About Rhonda Porter

Rhonda Porter is an NMLS Licensed Mortgage Originator MLO121324 for homes located in Washington state. Her blog, The Mortgage Porter, is nationally recognized for sharing relevant information to consumers about mortgages. She has been originating mortgages since 2000 at Mortgage Master Service Corporation #40445 Consumer NMLS Website: http://www.nmlsconsumeraccess.org/TuringTestPage.aspx?ReturnUrl=/EntityDetails.aspx/COMPANY/40445 NMLS ID 40445. Equal Housing Opportunity. You can follow Rhonda on @mortgageporter, Facebook and/or Google+

FHA Mortgage Insurance Premiums Increased for Most and Reduced for Few Streamlined Refi’s

Earlier this month, FHA mortgage insurance premiums (both annual and upfront) were dramatically increased for purchases and refinances with exception to *some* FHA streamline refinances.  If you were preapproved with an FHA insured mortgage prior to April, you should check with your mortgage professional to make sure your preapproval is still valid with the increased mortgage payment.  Remember, it’s your mortgage payment (debt to income ratio) and down payment that determines how much home you qualify for.

Upfront mortgage insurance premiums (typically financed) has been increased to 1.75% of the base loan amount.

Annual mortgage insurance for FHA loans with terms greater than 15 years (30 year fixed and adjustable rates) are now 1.2% of the base loan amount if your loan to value is 95% or lower; if  your loan to value is greater than 95%, the annual mortgage insurance premium is 1.25% of the base loan amount.

For a 15 year fixed rate FHA mortgage, if your loan to value is 90% to 78.01%, the annual mortgage insurance premium is 0.35% of the base loan amount; loan to values over 90% will have annual mortgage insurance rates of 0.60%.   NOTE:  If you have a 15 year fixed FHA mortgage and your loan to value is 78% or lower, there is no annual mortgage insurance required.

If you have what’s considered an FHA “high balance” mortgage, which in the Seattle area, would be a base loan amount of $417,001 to $567,500 for a single family dwelling, annual mortgage insurance premiums are set to go up again effective on case numbers issued June 11, 2012 or laterHUD is scheduled to increase annual mortgage insurance premiums for FHA Jumbos/High Balance loans by an additional 0.25%.

Annual mortgage insurance is paid in your monthly mortgage payment. To determine how much your annual mortgage insurance premium will be, multiply the percentage reference above by your base loan amount and divide by 12.

**So how about those lucky folks I referenced above who may qualify for reduced FHA premiums?  HUD is dramatically reducing mortgage insurance premiums for FHA streamlined refinances IF the FHA loan was endorsed by HUD before June 1, 2009.  “Endorsed” is different than when your loan closed – it’s when HUD insured the FHA loan. This process often takes place several weeks AFTER the mortgage has closed – you may have closed your refinance on April 30, 2009 and if HUD endorsed it on June 1, 2009 (or later) you won’t qualify for the reduced rate.

Those who qualify will benefit from seeing their upfront mortgage insurance premium reduced to 0.01% and annual mortgage insurance reduced to 0.55%.  This is effective on FHA case numbers issued June 11, 2012 or later.  The good news is that you don’t have to wait to lock in your rate if your FHA loan qualifies for the reduced rate – you can start your application now!   Your local mortgage originator can probably help you determine when HUD endorsed your FHA insured loan – I’m happy to help if your home is located anywhere in Washington state.

No Fooling: FHA MI going up again April 1

HUD has announced that effective on FHA case numbers obtained on or after April 1, 2012, FHA mortgage insurance premiums will be higher.

Upfront Mortgage Insurance Premium (UFMIP) will be increased on all FHA loans from 1.00% of the loan amount to 1.75%. Most borrowers opt to add this cost to their loan amounts as FHA will allow this cost to be financed.  Homeowners who elect to take advantage of an FHA streamlined refi may receive a portion of the upfront mortgage insurance premium credited back towards the refi closing cost.

UPDATE:  FHA will have REDUCED mortgage insurance premiums for streamlined refi’s IF the FHA mortgage that is being refinanced was “endorsed” by HUD prior to June 1, 2009.  Click here for more info.

