Major changes go into affect on the FHA loan program on Monday July 14, 2008. These changes are very significant and will impact the affordability of these loans for many borrowers, especially those will less than stellar credit who can’t put 5% down. Basically, almost everybody in todays market.

Essentially, the Upfront Mortgage Insurance Premium (UFMIP)and monthly Mortgage Insurance IMI) will now be risk based. Even though the borrower has the option to pay UFMIP in cash upfront, it is typically financed into the loan. Bear in mind that UFMIP is not part of the regular closing costs. FHA has always charged a flat upfront mortgage insurance premium for every borrower regardless of credit risk. Until last week UFMIP on the 30 year fixed FHA loan was at 1.5%. The monthly mortgage insurance payment has also always been fixed at 0.5% for the 30 Year loan. These percentages will now change effective Monday.

UFMIP will now be charged on a risk basis, i.e., based on your credit score. It will range from 1.25% for lower-risk borrowers to 2.25% for riskier borrowers. In dollar terms this means that on a $200,000 loan UFMIP can range from $2,500 to $4,500. Remember this is on top of the closing costs and down payment already due. Since this can be financed into the loan, your final loan amount will reflect this cost. Having poor credit will now be expensive even on FHA loans.

Monthly mortgage insurance will vary from 0.5% and 0.55% and is determined by the loan to value. If you are putting less than 5% down than its set to 0.55% but if you’re putting more than 5% down it will be 0.5%. Monthly mortgage insurance is calculated by multiplying the percentage to the loan amount and dividing by twelve. So on a $200,000 loan and a MI rate of 0.55% your monthly mortgage insurance payment is $83.34.

First time home buyers who fall in the hefty 2.25% UFMIP bracket do have a way to obtain a slight reduction to UFMIP. If you are borrowing more than 95% of the purchase price (loan to value) and your credit score is below 559 then you may be eligible for a reduction in your UFMIP by 0.25% - so it would be 2.00%. However, you need to complete a HUD-approved pre-purchase counseling session. FHA will only provide the discount after you have successfully completed the course and will ask for a certificate of completion.

Additional Reading on FHA: Is the FHA Loan Program Right For Me?

Relevant FHA Down Payment Assistance related posts on other blogs:

Arizona Republic Article on DPA
Dear HUD, Stop Being a Bully
Real Estate Road Signs - “Buy A House for $500 Down”
Down Payment Assistance Programs

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Tags: FHA, mortgage insurance, upfront mortgage insurance
Categories: Credit Scores, FHA, Mortgage Insurance, Uncategorized
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I receive a lot of questions on the Home in Five Down Payment Assistance Program. The most popular question is of course regarding the availability of funds for non-targeted areas. Well, if you were waiting for these funds before making your purchase then wait no more. We have some good news today. I received an e-mail this morning that there has been $2,000,000 released for down payment assistance in non-targeted areas.

What does this mean to you then?

This means that money is now available for down payment assistance on properties that are outside the designated targeted zones but inside Maricopa county. Just so everyone is clear here are some quick facts:

• Borrower must be fully approved for a loan program which allows the use of down payment assistance (such as FHA)
• Borrower can use funds to purchase anywhere in Maricopa county.
• The borrower does not need to be a first time home buyer (for these funds).
• Have a property in escrow, appraised and underwritten - since the money runs out quick.
• The rate on this program is 6.3% and the assistance is 5% of the purchase price.
• Funds are disbursed on a first come first serve basis.

This program allows up to 5% down payment assistance.  Funds can be used to pay closing costs as well, it just depends on how you end up structuring the loan with your loan officer.

Just a reminder that these funds are HUGELY popular and go fast, so if you are anywhere close to finding a property…this is a SUPERB time to take the plunge!

Read more on the Home in Five Down Payment Assistance Program.

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Tags: Down Payment Assistance, maricopa county
Categories: FHA, Mortgages, Uncategorized, down payment assistance
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Senator Kent Conrad admits he wasn’t aware that Countrywide gave him preferential treatment on his mortgage and donated the equivalent fee to a charity. Senator Christopher Dodd on the other hand also got a loan from Countrywide but denies he was treated any differently. I don’t know if I buy that necessarily. Shame on Countrywide for treating these powerful senators differently than the regular borrower. It only hurts the industry when big companies try to pull this kind of shenanigan.

Now why is this significatn you ask? Well because these two Senators sit on the Senate Banking Committe, and Dodd is in fact the chairman. This committee has been actively seeking ways to regulate the mortgage industry since early last year.

Now, if I were a Senator on this committee, I’d highly recommend not doing any Real Estate transaction until the credit crunch is fully behind us and any legislation has been dealt with. Or, just doing a cash purchase if you must delve into the market.

Here is the story from Bloomberg:

June 14 (Bloomberg) — Senator Kent Conrad said he was given preferential treatment on a mortgage from Countrywide Financial Corp. and will write a $10,500 check to charity.

“It appears Countrywide waived one point on my mortgage,” Conrad, a North Dakota Democrat, said in a statement today in Washington. “Although I did not ask for or know that I was receiving a discount, and even though I was offered a competitive loan from another lender, I do not want to have received preferential treatment.”

Conrad said he also received a loan from Countrywide on an eight-unit apartment building in Bismarck, North Dakota, even though the lender typically serves properties that have four units or less. He said he had decided to refinance that loan with another institution.

Conrad and Senator Christopher Dodd, who oversees the U.S. mortgage industry as chairman of the Senate Banking Committee, were among those who received loans through Countrywide’s “V.I.P.” program, which waived points, fees and borrowing rules for prominent people, Portfolio magazine reported June 12. Dodd has denied receiving preferential treatment.

