Rates Continue To Drop

Gustan Cho Associates

Low Mortgage Rates And Home Values

Home values throughout the United States continue to climb.  Home prices are at the highest value since the real estate and credit meltdown of 2008.  Home values nationally are up 5.1% from the same period last year, 2014.  Housing demand is overcoming the supply in housing nationally.  This coupled with low mortgage rates and the introduction of the 3% down payment on home purchases on conventional loans and the reduction of the FHA annual mortgage insurance premium has driven home sales and increased home values nationwide.  Many renters are now considering becoming first time home buyers.

Low Mortgage Rates And Reduction Of FHA Mortgage Insurance

Low mortgage rates and the reduction of FHA annual mortgage insurance premium has attracted many renters into buying their first home.  Why rent when you can buy?  Many renters, especially in California, Illinois, Georgia, Michigan, North Carolina, Texas, Florida, and Indiana are paying more than $1,500 or more to rent a single family home.  A lot of times, being a homeowner can be cheaper than renting and you get to write off the mortgage interest on your income taxes. With low mortgage rates and the combination of FHA lowering their annual FHA mortgage insurance premium, a home buyer will have more buying power.

Low Mortgage Rates And Low Down Payment

Combination of low mortgage rates and the re-introduction of the 3% down payment on conventional home purchase loans announced by Fannie Mae and Freddie Mac has sparked interests from renters who no plan on becoming first time home buyers.  The new 3% down payment on a conventional loan for first time home buyers is less than the low 3.5% down payment required on FHA home purchase mortgage loans.  Home buyers normally do not have to worry about closing costs because closing costs can be covered by a sellers concession or in the event if the home seller is not willing to work with a sellers concession, the home buyer can get most or all of his or her closing costs covered by the mortgage lender through a lenders credit towards closing costs.

Home Loan With Bad Credit

FHA, VA, Fannie Mae, USDA, and Freddie Mac have all lowered their credit guidelines to promote homeownership nationally.  FHA has reduced their FHA annual mortgage insurance premium from 1.35% to 0.85%.  Although FHA has lowered their loan limit in the beginning of 2014 to $271,050 nationally, FHA has also raised the FHA loan limits for many parts of the country like California where the areas are classified as high cost areas.  High cost counties in the state of California has FHA loan limits up to $625,050.  Many counties in states like Illinois, Texas, Florida, and Indiana have high cost areas where the FHA loan limits are much higher than the standard $271,050 FHA loan limits.  FHA minimum credit score requirements to qualify for a 3.5% down payment home loan is 580 FICO.  FHA also introduced the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program where it shortens the waiting period after bankruptcy and foreclosure to a one year waiting period to qualify for a FHA insured mortgage loan.  FHA also has loosen the credit qualification for FHA home buyers where collection accounts do not have to be paid to qualify for a FHA loan.  Prior bad credit is acceptable and medical collections do not count and can be ignored by FHA approved mortgage lenders.  FHA also allows for non-occupant co-borrowers to be added on the FHA loan so the main borrower can qualify.  FHA also allows the down payment for a home purchase to be gifted by a relative or family member.  FHA also has the FHA 203k loan program where a home buyer can purchase a fixer upper where the FHA lender can fund the acquisition and construction loan all in one loan with a minimum of 3.5% down payment on the after improved value.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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