The annual mortgage insurance premium will be increasing an additional 0.10% and for those borrowers with a “high balance” FHA loan will see their premiums go up an additional 0.25% (for a total increase of 0.35%) on June 1, 2012.

The annual mortgage insurance premium is part of an FHA borrower’s monthly mortgage payment and remains with the loan for a minimum of 60 payments AND 78% loan to value is reached.

On a $417,000 loan amount, the difference in payment is around $48 and on a high balance $567,500 loan amount, the difference in payment is about $184.

If you are considering an FHA mortgage, whether it’s for a refinance or purchase, and you have the ability to start the loan process in March and obtain your FHA case number, I highly recommend contacting a local mortgage professional (I’m licensed only for homes located in Washington state) and see what your options are.

UPDATE MARCH 6, 2012:  HUD has just announced that there will be reduced mortgage insurance rates for FHA streamlined refinances where the FHA loan that is being refi’d was originated prior to June 1, 2009.  A mortgagee letter will follow with more details.

Mortgage Tech Summit is Next Week!

Last year, I had the privilege to attend and participate in the first Mortgage Tech Summit in Denver.  Next week, on February 9th and 10th, the next MTS will be taking place in Scottsdale.MTSAZ12
If you’re a real estate professional, come on out and join us…especially if you are a fellow mortgage originator.  The ticket prices are progressive, meaning that they become more expensive with every ticket purchased – right now, you can attend this two day event for just over $40! And with every ticket purchased, the price for admission increases.

Even if I was not a speaker at this event, I would gladly pay the price of admission and fly down to sunny Arizona to attend.  This is a great event! 🙂

Lenders Jacking the Cost to Extend Locks

A lock extension is what is required when a loan does not close in the time frame as arranged with the original lock. Locks are available for 30, 45 or 60 days with the longer the period of time available for the lock, the higher the cost. So if you have a 30 day lock and for what ever reason, your transaction has not closed by day 30, you’re in a situation where the lock may need to be extended.  It used to not be a huge expense if you were 1 day late past the extension, most lenders charged around 0.125% for an additional 7 days (extensions are typically offered in blocks of time, like locks).

Our government elected to pay for the Temporary Payroll Tax Cut by demanding a 0.10% fee on all new mortgages generated by Fannie or Freddie (conventional) and FHA. This roughly pencils out to an increase in rates of about 0.125% give or take.  What some banks have also done, is to increase the cost to extend loans. Some banks/lenders are calling this “temporary” and others are not.

Here’s a sample from one lender who recently increased their extension fees for a second time!

extension

For example, if you have a $300,000 loan amount, prior to the government’s “G-Fee” your extension fee would have been 0.125% of $300,000 = $375.  After February 2, 12, with this lender your cost to extend a rate for 7 days is now a whopping $1,875.

Every lender has their own extension fees. I recommend asking your originator what the cost may be should you need to extend.

Other possible options to consider, depending on where rates are should your lock be expiring, is letting a rate expire and re-locking, if your lender permits. Lenders have different policies with that as well and it’s important that you discuss this with your mortgage originator.

Are Buyers Getting Ripped Off with REO Escrow Fees?

[Warning: rant ahead].

Recently I’ve closed a couple of REO transactions lately where I’ve been dismayed at what the escrow companies are charging the buyers. They claim it’s is warranted because of the extra work that goes into processing a bank owned property…I could almost buy this EXCEPT it’s not the buyer who has created any additional work.

Adding to my frustration is that this exorbitantly higher escrow fee tends to not be split equally between the buyer and  seller (the bank or lender). I’ve heard of builders receiving discounted escrow fees, however the buyer pays what would have been the normal half.  With the REO’s I’ve seen lately, the fees have been almost double what I would consider “normal”.  Some of the fees have been so high, it can jeopardize a smaller transaction becoming a “high cost loan”.

On a recent closing, on a $70,000 condo in West Seattle, I called to obtain a quote from an escrow company where Freddie Mac was the seller. The quote I received was for $848. I asked the assistant if this was the full fee or the buyers half, since the quote I was using from my preferred provider was $438. She replied “full” (meaning the $848 would be split 50/50 between seller and buyer). When we received our estimated HUD, the buyer’s escrow fee was jacked back up to $848 and to make matters worse, the escrow company was trying to not honor their written quote to me. After dealing with several managers, the escrow company agreed to meet my quote of $438…it’s not half of $848 but it’s definitely closer to what would be a fair escrow fee for the buyer in this price range.

