The FHA 15 year fixed program is a great program for Orange County home owners and home buyers. While the downside is the higher payment that comes with a shorter amortization, for those that can handle it, there are thousands of dollars to be saved.

FHA 15 Year Fixed Advantages for Orange County Home Owners

1. The interest rate is lower, by .375 to .5% in rate.
2. The Monthly Mortgage Insurance is less on the FHA 15 year fixed than on the FHA 30 year fixed. And at 90% loan to value or less, the MMI is completely waived.
3. The FHA 15 year fixed is more flexible with underwriting and FICO scores than Conventional Fannie Mae and Freddie Mac programs.
4. FHA allows the combining of a 1st and 2nd mortgage up to 97.75% loan to value, up to a $729,750 loan amount in Orange and Los Angeles counties. Most Conventional lenders will consider this a "cash out" refinance, and won't allow financing over 60 to 65% loan to value.
5. FHA will even allow a "cash out" refinance to 85% loan to value for those who have credit card debt to consolidate.

Example of an FHA 15 Year Fixed in the Orange County City of Irvine

Recently, an Irvine home owner named Mike Jones was considering a refinance. His first mortgage was $440,000 at an interest rate of 5.5%. His payment was $2,611 and he had 27 years remaining on the loan. He also had a 2nd mortgage at a 30 year fixed rate of 6.5% in the amount of $85,000. His payment was $568 and he had 27 years remaining. He had called multiple lenders looking for a way to combine his loan, but due to the drop in his properties value from $700,000 to the current $610,000, it didn't seem possible. For a Conventional loan, lenders wanted his property to be valued at over $850,000. He did find one lender who would go as high as 80% loan to value, but the interest rate would not have been an improvement. Then, Mike contacted a local Orange County Direct FHA Lender located in Irvine, and learned about the FHA program. The downside was his combined mortgage payment would be $4,073, which was $894 higher than his current payment. But the interest rate would be 4.375% (4.534 APR) and there would be no Monthly Mortgage Insurance. Although his payment would be higher, the net effect would be savings over the life of the loan of approximately $300,000. That was hard to pass up. Mike closed the deal and went from the feeling of "my house will never be paid off" to a feeling of "now I can retire in 15 years".

Find an Orange County FHA Expert

Not all lenders know the in's and out's of FHA. Finding an FHA Expert who can prepare personalized loan scenarios based on an individuals situation is critical, before money is spent on an appraisal. Many of the best OC FHA loan officers are able to not only prepare scenarios, but present them in a manner that is easy to understand. Incorporating video into the presentation can help the borrower not only better understand his/her options, but also be able to quickly share the scenarios with his/her spouse or financial advisor. With interest rates remaining low, now is a great time to check into an FHA program.

Over the past 30 days we have seen mortgage interest rates increase quickly. Orange County home owners and home buyers who had been expecting a 30 year fixed rate in the low 4's are now finding rates in the upper 4's to 5%.  Still, rates are near historic lows.

FHA and VA Rates for Orange County Homebuyers

FHA and VA  interest rates had been sitting at 4% to 4.25%, depending on a borrowers FICO score and loan amount. (Loan's over $417,000 tend to have a higher rate - "Jumbo" or "high balance" loan amounts) Now, FHA rates are at 4.75%, with an APR of 5.621. This is still a very low rate, especially considering the FHA loan program only requires a 3.5% down payment.

Will Interest Rates Continue to Increase?

The Fed is doing everything they can to keep mortgage rates low, but there are still outside forces which are having a big effect in rates and the bond market. Issues in Europe (Ireland, Greece, Portugal etc), China's inflation, favorable economic and jobs reports are all factors in what  is happening with rates right now. The bond market picked up 800 basis point from April to the beginning of November. So far, since mid November, we have lost 400 basis point. So we've only lost half of what we gained since April. Depending on how you look at it, we either have another 400 basis points to lose, means rates will go up, or possibly rate will stablize as we head into 2011.

