgage insurance premium (UFMIP) from 1% to 1.75% effective April 1, 2012.

Starting June 1, 2012, the MIP for FHA loans over $625,500 will increase 0.35%, raising that fee to 1.50% of the total loan amount.

The primary reason for the changes is to bolster capital reserves for FHA’s Mutual Mortgage Insurance Fund. Congress has mandated the fund keep 2% in reserves. Last year, that reserve had slipped to 0.2%. The changes are expected to generate about $1 billion annually for the fund.

The increase in mortgage insurance costs applies to the purchase or refinancing of all FHA loans regardless of the amortization term or loan-to-value (LTV) ratio. The increases will not apply to borrowers already in an FHA-insured mortgage, a Home Equity Conversion Mortgage (HECM), and other special loan programs to be outlined in a forthcoming FHA Mortgagee Letter.

For your customers considering refinancing or making a purchase, they might want to act before the new mortgage insurance premiums take effect.

If you would like more information about what these higher fees will mean for you, please contact me today.

Hunt Conrad
Hunt for your loan
707-328-1233

I was consulting with a Sonoma County resident about the posibilty of doing a refinace on his home the other day and I realized that the while I am very comfortable with the concepts of qualifying for a home loan, not everyone is. So here is the explantion I used to describe to him what income ratios are and how they are applied and used in the Mortgage loan process.

Front End Ratios are the result of dividing the proposed housing debt (Principle, interest, taxes and insurance, PITI) by the income as we have calculated it . The Back End Ratio combines your PITI with your other outstanding monthly obligations and divides by the income, giving us ratios that are guidelines by which we determine the ability of the borrower to repay their total financial obligations. Obviously the higher the ratios, the higher the perceived risk of default however there is a difference between a young, newer employee making $2000 a month (guidelines limit his front ratio to 28% and back end ratio to 38%) and an employer making $10000 a month ( ratios of 38% over 49% are typically tolerated). The reason is that there is, conceivably, more residual income for the higher income earner to work with. There are also many other factors that go into the decision making process that relate to credit, equity position and assets but this is a the general rule as it relates to income ratios. I hope this helps.

If you have any more questions please call or email me.

Mortgage insurance allows Sonoma County home buyers to purchase property with less than 20% down payment.  Banks only want to lend you money if you have the required down but if you pay for insurnace to cover the differnce, you can put less down. 

 If you are currently looking for a Sonoma County home and not planning on putting down 20% then not only are you looking for the best service (that would be me) and rates and fees (also me) ,  you are also looking for which lender is going to offer you the best pricing in mortage insurance (obviuolsy ME). 2-3 years ago when California Real Estate was in a real tail spin, most Private Mortgage Insurance companies all but left the state.   Getting insurnace on a 5% down loan was all but impossible.   At the very least it was very expensive.   The only option was the FHA, which is still agreat option for borrowers with less than 5% down. Now as Sonoma County Real Estate values are moving upward Insurnace companies are coming back to the market.  If you can get to  5% down,which can include gift funds, Private Mortgage Insurance is a much better option than going FHA and the 3.5% down.  There are many options,  when considering PMI and I would be happy to sit down and talk with you about all of them.  You have options.  Is your current lender giving them all to you?

“Hunt For Your Loan”

If you are thinking about buying a property in Sonoma County, don’t you think it would be a good idea to find out what it will cost you. I can give you access to my mortgage calculator that has todays rates already imbedded in the program so that all you really need to do is plug in a purchase price and down payment and you can find out what your payments are going to be along with you cash to close including closing costs and Pre-paid items. What is nice about the program is that you can be looking at a home in Healdsburg offered for sale at 450,000$ and plug in the numbers. Maybe it is more expensive than that what you are Pre-approved for (becasue you have already been to my website and been pre-approved for a mortgage) so you drop the sale price to 400,000$ and see if you can afford that price. While the payments are important, often the “cash to close” is often a bigger stumbling block. Knowing exactly what dollar amount it is going to take to close your Mortgage loan is critical to your Sonoma county home buying success.