To add insult to injury, it seems the service from these escrow companies is lack-luster to say the least. It’s as if the company “won” a big bid and therefore service to the buyer, the consumer, just isn’t important since there will be plenty of gravy business to continue.

Home buyers can shop for their escrow provider, however when it’s an REO situation, 9 times out of 10 (if not all of the time), the escrow company has already been dictated.

I understanding charging more when there is more work that is actually being done with a transaction – as long as it’s fair and reflects the actual level of work that’s being done on that transaction.

It really frustrates me.

SIDE NOTE: I’ve only had excellent service from Legacy Escrow – my rant has NOTHING to do with them.

Rant over…for now!  🙂

2012 Conforming and FHA Loan Limits for King County

The 2012 Conforming and FHA loan limits for King, Pierce and Snohomish Counties have been announced… ready for a little twist?  Conforming loan limits will remain the same as they currently are and FHA loan limits will be restored to the higher “temporary” loan limits that were available prior to October 1, 2011.

For a single unit residential property in King, Snohomish and Pierce County, the 2012 loan limits are:

  • $506,000 Conforming
  • $567,500 FHA – NOTE: FHA loan limits are effective as of November 18, 2011.

Yep… for the first time (I’m guessing ever) FHA loan limits are higher than conforming!  I’m reading in the blogo-sphere that the higher FHA loan limits are available – HOWEVER, I am not seeing this from HUD (on their loan limit site or a Mortgagee Letter) or from any of the lenders I work with.  Until I see something from HUD or a wholesale lender saying they’re accepting the higher FHA loan limits, then my assumption is that $506,000 is the loan limit through the end of this year.  If I learn otherwise, I’ll let you know!

UPDATE December 5, 2011:  HUD published a mortgage letter Friday and updated their website this morning (or in the wee hours last night) with the higher loan limits.

Financing Your Seattle Starter Home

Ardell is beginning a series about styles of starter homes in Seattle. I thought I’d offer a companion post on a few different financing options for that home based on the list price she’s suggesting of $350,000.

Rates quoted in the post are effective as of November 1, 2011 at 2:00 pm.  I’m using 1.25% of the sales price/12 for the property monthly taxes and estimating home owners insurance at $50 a month – a total guestimate on my part.  I’m using a low-mid credit score between 720-739. Adjustable rate mortgages are also available – however in the interest of getting this post up in a timely manner, I’m sticking with 30 year fixed rates with minimum down payment scenarios.

A majority of first time home buyers may lean towards FHA for financing if they’re shy a significant down payment.  FHA currently allows a minimum down payment of 3.5% of the sales price, which can be gifted by a family member. Sellers can contribute up to 6%, however it must go towards closing costs and prepaids – it cannot be applied towards the down payment.  FHA has upfront and annual (paid monthly) mortgage insurance which is slightly reduced if the borrower puts at least 5% down instead of 3.5%.  Another plus about FHA insured loans is that they may be assumable to a future qualified buyer.

FHA 30 Year Fixed at 3.750% (apr 4.581) currently offers rebate pricing which reduces closing cost to approx. $256 with prepaids/reserves being additional.

  • Principal & Interest payment = $1579.81 plus mortgage insurance of $323.68 and est. taxes & insurance of $415 = total monthly mortgage payment of $2,318.49
  • 3.5% down payment = $12,250 minimum borrower contribution (can be gifted by family member)
  • Seller can pay closing cost plus prepaids/reserves estimated at $2940.  Total funds estimated for closing at $15,190.

In my opinion, more sellers should be willing to accept VA buyers – I’m saddened more don’t just on the basis these brave people served our country.  VA loans are not as challenging as they once were.  The Veteran cannot pay for the escrow fee, other than that, unless the seller wants to pay for closing cost (as they may with most any other type of transaction) the cost is minimal or no different for the seller.  VA just reduced the funding fee for these loans – making them more attractive to our Veterans.   Many qualified Veterans opt for to use this program as it offers zero down financing and no annual mortgage insurance and it’s a benefit they’ve earned.