Home Affordability is High in the OC

Despite the increase in rates, home affordability is higher right now than in the past 30 years. A combination of low rates and low home prices and has created a situation where a mortgage payment compares favorably to a rent payment.  The first step in the home buying process is to talk with a local Mortgage Expert. The loan officer whould be able to prepared a "Rent Versus Own" analysis, along with detailed and customized loan scenarios.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact me for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County Home Loan:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

Orange County, CA first time home buyers need to be aware of how a taxes and insurance impound account works on an FHA loan, and how it affects their total mortgage payment. An impound account for property taxes and home owners insurance is required on FHA loans. (It is also required on VA loans.) An impound account, also known as an “escrow account”, is essentially a forced savings account held by the lender on the FHA borrowers behalf.

The Amount Collected for Taxes Depends on the Month the FHA Loan Closes

Property taxes in California are paid twice a year, in 2 six month installments. The first half taxes are due on February 1 each year and cover July 1 through December 31. Second half taxes are due February 1 and cover January 1 through June 30. The amount collected at closing to set up the new impound account is dependent on the First Payment date shown on the loan documents. For example, a loan closing in the month of August, lets say August 30, would have a First Payment date of October 1. According to the chart shown below, loans with a First Payment on October 1 should have 8 months taxes deposited into the impound account.

Since the purpose of the impound account is to make sure property taxes are paid in a timely manner, the lender needs to make sure there is enough money in the account when taxes are due. If we assume a loan closes on August 30 and will have an October 1 first payment, then the lender needs to make sure there is enough money in the account only 30 days after the first payment to cover the first half tax installment, due November 1.  But the lender will also need to make sure enough funds will be in the account three months later to cover the second half installment. Impound accounts are regulated by law and lenders are allowed to have up to a two month “cushion” to help prevent a shortage of funds in the account.

This all sounds confusing, but is necessary in order to keep the borrower from getting a surprise when property taxes are due. (The surprise may come in the way of “supplemental property taxes” in the first year after a purchase.)

Home Owners Insurance is also deposited to the impound account. At closing a one year premium is paid, but the equivalent of two months property taxes is also deposited into the impound account. This ensures there will, or should, be enough money in the account 1 year later to renew the insurance.

Orange County FHA Buyers Need to Budget for the Impound Account

Orange County home buyers using FHA or VA financing need to budget for the funds required for the impound account. Both FHA and VA guidelines allow for the seller to pay for the set up of the impound account, which can be the best solution for Orange County home buyers who have saved for the down payment and not closing costs.

It is important to contact an Orange County FHA or VA lender who can prepare customized loan scenarios which will show estimates for not only the amount of funds required to buy a home, but also will give a full breakdown of the purchase price, loan amount, and payment.

Authored by Tim Storm, an Orange County, CA  FHA and VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

The No Cost Refinance has been very popular in Orange County over the past few months. But how does a No Cost refinance work? Where do the costs go?

Interest Rates for Orange County are at All Time Low's

Interest rates are at all time lows currently.  While many people can't refinance because they have lost too much equity in their home, there are plenty of Orange County home owners with plenty of equity in their home. They are able to take advantage of low rates, provided that can provide all the necessary income and asset documentation that it takes to get a loan these days. There are several programs available for people with little or no equity as well, including Fannie Mae's Home Affordable program, FHA Streamline Refinance program , and VA's Interest Rate Reduction Refinance . The FHA and VA programs do not even require an appraisal, while the Fannie Mae program will allow borrowers to refinance, even if they are at 125% of the properties value. Most Orange County lenders will only allow a refinance up to 105% of the properties value, but that is good enough for most people. Freddie Mac also has a similar program.

Where do the Closing Costs go?

While most mortgages will have closing costs, a No Cost refinance allows the borrower to take a slightly higher interest rate than they would have if they were willing to payment closing costs, and then use "rebate", Service Release Premium", or "Yield Spread", to cover the closing costs. The end result is no increase in the borrowers loan amount. For example, a home owner with a $300,000 home loan may be able refinance to a 4.625% interest rate if they are willing to either pay or finance $3,500 to their loan, ending up with a $303,500 loan amount. Or, they could take a rate of 4.875% and have no closing costs. Their new loan would not increase, remaining at $300,000.  The interesting thing is that the payment difference is minimal. The reason for this is because the payment on  $300,000 at 4.875% is only slightly hgiher than the payment on $303,500 at 4.625%.

