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Real Estate - Mortgage

Watchdog: FHA incorrectly insured $1.9 billion in mortgages in 2016

A new report from a federal watchdog finds that the Federal Housing Administration incorrectly insured approximately $1.9 billion worth of mortgages in 2016. The new report, which was published recently by the Department of Housing and Urban Development Office of Inspector General, found that in 2016, the FHA insured an estimated 9,507 borrowers who were actually ineligible for FHA insurance because the borrowers had either delinquent federal debt or who were subject to federal administrative offset for delinquent child support. “Of loans closed in 2016, FHA insured more than 9,500 loans worth $1.9 billion, which were not eligible for insurance because they were made to borrowers with delinquent Federal debt or who were subject to Federal administrative offset for delinquent child support,” HUD-OIG noted in its report. “As a result, the FHA insurance fund faced a higher risk of loss, and the government in general did not realize the benefits of the Debt Collection Improvement Act.” The issue is this: The FHA’s guidance prohibits lenders from continuing to process a mortgage application for an FHA-insured mortgage for borrowers with delinquent federal non-tax debt, held by agencies like the Department of Education, the Department of Justice, the Small Business Administration, or the Army and Air Force Exchange Service. Additionally, federal regulation allows an offset of federal payments to satisfy delinquent non-tax debt owed to the government and to collect past-due child support obligations. Now, it should be noted that the number of ineligible mortgages was a small percentage of the total number of loans the FHA insured in 2016. Rather, the watchdog reviewed a small sample and extrapolated the results of that exam out over the entire population. We used these results to project the total number and value of ineligible loans insured by FHA. “We recommend that FHA put $1.9 billion to better use by developing a method for using the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers,” HUD-OIG noted. “We also recommend that FHA revise the single-family handbook to comply with the regulation that prevents loans to borrowers with delinquent child support subject to Federal offset and schedule the timely renewal of data-sharing agreements to prevent data loss in the Credit Alert Interactive Voice Response System or discontinue use of CAIVRS if the information duplicates the information available in the Do Not Pay portal,” HUD-OIG added.

3 Reasons to Use an Adjustable-Rate Mortgage

However, there are some situations when the adjustable-rate option could make good financial sense. In other words, if you're sure that you'll move in four years, a 5/1 ARM can be a good move for you. On a $200,000 mortgage, this is the difference between monthly principal and interest payments of $1,041 and $966 -- a significant savings. You have reason to believe your credit will improve Another valid reason for considering an adjustable-rate mortgage is if you have so-so credit now, but believe your credit will be significantly better by the time your initial rate period is over. If you have a few charge-offs on your credit report that are five years old, there's reason to believe that your credit will jump substantially higher in two years, provided that you're responsible between now and then. The reason this can be a smart idea is that mortgage rates offered to borrowers can vary dramatically depending on credit. According to myFICO.com, the average borrower with an 800 FICO score, which is considered to be top-notch credit, can expect a 30-year mortgage rate of just 4.19%. With a $200,000 mortgage, the higher rate means a monthly payment that's nearly $200 more. Here are a couple of good reasons for this: If interest rates are high when you obtain an ARM, the likelihood of a sharp increase when your rate resets is much lower than if rates are near record lows when you obtain the loan. The takeaway The general theme here is that an adjustable-rate mortgage can be a smart idea if you don't plan to keep the loan beyond the initial "teaser" rate period, either through selling your home or refinancing the loan.

Millennials on the move: the best and worst states to live in

For Millennials looking to buy a home, a new ranking suggests heading anywhere but the South. That’s where the majority of the nation’s worst states for Millennials are located, with New Mexico, West Virginia and Mississippi leading the pack. Its quality of life ranking is also among the best in the country. Texas is the highest-ranked southern state at No. 1 for lowest Millennial housing costs, followed by West Virginia, Kentucky, Arkansas and North Dakota, while the highest Millennial homeownership rates are in Minnesota, West Virginia, Indiana, Utah and Delaware. Millennial income is highest in D.C., New York, Massachusetts, Washington and California, while Millennial unemployment rates are lowest in North Dakota, Nebraska, South Dakota, Iowa and Utah. Verify your new rate (Apr 25th, 2018) Where not to move The South claimed nine of the 10 worst states for Millennials, with New Mexico coming in dead last. West Virginia, Mississippi, Alabama, Louisiana, Oklahoma, South Carolina and Florida also made the list of the worst states for Millennials. Get today’s rates Want to buy a home in one of the nation’s best states for Millennials? Show Me Today's Rates (Apr 25th, 2018) The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker.

