Saturday, February 28, 2009

FHA and Conforming Loan Limits Released

FHA and Conforming Loan Limits Released The U.S. Department of Housing and Urban Development has released new FHA and conforming loan limits based on changes enacted last week as part of the massive economic stimulus bill.

Under the legislation, loan limits in high-cost areas are increased to $729,750, the same as last year. They had dropped to $625,500 this year before passage of the legislation. In a Mortgagee Letter released yesterday on the change, HUD says the new loan limit for an area will be based on market calculations from either this year or last year, whichever is the higher of the two calculations

Given current market conditions, many areas are staying at the 2008 mortgage limit. The loan limits can be accessed in a searchable form on HUD's Web site.

REALTOR® Magazine Online

Sunday, February 22, 2009

5 Tips for Homebuyers Seeking a Mortgage

5 Tips for Homebuyers Seeking a Mortgage

Here’s a warning for potential borrowers: Nervous lenders have tough new rules and are paperwork crazy."Borrowers are going to have to prove they are the borrower they say they are," says Keith Gumbinger, vice president of HSH Associates, a mortgage-industry publisher in Pompton Plains, N.J.Gumbinger says homebuyers should consider these things before they apply for a loan.

1. Down payments are critical.Borrowers should expect to put down at least 10 percent for a “conforming loan” – a mortgage that Fannie Mae and Freddie Mac will purchase.

2. Credit scores count. A 720 on the 850-point FICO rating scale will get a borrower access to the best rates. Rich Bira, branch manager of FCM Direct Lender in Chicago, says: "A score between 720 and 739 gets 0.125 percent added to the rate, a score between 700 and 719 gets 0.375 percent added to the rate, and a score between 680 and 699 gets 0.5 percent added to the rate.”

3. Consider VA and FHA. Borrowers without down payments or with less than stellar credit scores should consider these government-insured loans offered through the Federal Housing Administration of the Veterans Administration.

4. Unearth the records. Before applying, borrowers should organize tax, banking and other records that prove income, savings and debts. They should also expect to be patient about what may seem to be endless requests for information.

5. Get rid of debts. Limiting debts, including what borrowers expect to pay for the mortgage, to less than 43 percent of gross income is important.

Source: Chicago Tribune, Mary Umberger (02/15/09)