Visit the Real Estate Mortgage Calcualtor just clink on this link…

You can also save it as an app on your phone and take it with you while you look for a Home. Good Luck House hunting. “Hunt for your Loan”. If you have any questions please call or email me.

If you are planning to buy Sonoma County real estate in the next year the first thing you need to do is you have to get pre-approved for a Real Estate Mortgage. It really does you no good to wander the internet or check out open houses with out the knowledge and advantages that being pre-approved for home loan can provide you. Many Sonoma County Realtors won’t even talk with you until you have filled out an applicaton and rightly so. they don’t want you wasting there time. Your appetite could be for a 300,000$ house and your finacnial reality is that you can only afford a 250,000$. The opposite is true as well. You could be looking at 250,000$ houses and really be able to buy something more expensive. There are so many prgrams out there that I can tailor your loan to, you just will never know until you get pre-approved for the mortgage. Filling out a Real Estate mortgage aplication is so easy. It will take you all of about 10 minutes. Just go to my website and Get Pre-Qualified. Call or email me with questions…”Hunt for your Loan”! I am here to make your home buying easy and fun!

The Rating agency that dropped the credit rating from AAA to AA+ is Standard and Poor’s and is only one of three of the rating agencies. It takes two out of the three to actually effect the credit rating of the country’s debt. In addition my opinion of these agencies is not really very high because they are the same ones that rated AAA the tranches that were at the bottom of all the trouble we now face. In additon many believe that the rating drop was done to send a political message to the politicians
That said, we have all expected Sonoma County Real estate mortgage rates to rise by now. We fully expected that we would be experiencing a certain amount of inflation putting pressure on rates but that has just not been the case. In fact what has happened is that we are seeing a flight to safety to the US bond market pushing the yields down to their third lowest level ever. Obviously, every investor out there believes that the likely hood of America defaulting on their debt is lower than any other available option out there.

So today, the effect of the drop by S&P’s mortgage rating I think has little to do with the mortgage rates but the global economic worries are causing rates to drop because of the dramatic interest in the US bond market. Right now we are in a very low real estate mortgage rate cycle that most likely won’t last very long. I would expect rates to rise very moderately over the next couple of weeks but overall stay low through the end of the next quarter. For whatever that is worth.

I still think that Sonoma County Real Estate is the best long term protection against inflation.

This has to be one of the most usefull financing tools for both Sonoma County Real Estate owner occupants and Investors alike. Simply put, it allows a borrower to fold in the cost of renovation up front into the loan. It is limited to 35,000 and can include almost everything from carpet and paint to electrical and plumbing. What it doens’t include are additions or structural items but roofs are. The idea here is to make a
Sonoma County foreclosed property livable. The one big difference between a Homepath and Homepath Renovation loan is that there is an appraisal required in order to justify the improvements for the Renovation loan. There is still no Mortgage Insurance required. Owner occupants borrower still put down just 3% of the total of purcahse price and renovation costs. Investors are only required to put 15% down of the total and they can finance up to 20 properties provided they meet guidelines.
This is a tremendous mortgage financing tool for anyone looking to purcahse foreclosure proeprties. If you would like more information I would be happy to provide it to you. Please contact me at 707-431-9715 or at hunt.conrad@prospectmtg.com. you can also fill in the info requested boxes at the bottom of the page.

The First Two parts of applying for a Home loan in Sonoma County revolved around the concepts of Credit History and the abiltity to repay the loan using your documented income. Part #3 known as your equity position or down payment deals with “skin in the game” as some would like to refer to it.

The Lowest down payment currently availble would be Zero, nada, nothing for a VA loan. If you are veteran with an honarable discharge, a VA loan with no down payment is certainly a great financing option. You will still have closing costs and the Sonoma County property needs to be in good condition. No fixers here.