Americans want to buy but need to be savvier mortgage shoppers

For many Americans the desire to own a home is not being dampened by rising prices. Rather, 37% of adults - rising to 52% among Millennials – say they plan to buy within the next two years, including 48% of those who do not currently own a home. The PenFed Credit Union National Mortgage Survey released Tuesday, also shows that renovation intention remains strong with 54% of homeowners wanting to renovate, even though most (95%) say they like their current home. "Americans are undeterred when it comes to owning their dream home and we are finding that for many that means renovating their current homes," said Craig Chapman, vice president of mortgage sales and business development, PenFed. "At PenFed our second trust loans are up and we expect to end the year with a 20% increase over last year. If they were to pick a dream location, on the beach would be the top choice for 30% with other popular choices including a ranch/farm (22%), in their favorite city (22%), and in the mountains (18%). Most buyers didn’t shop around for a mortgage The survey also shows that many homebuyers are not getting the best mortgage deal, often due to some misconceptions. Almost two-thirds of buyers (65%) didn’t shop around for a mortgage when buying their home and 44% believe that the lowest rate is always the best deal. There is also some confusion around the terms ‘pre-approved’ and ‘pre-qualified’ with 30% believing they are the same and another 22% not sure. More market update:

How student loan debt hurts Millennial home buyers

The impact of student loans It’s no secret that crippling student loan debt keeps many Millennials from buying a home. But according to new data, Millennials with student loan debt aren’t just less likely to own a home. Verify your new rate (Oct 24th, 2018) Buying a home with student loan debt According to a new study from MagnifyMoney, the homeownership rate among Millennials with student loans is just 34 percent — two percentage points lower than those without loans. Homeowners with student loan debt have properties valued 5 percent lower than those without it. According to MagnifyMoney’s Rebecca Safier, there are lots of ways this cohort can get ahead on those loans and open the door to better financial health. “If you can make extra payments, you can get out of debt faster and save money on interest,” Safier said. Look for areas where you can cut down on spending. As a result, refinancing could save you money on interest and help you pay off your student loans ahead of schedule.” Get today’s mortgage rates Millennials now make up the largest share of homebuyers, so hope isn’t lost for these debt-saddled Americans. Shop around and see what mortgage rates you qualify for today. Show Me Today's Rates (Oct 24th, 2018)

Don’t Get a Mortgage Loan Without Doing This

“The Consumer Financial Protection Bureau found that nearly half of home buyers do not look for mortgages with more favorable interest rates. Why?” Well, for one: It’s the Wild West out there. If you’ve gotten even a third of the way through the home-buying process, you know there’s enough paperwork to fill what was supposed to be the guest bedroom in your new place. The process is overwhelming—so much so that simply getting a preapproval from one lender feels like a win. But you shouldn’t stop there! While the market dictates where interest rates hover, different banks and lenders have different offers, so call around and get at least a handful of different quotes before settling. It’s often the case, too, that bigger lenders will match or beat better offers you get—but that’s not something they usually advertise. You have to get in there and play the game. In Worth It, Steinberg uses a $100,000 mortgage example: If you pay this off over 30 years, you’ll end up paying over $71,000 on top of the mortgage amount. Whatever you do: Shop around, and know that almost everything involved in buying a house is negotiable—the mortgage included.

One answer to the lack of affordable apartments might begin at home

They currently rent out the 800-square-foot unit to a friend to live in, with a long-term goal of occupying it themselves and renting out their main house to help finance their retirement. The West Coast has become a leader in both high housing costs and in ADU construction, with California and Oregon mandating that most cities must allow ADUs, leaving only limited power at the municipal level to legislate how the structures look and to whom they can be leased. Portland, Ore., issued fewer than 100 ADU permits as recently as 2010. This concern helps explain why they are so often rented to friends, children and parents. A Portland State University study released this year found that 42 percent of ADU owners built them for long-term rental housing and that 35 percent planned to rent to family members or friends. Suburbs such as Montgomery County, Md., offer a better opportunity for detached accessory dwellings. “This is a crucial opportunity to grow our housing stock and give homeowners the chance to supplement their income, while helping to cover what are very high housing costs,” Reed said. “They tend to think, ‘Oh, this is a little house so it won’t cost that much,’ ” Pogany said. “ADUs still require all of the same infrastructure of a new home, with a similar cost per square foot.” Pogany’s clients tend to spend from $200,000 to $350,000 on accessory dwellings, although that figure is much lower than the average cost of a home in the city. “Maybe our yard is a little smaller, but for the most part, it has worked out very well.