Full story here.

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Tags: countrywide, senate banking committee, senators
Categories: Congress and Government, Mortgages, Uncategorized
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Many thanks to all the Windemere agents who attended the Blogging 101 class yesterday (on Thunderbird and 101). I sure enjoyed teaching the class. I owe this opportunity to Chris Mattix, my newest Facebook friend! So, thank you Chris for having me.

As promised here is a link to the Powerpoint presentation from yesterday. Additionally, I have posted the video of a class I did on setting up a Wordpress blog at the Arizona RE Bloggers Network meeting last month.

Arizona Real Estate Bloggers Network Meeting - May 2008 from phoenixrealestatelive on Vimeo.

I do mortgages on the side to support my blogging habit, so please feel free to refer any clients who may be in the market and need a good quality lender! If you browse through this blog you’ll realize that Aimee and I certainly know what we’re doing and we have a history of providing 100% customer satisfaction!

Just a friendly reminder

Post Updated Monday June 16th. Here is the powerpoint slide from my presentation via SlideShare:

| View | Upload your own

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Tags: arizona, bloggers, blogging, phoenix, Real Estate
Categories: Arizona, Bloggers, Blogging, Phoenix, Uncategorized
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…. Young Hillary Clinton!

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Tags: funny, hillary clinton, younger
Categories: Humor and Fun, Uncategorized
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The week just flew by. Hello. Its Friday night already.

The highlight of the week for me was of course Thursday. I was the substitute presenter at the Arizona RE EV Blogging Networks monthly gathering. Jay Thompson, The Phoenix Real Estate Guy, was not able to do the kick off Wordpress training and so I had the honor of stepping in. It was a lot of fun actually. I want to thank everyone for showing up and for your enthusiasm. It is always a pleasure to talk about blogging.

My presentation was a very basic over view of how to set up a Wordpress blog and all that good stuff. It went well for the most part, but the area where I felt I was weak was in actually getting people to start a blog. A few people did end up setting up blogs, but many seemed to just want to listen and take notes. Which is fine. As promised I have uploaded my powerpoint presentation.

A lot of folks out there are hungry to learn about blogs and how to blog. If you have questions and concerns, why don’t you leave a comment on this post and I’ll try to answer it - or someone else could and that way we build a repository of information for agents and lenders eager to learn about blogging. You can still write to me directly if you wish too.

Some of the usual suspects were there - like Christoph, Nick and Doreen. Many thanks to Candace and Shelli for all their hard work in putting this meeting together. Also the our sponsors. Thank you all. See you next month.

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Tags: arizona, bloggers, blogging, phoenix
Categories: Arizona, Bloggers, Blogging, Uncategorized
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Tags: first dance
Categories: Humor and Fun, Uncategorized
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As you enjoy your Labor Day weekend, there are a few things you may be wondering about this day. I know I’ve asked myself what this holiday is all about. I saw this clip from the History Channel, via MSN Video which goes over the basics of Labor Day. It’s a uniquely American holiday designed to honor the worker who makes this country such a great one! Take a few minutes today and watch this video.

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Tags: Labor Day Holiday Weekend
Categories: Uncategorized
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If you can’t pronounce my name correctly then you are not alone. A recent study <*smirk*> found that more than 95% of Americans can not pronounce Shailesh correctly. I’m joking, there was no study. Actually, I’m a living breathing data collector and I can tell you that not many can say my name correctly.

As you can imagine, I’ve heard all kinds pronunciations. My personal favorite is “eye-lashes”.  This came from 5-year old Iliana a few years ago. Her dad was embarrassed when she said it, but  I liked it and wished she would still call me that from time to time. I gave her permission to do so, but she’s too respectful.

I wish people would be a bit more relaxed about the issue. I am not offended if you meet me for the first time and you can’t say my name, heck even if you can’t say it the second time. I can understand that. It’s not a common name in the United States. Even in Nepal, where I’m from it’s not entirely a common name.

So I want to ask my readers (especially those who have not met me or talked to me over the phone) to select the correct way to pronounce my name. I’ve provided options below. Just leave a comment with your guess and I’ll choose a winner next Friday (August 17th).

a) sh-a-lee-sh

b) say-le-sh

c) sigh-lesh

d) shh-ai-leeesh

e) None of the above: __________

As a side note, native speakers of Nepalese will tell you none of these are correct. Which is certainly the case. However, one is definitely more preferable than the rest. Plus, it’s my name and in America you get to tell others how you want to be called.

Next week, how to pronounce my last name - Ghimire!

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Regular visitors will notice that I changed the theme of this blog. There is nothing to worry about loyal readers, AMG was not sold to a multi-billion dollar company or anything dramatic of that sort. It was just a realization on my part that I needed to simplify and personalize the blog to better serve my readers.

One of my hero’s Albert Einstein once said “make everything as simple as possible, but not simpler”. He was referring of course to the laws of Physics. I think it applies to my blog as well. In my previous incarnation I was trying too hard to make things complicated. I was trying to follow the crowd of site masters who have all kinds of goodies on their websites. I was huffing and puffing that my site didn’t have that gadget and that widget. Then I remembered old Al. So, here is the new simplified layout. His simplify message is also relevant to my mortgage philosophy and so will be the theme of this entire blog.

You’ll also notice this blog is now a bit more personalized. I spent some time making this space “mine”. I wanted it to reflect Arizona, my state of residence and place of business. While I can do business in 48 states, I am the Arizona Mortgage Guru, the fearless warrior of home loans. To reflect my geography I placed the mountains of Northern Arizona as my header.

Now that this part is done with, I’ll be back to blogging about mortgages right away!

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