VA 30 Year Fixed at 3.750% (apr 3.898) also has some rebate pricing (not as much as the FHA scenario) with closing cost (not including the buyer’s escrow fee) estimated at $1887 with prepaids/reserves being additional.

  • Principal and interest payment = $1643.60 plus taxes and insurance of $415 = total monthly mortgage payment of $2,058.60.
  • Zero minimum down payment required.
  • Total estimated closing costs and prepaids = $4592 which the seller can pay if negotiated in the purchase and sales agreement.  Total funds for closing estimated at $4592.

Conventional 5% down payment with private mortgage insurance.  Private mortgage insurance has been gaining in popularity for those who can qualify for it. This is mainly due to HUD’s latest increase to FHA’s mortgage insurance premiums.  With a 5% down payment, the seller can pay up to 3% of the closing closing cost.  There are different options with how private mortgage insurance with how it can be paid.

All of the conventional scenarios are with a 5% down payment of $17,500.

30 Year Fixed with Monthly Private Mortgage Insurance: 4.125% (apr 4.777).  Closing cost with the current rebate is approx. $2,930.

  • Principal and interest payment = $1641.46 plus mortgage insurance of $249.38 plus taxes and insurance of $415.00 = total monthly mortgage payment of $2275.84
  • Total estimated closing cost, reserves and prepaids = $5853 which could be paid for by the seller.  Total funds for closing estimated at $23,353.

30 Year Fixed with Single Premium Mortgage Insurance: 4.125% (apr 4.391).  Single premium mortgage insurance is just that – mortgage insurance that is paid for in one lump sum at closing. With 5% down, I think it’s rather expensive however, if the buyer was able to negotiate the seller paying for closing cost, it would really be worth having it go towards this.  Closing cost with rebate plus the single premium mortgage insurance comes to $10,278.

  • Principal and interest payment of $1611.46 plus taxes and insurance of $415.00 = total monthly mortgage payment of $2026.46.  NO monthly mortgage insurance.
  • Total estimated closing cost, reserves and prepaids are estimated at $13,201.  The most the seller can contribute is 3% with a 95% loan to value, which is $10,500.  Buyer would need at least $20,201 including down payment assuming the seller contributes the maximum 3%.

Split-premium mortgage insurance is a combo of monthly and single premium and I think a more likely scenario at 5% down than a single premium scenario.

30 Year Fixed 4.125% split-premium mortgage insurance (apr 4.586%).  Closing cost with current rebate pricing and reduced upfront mortgage insurance premium is estimated at $6709.

  • Principal and interest payment of $1611.46 plus mortgage insurance of $130.23 and taxes and insurance of $415.00 = total estimated mortgage payment of $2,156.69.
  • Total estimated closing cost, prepaids and reserves are estimated at $9,178 which the seller could hypothetically pay for since it’s under the 3% cap.  Total funds for closing are $26,678.

Now if this home was a Fannie Mae Homepath property (meaning the seller is Fannie Mae) it would qualify for the Fannie Mae Homepath mortgage which does not have private mortgage insurance (for credit scores over 660) and there is no appraisal required.  Fannie Mae Homepath will go as low as 3% down payment for owner occupied and 10% down for investment properties – however we’re just talking about buying your first home (primary residence) in this post. 🙂  You do receive preferred pricing at 5% down over 3% so if you can come up with that extra 2%, I highly recommend it! With Fannie Mae Homepath, the seller can contribute up to 6% of the closing cost if negotiated in the purchase and sales agreement.  Fannie Mae often has buyer incentive promotions where they chip in for a majority of the closing cost.

30 Year Fixed Fannie Mae Homepath Mortgage with 5% down payment:  4.875% (apr 4.947%) with closing cost based on factoring current rebate pricing at $2124.

  • Principal and interest payment of $1,759.62 plus taxes and insurance of $415 for a total monthly mortgage payment of $2,174.62.
  • Total estimated closing costs, prepaids and reserves are estimated at $5,148 which the seller could pay for. Total funds due at closing estimated at $22,648.

