One of the most important pieces for listing agents and sellers to know about FHA appraisals is that the appraiser must make sure that the water, water heater, and gas are all in working order. Bob walks us throug his typical FHA kitchen inspection here and shows us how its done.
FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will also increase by 0.75 percent.
The current upfrtont premium is 1.00 percent.
The current annual premium (collected monthly) is at 1.15% for loans over 95% loan to value, and 1.10% for loans under 95% loan to value.
For a loan size of 500,000, this represents a $3750 increase in closing costs on the upfront premium, and a $500 per year increase on the annual premium. Not too bad. It’s important to note that the annual premium can be financed into the loan amount, so this increase is not too bad if it’s factored over a 30 year term.
It’s important to note that there are many great alternatives to FHA financing with low minimum down payments. Ask your mortgage professional!Jay Sondhi Mortgage Consultant Government Loan Specialist
FHA requires the appraiser to make an inspection of the lighting and heating systems of a property. This is important to note especially for REO properties that may be vacant at the time of listing. It is important for you to know that the water, electricity, and possibly gas must be turned on for the appraisal at the time of inspection.
I’m back with an other quick video from Bob Singer at Tracappraisals with regard to FHA appraisal inspection. There is a common mis-conception about FHA loans. Many folks out there, realtor and borrower alike are under the impression that the FHA will be sending an inspector out to the property to make sure that it will pass muster. This is not true. The appraiser will be conducting an inspection just like any other appraisal, but there are some extra pieces that they will consider. Take a look at this video with Bob Singer as he inspects the bathroom.
I am writing this post to help you understand what the FHA does and does not require in regard to the condition of a property being purchased using an FHA loan. The guidelines have changed in this area as the FHA has loosened up on its property requirements. While these guidelines dictate what the Federal Housing Authority will accept to insure a loan, lenders will generally have “overlays” above and beyond these requirements so it is best to check in with a qualified FHA mortgage specialist with questions about a specific property.
There is a common mis-conception that an inspection by a government inspector is required to close an FHA loan. This is not the case. To close an FHA loan, the appraiser must be FHA certified, and the appraiser must make a some extra warranties on their report. We spent some time with Bob Singer with TracAppraisals here in San Francisco to show us what he looks for when completing an appraisal for an FHA loan.
Here, Bob Singer from TRACAppraisals.com explains the FHA visual appraisal inspection of siding in the first of this series.
With the increasing costs of FHA mortgage insurance, it is nice to see that private mortgage insurance companies have been offering new alternatives. Split MI offers the option for lower mortgage insurance factors in exchange for an upfront fee much like FHA. The program requires 720 credit scores, and 5% down for loans at or below $417k and 10% down for loan amounts to $729,750.
Split MI becomes even more attractive for borrowers with higher ficos and larger loan amounts. It is possible to get monthly mortgage insurance factors down to 0.22%. This is great news, because FHA “annual premiums” have increased from 0.55% to 1.15% in one year!
Unlike FHA, you are not required to pay private mortgage insurance for 5 years. Every lender has its own rules, but most have processes that allow you to petition for mortgage insurance removal when home prices rebound. This is not the case with FHA. FHA mortgage insurance is required until the principal balance reaches 78% of the original purchase price.
I’ve put this table together to show you some different MI options with today’s rates. You can see here that Split MI can save you a lot of cash.
|Monthly MI||Split MI||FHA|
|First Loan Amount||$450,000||$450,000||$454,500|
|First Note Rate||4.5%||4.5%||4.25%|
|MI Premium Rate||0.74%||0.43%||1.05%|
|Monthly MI Payment Year 1||$278||$161||$394|
|Monthly P&I Payment Year 1 (First Mortgage)||$2,280||$2,280||$2,236|
|Total Monthly Payment Year 1||$2,558||$2,441||$2,630|
|Monthly Savings Or Loss||$0||$116||($72)|
|MI Cancellation Eligibility Month||45||45||60|
|Total Interest Paid During 10 Years||$184,013||$184,013||$174,874|
|Total MI Paid During 10 Years||$12,488||$11,756||$23,006|
I’ve recently taken an application for a veteran who will be refinancing their two purchase loans from a couple years back. She will be saving about $700 per month with her new 30 year fixed rate of 4.75%. It reminded me that there are still a lot of folks out there who may not have taken advantage of the low rates available because they thought there was not enough equity in their property to refinance. Without getting into too much detail, I thought I would share three great options to consider if this is the case for you:
If Freddie Mac or Fannie Mae own your mortgage, it may be possible to refinance your current loan even if it’s underwater. Have you checked to see if your loan is Freddie/Fannie? Here are the links.
FHA will insure mortgages up to 97.75% of the home value. The maximum loan amount is $729,750 here in San Francisco County. This loan limit is slated to be decreased at the end of 2011.
If you or your spouse is a veteran, you can borrow up to 100% of your home value. This is a great option for veterans because mortgage insurance is not required for VA loans. The current VA loan limit for San Franciso and San Mateo County is $1,000,000.