Big News for FHA Loans

Article by Brandon Byrd, LoanSouth Mortgage

The Federal Housing Administration (FHA) is wasting no time putting at least one of the Obama administration’s housing finance reforms into place. The agency announced last month that it is implementing a new premium structure for FHA-insured mortgage loans.

FHA is increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point on all 30- and 15-year loans. Currently the month premium is based on a rate of .90 but after April 18th that goes up to 1.15% for loans with a CLTV greater than 95%. The upfront MIP will remain unchanged at 1.0 percent, and the new structure applies to all new loans insured by FHA on or after April 18, 2011.

FHA Commissioner David Stevens says the annual payment adjustment will increase borrowers’ costs about $30 per month and will help to strengthen the agency’s depleted coffers.

“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” Stevens said in a statement.

He continued, “This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”

Currently a FHA loan with a base loan amount of $200,000.00 would carry a month mortgage insurance premium of $150.00 but after April 18th that will rise by $41.67 a month to $191.67.

Fortunately, the private mortgage insurance companies have been keeping pace and rolling out new product offerings consistently since last year. Conventional 97% financing is back and the down-payment can even be a gift! This is great news for the market overall and a relief to those looking to purchase properties that may not be eligible for FHA financing. However, this does not eliminate FHA as an option for low down payment financing. Conventional financing with MI does have much more stringent requirements for debt-to-income, credit scores and seller contributions.

We here at LoanSouth have many great PMI options to help give you the consumer a better variety of options rather than just FHA financing. These options include lender paid mortgage insurance, split premiums and financed mortgage insurance. My personal favorite is the financed premium because in nearly every scenario, the financed PMI option saves you the borrower significantly on a monthly basis compared to other loan and PMI options. LoanSouth has premium pricing with several MI companies which means we consistently price out better than our competitors who may not have the same PMI options.

To find out more about LoanSouth’s mortgage programs please contact Brandon Byrd at 404.915.8252 or by email at bbyrd@loansouth.com.

*Nothing in this publication constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes; it does not constitute an advertisement and is not to be construed as a solicitation. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning LoanSouth Mortgage, Inc nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. The report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Brandon Byrd, Mortgage Banker
NMLSR License # 209657, A Georgia Residential Mortgage Licensee #23200
Questions? Contact: Bbyrd@loansouth.com, 404-915-8252

Got Mulch?

If you haven't already heard, Red Robin Group has adopted a park! That's right, we've committed to year-round up-keep of a local Ormewood Park community space known as Stoney Point Park.

Our last clean-up date included some much needed additions to the park in the form of colorful birdhouses and birdfeeders. Red Robin Group partnered with the folks at the East Atlanta Kids Club on a birdhouse- and birdfeeder-painting evening for the young people in the summer program there. Now when you drive by the park, maybe you'll see a few more of our fine-feathered friends enjoying their newly renovated (and some newly constructed) homes.

Red Robin Group tears into the park at least once a quarter for a good, thorough clean-up. In mid-March we'll be looking for a few more resources and volunteers who can help us keep it looking a little more spiffy year 'round. So when that first day of Spring rolls around and you find you've got a few extra plants, mulch or other gardening items left over after a weekend spending craze at the garden store -- or perhaps a dependant or two with a few extra hours on their hands -- we'd love all the help we could get.

Our next big clean-up is scheduled for Sunday, March 20th (The first day of Spring!), from 4-6 p.m.

For more information or to volunteer, contact Chelsea at 404-254-5206 x8.

To learn more about adopting a park in your neighborhood, visit http://www.parkpride.org/.

And for more information about how you can help enrich the lives of the young people in our community through programs that enhance their education, creativity and social skills, please visit http://www.eastatlantakids.org/.



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Reminder for 2010 Homebuyers

Did you know that you can claim a Homestead Exemption as a tax benefit if you bought a home in 2010? Filing for this exemption can greatly impact your tax return, and get you that extra money to start off 2011 on the right foot.

Georgia allows homeowners to claim a Homestead Exemption as a tax benefit that could amount to considerable annual savings. To qualify for the property tax exemption the homeowner must occupy the residence and file for Homestead Exemption at the county Court House or Tax Commissioners Office in person, by mail or on the web, depending on the county in which you reside. Filing deadlines and requirements vary by county.

Below is the contact info for nearby county Tax Commissioners offices:

Cherokee: 678-493-6400, www.cherokeega.com/ccweb/departments/tax
Clayton: 770-477-3311, www.co.clayton.ga.us/tax_commissioner/exemptions.htm
Cobb: 770-528-8600, www.cobbtax.org/Main/Home.aspx
Dekalb: 404-298-4000, www.co.dekalb.ga.us/
Douglas: 770-920-7272, www.co.douglas.ga.us/tax/
Fulton: 404-224-0102, www.fultoncountytaxes.org/fultoniwr/
Gwinnett: 770-882-8800, www.gwinnettcounty.com

Congratulations on buying a new home, and don't forget to claim your Homestead Exemption tax benefit for 2011!

A Slight Scent of Recovery

Article by Brandon Byrd, LoanSouth Mortgage

If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.

Here's why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money.

With the job market still very sluggish, consumers aren't spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that's good for home loan rates. That's because rates are tied to Mortgage Bonds, and inflation is the arch-enemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen.

Recent economic data – a slight scent of recovery...

"The question now is whether mortgage rates will remain in the current range or make another move," says Anthony Hsieh, chief executive of loanDepot.com, a direct mortgage lender in Irvine, Calif. The answer will depend largely on the direction of the U.S. economy, which Hsieh says appears to be "firming up."

"Unemployment is starting to stabilize. Housing is stabilizing, although there are still soft pockets. Stocks are up, and there are inflationary fears with energy prices going up, so directionally and logically, we're in for potentially higher interest rates," he says.

Adding weight to that view was a report this week that manufacturing activity expanded for the 17th consecutive month in December. Manufacturing strength showed up in autos, metals, food, machinery, computers and electronics sectors, though housing-tied industries continued to struggle, according to the Institute for Supply Management in Tempe, Ariz. Just last week we also found out that the National Retail Federation expects 2010 holiday sales to have increased by 3.3% versus a slight 0.4% gain in 2009.

The past, present and future...

Last Monday the national benchmark 30-year fixed-rate mortgage dropped 8 basis points to 4.94 percent, according to the Bankrate.com national survey of large lenders and a year ago, the mortgage index was 5.26 percent. Four weeks ago, it was 4.89 percent.

Personally I locked and closed several loans at 3.875% about 60 days ago. Now if you would have told me I would have been locking rates in that low 10 years ago when I started in the mortgage business I would have said you were CRAZY!

Today those same loans would be locked in at 4.750%, almost 1% point higher.

Now here’s the math...

So a $200,000 note at 3.875% based on a 30 year term would run you approximately $937.45 a month while same deal at 4.875% would run you $1,054.13 a month. So some borrowers are seeing that waiting 60 days will cost them an additional $116.84 a month. Over 30 years that is an additional $42,062.40!

While we certainly want to see better economic recovery news in the near future, we have to remember that there's an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.

Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me.

*Nothing in this publication constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes; it does not constitute an advertisement and is not to be construed as a solicitation. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning LoanSouth Mortgage, Inc nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. The report should not be regarded by recipients as a substitute for the exercise of their own judgment.
*Rate and economic data is from Bankrate.com, CNN Money and Mortgage Success Source, LLC

Brandon Byrd, Mortgage Banker
NMLSR License # 209657, A Georgia Residential Mortgage Licensee #23200
Questions? Contact: Bbyrd@loansouth.com, 404-915-8252