USDA loans also offer 100% financing but are not available in Seattle.  If this home was located in more rural areas, such as parts of Redmond or Duvall, it would possibly qualify this type of financing.  Since we’re talking about buying your first home in Seattle, I’ll leave USDA for a future post. 🙂

PS: I know I refer to the seller being able to contribute towards the closing cost on this post several times.  Real estate agents and or builders may contribute as well however, the total contribution amount (seller + agent + builder) cannot exceed the percentages that I’ve referenced.

Washington Association of Mortgage Professionals Celebrates 25 Years

WAMPNext Thursday evening, the Washington Association of Mortgage Professionals has organized a “gala event” to celebrate it’s 25th anniversary and recognize “the best of the best” in the real estate industry from mortgage originators and companies to title, escrow and real estate agents.

michael-colagrossiI thought I would take a few moments to interview Michael Colagrossi, CEO of First Rate Financial (NMLS #60862 MLO#60242) who has been a member of WAMP for the last seven years and is currently serves as the Vice President and in charge of the Mortgage Broker Council, among other duties.

I have had the opportunity to get to know Michael via WAMP and various social media avenues.  My questions to Michael are in bold with his answers following in italic.

Michael, how has WAMP benefited you and your company? WAMP has allowed our company to become more involved with the ongoing changes in the mortgage industry and how to be proactive verses taking a reactive stance.  I also think as a professional it is important to take time to contribute to ones professional association for building and being involved  in a community of professionals allows one to share best practices, knowledge and experiences which benefit everyone.

In your opinion, what are the most 3-5 important contributions WAMP has made to the industry? First and foremost, I believe being in an association that has stood the test of time for 25 years being here are a resource to our industry as well as local and national outlets is a contribution in itself.   We interact with local government whether it be meeting with Maria Cantwell’s office to become their source of information for mortgage related questions, or meeting monthly with DFI in Olympia to give feedback on legislation and how we believe it impacts the citizens of Washington and those in our industry.

Secondly our ability to promote our professional among the public is important and what our members have to go through on a yearly basis to maintain their professional status. This can be seen by visiting our newly launched website at www.mywamp.org.

Third, we are an outlet for not only Mortgage Loan Originators but also all industry professionals ranging from appraisers, insurance agents, title and escrow professionals to voice their opinion in a social setting at our events.  I think sometimes just getting together helps make us realize everyone has a support system and there are others out there fighting the good fight.

WAMP has made it 25 years – what does the future bring for WAMP? Our organization has gone through ups and downs and we recently reorganized WAMP to better reflect the economy. Flexibility and more important, the people we have that volunteer on our board is what helps keep us going. For this is a volunteer organization and without everyone contributing, we would not be here today. We are currently growing and look forward to continuing our progress into the decades to come!

Can you tell us a little about the event next Thursday that is celebrating WAMP’s 25th anniversary? The event is meant not only to celebrate our organization turning 25, but more importantly to recognize the professionals in our industry who go above and beyond for their clients and fellow business partners. The awards re meant to let the community know more about these individuals and teams and acknowledge their contributions over the last year. This event is also a time for everyone to take a load off and celebrate a great year for with all the ups and downs, sometimes we forget to take a step back and smile and realize that life is not all bad and there is light at the end of the rainbow.

Thanks, Mike! 🙂

If you would like to attend this “black tie optional” event, RSVPs technically close tomorrow with limited rsvps next week.   Martin Kooistra, CEO of Habitat of Humanity’s Seattle/South King County is the Key Note Speaker with the awards dinner following.

I hope to see you at the Renaissance Hotel in Seattle on Thursday, October 27th.  RSVP here.

PMI Mortgage Insurance Company is no longer writing new polices

2011-08-20_1844At 6:38 pm on Friday, August 19th, I received an email from PMI Mortgage Insurance Company that they can no longer issue new private mortgage insurance policies as of Friday, August 19, 2011.  Private mortgage insurance is used when you have less than 20% home equity and are not using a program such as FHA, VA or USDA.

We are writing to inform you of the very recent regulatory decisions that have impacted our ability to write new commitments. Specifically, PMI Mortgage Insurance Co. (“PMI