- FHA loans in Florida
Sometimes people think that FHA is an acronym that means first time homebuyer. The Federal Housing Authority (FHA) loan isn’t just for first time homebuyers. In fact, you can have multiple FHA loans. It is required that you plan to reside in the home as your primary residence though. It’s conceivable under certain conditions that you could rent your current home with an FHA loan already in place and relocate to another home and get another FHA loan, having two FHA loans at the same time. “FHA” does not mean “first time homebuyer”.
The FHA, administered by the Department of Housing and Urban Development (HUD), places limits on the mortgage amounts in various counties. I guess HUD doesn’t want to be financing homes for the rich and famous buying their mega mansion. They want to finance homes for the common folks like me! HUD changes their limits as prices fluctuate. The limit is going down this time which seems bad, but it’s because homes are so much more affordable now, and that’s a good thing!
My primary area of business is Okaloosa County,Florida. The limit in Okaloosa County is reducing from $312,500 to $271,050. To check the loan limit in your area, click the HUD logo above. It’s important to note that this change affects loans registered (not necessarily closed) with FHA on or after Oct 1, 2011. So if you’re working out a purchase agreement in this price range that isn’t going to close for several weeks or months, that’s ok so long as your lender (me, of course) gets it registered with FHA before Oct 1.
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- Rural Housing loans in Florida
I hope you’ve got your Rural Housing loan ready to close by the end of September 2011. The cost of financing a RH loan will go up for any loans approved by Rural Housing on or after the 1st of October. It’s not a huge increase, but you may want to know about it.
The Guaranteed Rural Housing Loan is already similar to the FHA loan, but it offers financing at 0% down, whereas the FHA loan requires at least 3.5% down. The FHA loan has an upfront fee that is rolled into the loan, and an annual fee spread across the 12 payments. A Rural Housing loan has historically only had an upfront fee. Beginning with approvals on or after Oct 1 the RH loans will have a reduced upfront fee but will be adding an annual fee. The difference in payment for loans approved after October 1 will be about $17/month higher per one hundred thousand financed.
It’s interesting to note that the annual fee is calculated every year based on the average unpaid balance for that year. In other words, the calculation is pretty complex, but makes a little bit more sense than the typical mortgage insurance model. The new RH model only charges mortgage insurance (they call it “Annual Fee”) on the unpaid principal each year, so it reduces over time. Typical mortgage insurance is a flat fee calculated upfront and doesn’t reduce regardless of how much you pay down your loan. So while the RH fee is more complicated, it’s fairer, at least in my humble opinion.
Remember the RH loan has household income limits you can access here, and is only available in some areas. To find eligible areas, click here. My primary area of business is Okaloosa County, Florida. The income limit in Okaloosa county is $102,500/year for a household of 5-8 and $77,650 for a household with 4 or less people. If your household earns more money than the household limit (kids included), you can’t get a Rural Housing loan.
The Rural Housing loan is an excellent program if you and your property are eligible!
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We’ve heard the bad news again and again recently. I understand full well that we’re in a time of economic uncertainty at present. In fact, maybe it’s not an “uncertainty” in your case, but more of a “certainty” as you too are feeling the pain of an economic downturn like we haven’t seen in at least 30 years. There is some good news however!
- The Producer Price Index (PPI) released today which measures overall inflation indicates that inflation levels are actually lower than expectations. This is primarily due to a huge decrease in the cost of gasoline. Of course an increased cost of gasoline causes the price of almost everything to increase commensurately, as it takes fuel to produce and deliver goods, and ultimately fuel to store and display goods to be sold. Thus “Core PPI” which excludes fuel and food rose to it’s highest level in almost 20 years. Certainly the Core PPI should be considered a lagging indicator as the numbers are so dramatically affected by the cost of energy. Thus, the cost of goods you buy should be falling soon with the falling price of energy!
- Additionally, because inflation is not considered to be a problem, mortgage interest rates are continuing to fall. I have been saying for weeks now that I predict interest rates will continue to fall, and indeed we’re seeing that happen!
- The Veterans Administration recently announced that they will allow refinances of up to 100% of the appraised value of the home. This means that whether you have a VA loan already, or you only have a conventional loan but have VA eligibility, you can refinance to today’s low interest rates for up to 100% of the appraised value of your home. This can include receiving cash from the closing!
- And finally, if we look at history we see that in fact we may be ready for a huge market reversal! Check out this Big fall, then big gain! – The S&P 500 lost 16.8% (total return) in October 2008, near the fall of 14.5% in August 1998. In the 12-months after that 14.5% decline, the S&P 500 gained +39.8%! The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market.
I’m looking forward to next week, as we’ll be celebrating Thanksgiving! If you have a question about anything mortgage related please feel free to call me! And, subscribe to this blog!