This is the No. 1 source of financial stress in Florida—and it’s not debt...

In Florida, the median price for a home is nearly $300,000, according to real-estate website Zillow, and the median rent is $1,800. And in the expensive ZIP code of Boca Grande, housing prices go dramatically higher: It can cost more than $1.6 million to buy the typical home. It's the cost of living overall. Floridians chose everyday costs. Almost a third of residents "are stressed about paying for everyday living costs," says GOBankingRates. 1 cause of financial stress in the country overall is also everyday living costs, according to the survey. About 32 percent of all respondents chose everyday costs as their top financial stressor, including those in notoriously pricey states like New York and California. Here are some tips to help you get started. Like this story? Subscribe to CNBC Make It on YouTube!

This Is How Much You Need to Make to Afford the Average Home in...

There are a lot of things standing in the way for first-time homebuyers, including just figuring out what you're supposed to be doing and whether a house is even something you can afford. It's intimidating. Cost information website HowMuch.net has endeavored to illuminate a little bit of that dilemma. Here's the methodology. HowMuch.net pulled median home prices for every state from the real estate listing site Zillow. It then put that information through a mortgage calculator to determine monthly payments, with an interest rate varying from 4 to 5% depending on the state's market and a down payment of 10%. Of course, there are a lot of variables at play, including that a state is made up of a bunch of cities that can have wildly different markets. Here are the states with the highest income figures on the map. Hawaii: $153,520 for a $610,000 home 2. Washington, DC: $138,440 for a $549,000 home 3.

Non-Traditional Credit Options For Mortgage Applicants

Bruce Marks, CEO of the non-profit NACA that provides loans to low credit score borrowers, says his company relies on non-traditional credit metrics frequently so I spoke with him to get an idea of what lenders are looking for. Rental Income: This is one lenders will look to first so this is the top priority for making sure you have a documented history of on-time payments. But make sure any changes to the monthly payments have a documented explanation (random example: if you and your ex agree that you'll pay for all of summer camp and travel for the kids rather than paying child support directly to your ex, make sure you have the bill from summer camp in your files so you can show a lender you didn't skip out on payments for a few months). Gig Economy income: In the eyes of some lenders, a steady monthly income from a job such as driving for Lyft or delivering packages for Amazon can be almost as good as a job in from a traditional employer. But it needs to be more than just a few recent months of income. "You look at stability of income. Savings/Practice payments: If you are stashing away money for a downpayment it can help to set up transfers out of your checking account as though they were a regular mortgage payment. If you have extra to put away there's no harm in making extra deposits, but a regular withdrawal that you don't dip in to shows a lender you're ready for a mortgage. It's better if the bill is one that is paid monthly as opposed to quarterly (such as water or sewage bills, which typically only bill a few times a year). If you have any other ideas for non-traditional options to add to the list email me at amydobsonRE@gmail.com or tweet me @amydobsonRE.


How much do millennials have saved for a down payment?

Despite driving much of buyer demand and activity, this group of 18- to 37-year-olds still faces a number of roadblocks on their way to homeownership — namely student loan debt and rising home prices. According to a recent study by Apartment List, since 1980 the median home value has jumped by 60 percent and the average cost of undergraduate tuition has grown by 160 percent. On average, and taking into account expected down payment assistance from family, recent college graduates (those surveyed were renters between the ages of 22 and 35) with student debt are managing to save $6,500 toward a down payment on a home — double the amount of high school grads ($3,400) and half the amount of college graduates with no debt ($13,900). At that rate of saving, Apartment List found it will take college graduates with no debt 7.9 years to save a 20-percent down payment for a median-priced condo. Apartment List says saving for a down payment in an expensive city could take more than 20 years for someone without a college education. SmartAsset’s latest study drives this point home since no “big cities” made their top 10 list of cities with high millennial homeownership rates. SmartAsset notes that millennials can circumvent the long down payment savings process by taking advantage of 3.5 percent FHA loans and first-time buyers programs that many states offer. Average down payment savings and estimated years needed to save a 20 percent down payment are based on data from only those respondents who stated that they plan to purchase a home in the future. Survey responses to questions on down payment savings are stated in ranges (e.g. “$100 to $199”). First, we ranked each city in each metric.