The First Step for a Zero Cost Refinance

The first step an Orange County homeowner needs to take to find out if a No Cost Refinance is right for them is to contact a local Orange County home loan expert. A good Lood Officer should be able to quickly prepared customized loan scenarios which will give the details on the options available.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

This is a great Garden Grove, CA property for sale, located at 9129 Bickley Circle, Garden Grove. The price of the home works perfect for Orange County FHA or VA financing! FHA only requires 3.5% down payment. This property, located on a cul-de-sac in the beautiful Landmark development of Garden Grove, is a great family home.

This is a "Normal Sale"

This is not a "short sale", which is a good thing. Short sales can take month to close, if ever. Dealing with a private seller means a faster closing. It is much easier to negotiate with a seller than a bank.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

What Is Needed to Claim the Tax Credit

Two Dates to Be Aware of

Another great piece of real estate for sale in Placentia. This listing is held by Placentia real estate agent Bette Boren with Tarbell Realtors. Placentia is located in north Orange County and is a beautiful, quiet community with surprisingly affordable housing. This townhome, which is located within Sherwood Village. Sherwood Village is located on the border of Placentia and Yorba Linda. You will not hear any street noice as the project is hidden away from the street and is surrounded by trees. 

This property is not subject to normal FHA condo guidelines because it is not a condo. The great thing about a townhome is you own the land. This helps to keep protect the property value and makes getting a loan easier. 
 

How Did the Flip Rule Work?

Why Did FHA Change their Mind About Flip's?

Conditions That Need to Be Met for the FHA Waiver of 90 Day Flip Rule

• <:od>All transactions must be "arms length" with no relationship between the buyer, seller, or other parties taking part in the sale of the property. The lender will need to verify the chain of title for the property to make sure there has not been a pattern of flipping over the past 12 months. Also, the property must of been marketed openly, either on MLS, For Sale By Owner, or some other means.
• The sales price cannot be more than 20% above the sellers purchase price without meeting additional conditions. If the property is being sold for more than 20% above the sellers purchase price, the lender may require an additional appraisal and property inspection. The lender needs to make sure there is a legitimate reason the property is valued 20% higher than the recently acquired price.
• The 90 Day No Flip Rule waiver is only for the "forward" FHA loan program. The waiver will not effect the Reverse Mortgage, or HECM in Orange County.

Not only Orange County First Time Home Buyers, but also real estate investors will benefit from their waiver. First time buyers will have more homes to make offers on, and investors will have more buyers to potentially sell to. FHA is just about the only loan program available for home buyers that allows a down payment of less than 10%. FHA only requires a 3.5% down payment, and the down payment can be a gift. The first thing an Orange County First Time Buyer needs to do is talk with an Orange County FHA loan officer who can prepare loan scenarios based on your qualifications and goals.

1. The Upfront Mortgage Insurance Premium (UFMIP) will be increased from 1.75% to 2.25%. The UFMIP is financed into the loan, so realistically this will not be a big deal. For example, on a $300,000 base FHA loan, the UFMIP would currently be $5,250, resulting in a total FHA loan of $305,250. Assuming a 5.5% interest rate, the principal and interest payment would be $1,733. Using the new 2.25% figure, the UFMIP would be $6,750, resulting in a total FHA loan of $306,750. The payment, using a 5.5% interest rate, would be $1,741 per month. That is only a $8 payment increase. Not a big deal.
2. FHA is updating the combination of FICO scores and loan to value maximum. Currently, FHA does not have a minimum FICO score requirement for a home buyer putting the minimum 3.5% down payment down. Now, a minimum FICO score of 580 is required for 3.5% down payment. If the FICO score is lower than 580 then a down payment of 10% is required. Reality: So what. Most lenders have already instituted a minimum FICO score requirement of 620. Some won't go below 660. This change should have not effect on Orange County First Time Homebuyers. If a homebuyers score is less than 580 then they probably need to work on  their credit before buying a home anyway.
3. Seller contributions will be reduced from 6% to 3%. Reality: Not a big deal, at least for Orange County First Time Buyers. A first time buyer purchasing a home for $350,000 in Orange County, and who needed the seller to pay for closing costs, could have the seller pay as much as $21,000 under the current guidelines. That would be excessive. Under the new guidelines of 3%, the seller could pay $10,500. That would be enough to coverall closing costs (assuming 1 point Origination) and most of the prepaid expenses in most cases. Maybe in areas with lower priced homes, like Tennessee, where you can buy a home for $50,000, will be effected by this, but not Orange County.

Upfront Mortgage Insurance Premium Information