The next lowest down payment option is the FHA loan. This has become the most popular choice of Sonoma County Mortgage finance in the last two years becasue it is a Gov’t subsidized program that allows for only a 3.5% down payment. 30 year fixed rates are very competative. The Sonoma County property needs to be in good shape here as well. There can be no deffered maintenece. If there is, we can do an FHA 203 K rehabilitation loan but that is a topic for another day. The majority of the Mortgage insurance is financed into the FHA loan balance itself and makes for a great way to get into the Sonoma County Housing market, especially for first time home buyers.

5% downpayment options are not currently availble for Sonoma County properties because the Mortgage insurance companies still maintain that we are a declining market. I completely disagree as I am seeing many properties in Healdsburg, Windsor and Santa Rosa selling for asking prices or even slightly above. This could change any day now so make sure you give me a call to find out the latest. 10% down payments are availble for owner occupied Sonoma County buyers using a National Mortgage Insurance Company but generally speaking it is easier and less expensive to get a FHA loan at the reduced Mortage Insurance rate.

20% Down payments are truly the best option if you can afford it for an Owner Occupied home loan in Sonoma County. This will afford you the best in Rates and Terms.

Please Contact Hunt Conrad, 328-1233, for the best rates and service for a Sonoma County Home Loan

Part II of our series on the elements needed to qualify for a home loan revolves around the notion that you need to be able to prove that you can repay the debt or make the house payments you are about to incur. We no longer have the Stated(wink wink) income loan. Income documentation has become one of the biggest stumbling blocks for people getting approved for mortgages.

If you are W-2 employed for at least two years in the same line of work or profession then you have nothing to fear. Your paystubs coupled with your w-2′s for the last two years will be all the proof you need. However if you have changed jobs recently or have breaks in your employment history then things will be appreciably harder for you.

If you are Retired, then proving all of your income sources will be more difficult because you are probaly receiving money form a variety of sources including Social Security, Pension, annuities and the like that aren’t necessarily showing up on your tax retuns. If you are drawing on an existing retirement plan for example, you will need to document the consitent withdrawls from the account and show the deposits going into your checking account. A lot of retirees also do a little work on the side. But unless you pay taxes and can prove it with tax retunrns then that income will not be used for qualigying purposes.

Self Employed borrowers have the hardest time qualifying for loans becuase often the income that they make is not necarrily reflected in their tax returns. Often a Self employed borrower will write off a lot of expeneses needed to make the money but that adjusted income is now what is used to qualify and is quite a bit lower. Often the most affluent of our society is self employed, has a great credit credit history and money in the bank, but becasue of the way our tax system works, they can’t qulaify for a home loan.

I have helped all sorts of borrowers figure out ways to qualify for mortgages. Call or email me today and let me answer all your mortgage questions. Dealing with a seasoned professional will often save you a lot of headaches in the long run. 707-328-1233. Hunt For Your Loan

Residential mortgage interest rates for Sonoma County residents continue to hover around all time lows. Whether your in the market for a 30 year fixed or 5 year fixed rate ARM you will still find extremely low mortgage rates. But the Gov’t just anounced that they have added 1.6 Trillion, Yes Trillion dollars, to our national deficit, bringing our total debt to right around 13.5 Trillion. UGH!
Soif that is depressing look at it this way…Mortgage Rates just can’t get any lower. I just don’t see how they could. With all this cheap money available to corporations stock piling their reserves, inflation will have to come into the picture which in turn will raise Mortgage interest rates.
And what are you going to do? You have sat around waiting for interest rates to get lower and you have missed the boat. That house you have always dreamed of is now out of your price range becasue lets face it. The cost of that beautiful house in Windsor is not the price…it is the monthly payment.
And if you are sitting on a 5% or higher Mortgage rate thinking that they have to get below 4% before you can Refinance then think again. In most cases, Interest rates only really have to be about 5/8ths lower to have a significant effect on your monthly payment so that it is worth it to refinance.
Call me now and lets figure out just how low these rates really are and how I can help you take advantage of them. 707-328-1233