Archive for August, 2008
FHA DEBT TO INCOME RATIOS - FYI !
Related Posts: Credit & Finance, Real Estate News
hiIn order to prevent homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios. These ratios are used to calculate whether or not the potential borrower is in a financial position that would allow them to meet the demands that are often included in owning a home.
The two ratios are as follows:
1- Mortgage Payment Expense to Effective Income Ratio
Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 29%.
An Example:
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| Total amount of new house payment: | $750.00 | ||
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| Borrower’s gross monthly income (including spouse, if married): | $2,850.00 | ||
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| Divide total house payment by gross monthly income: | $750/$2,850 | ||
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| Debt to income ratio: | 26.32% | ||
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2- Total Fixed Payment to Effective Income Ratio
Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 41%.
An Example:
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| Total amount of new house payment: | $750.00 | ||
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| Total amount of monthly recurring debt: | $400.00 | ||
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| Total amount of monthly debt: | $1,150.00 | ||
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| Borrower’s gross monthly income (including spouse, if married): | $2,850.00 | ||
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| Divide total monthly debt by gross monthly income: | $1,150/$2,850 | ||
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| Debt to income ratio: | 40.35% | |
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Please note that the above indicators do not exclusively determine whether or not a candidate will qualify for an FHA loan. Other factors will be considered, including credit history and job stability.
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THE FED APPROVES NEW RULES TO PROTECT CONSUMERS
Related Posts: Credit & Finance, Real Estate News
hiThe Federal Reserve Board on Monday approved a final rule for home mortgage loans to better protect consumers and facilitate responsible lending. The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction.
The final rule, which amends Regulation Z (Truth in Lending) and was adopted under the Home Ownership and Equity Protection Act (HOEPA), largely follows a proposal released by the Board in December 2007, with enhancements that address ensuing public comments, consumer testing, and further analysis.
“The proposed final rules are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership,” said Federal Reserve Chairman Ben S. Bernanke. “Importantly, the new rules will apply to all mortgage lenders, not just those supervised and examined by the Federal Reserve. Besides offering broader protection for consumers, a uniform set of rules will level the playing field for lenders and increase competition in the mortgage market, to the ultimate benefit of borrowers,” the Chairman said.
The final rule adds four key protections for a newly defined category of “higher-priced mortgage loans” secured by a consumer’s principal dwelling. For loans in this category, these protections will:
- Prohibit a lender from making a loan without regard to borrowers’ ability to repay the loan from income and assets other than the home’s value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a “pattern or practice.”
- Require creditors to verify the income and assets they rely upon to determine repayment ability.
- Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed.
- Require creditors to establish escrow accounts for property taxes and homeowner’s insurance for all first-lien mortgage loans.
In addition to the rules governing higher-priced loans, the rules adopt the following protections for loans secured by a consumer’s principal dwelling, regardless of whether the loan is higher-priced:
- Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home’s value.
- Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. In addition, servicers are required to credit consumers’ loan payments as of the date of receipt and provide a payoff statement within a reasonable time of request.
- Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer’s principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans. Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer’s credit history.
The new rules take effect on October 1, 2009. The single exception is the escrow requirement, which will be phased in during 2010 to allow lenders to establish new systems as needed. You can see more details http://www.federalreserve.gov/newsevents/press/bcreg/20080714a.htm
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FOREIGNERS COME TO AMERICA TO BUY HOMES !
Related Posts: Credit & Finance, Florida Listings, Real Estate News, What If Realty News
hiWASHINGTON, August 07, 2008
International real estate purchases in the U.S. continue to be a significant share of business for many Realtors, according to the 2008 National Association of Realtors® Profile of International Home Buying Activity.
This new research indicates that international buying activity in the U.S. is widespread. NAR estimates that between 150,000 and 190,000 homes were sold to foreign nationals from May 2007 to May 2008. Recent foreign buyers purchased properties in every state and the District of Columbia. The most popular states where international buyers purchased homes are Florida, California and Texas. Arizona, New York, Washington and Nevada were also popular.
The typical international buyer purchased a single-family vacation home costing $297,400. Four in 10 paid for their U.S. property with cash, compared with 7 percent for all domestic buyers. The typical international owner stayed at his or her U.S. property for 2.6 months during the year, according to the NAR findings.
Foreign exchange rates have helped make U.S. homes more affordable for international buyers. The euro, for example, has strengthened 24 percent versus the U.S. dollar over the past two years. Home prices are also now more affordable in places such as Florida and Arizona, contributing to those states’ popularity among foreign buyers.
International buyers are distinct from domestic buyers. International buyers tend to purchase more expensive properties, which cost an average of 36 percent more than the typical domestic buyer’s home purchase. In fact, more than 14 percent of properties sold to international buyers sold in excess of $750,000. Foreign buyers also show a greater preference for condos and townhouses compared to domestic buyers.
People from North America, Europe and Asia accounted for more than 85 percent of recent foreign home buying transactions. The top six countries of origin for foreign home buyers, in rank order, were Canada, the United Kingdom, Mexico, China, India and Germany. This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S. The percentage of Canadian buyers doubled from last year, from 11 percent to 23.5 percent. Florida Real Estate is a prime target for the forein investor, retiree or vacation home hunter.
The full report is available from NAR’s Research Division or at www.realtor.org/research/research/reportsintl.
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NEED TO MAKE A CLAIM BECAUSE OF FAY?
Related Posts: Credit & Finance, Real Estate News, What If Realty News
hiThere are two Web sites you may want to bookmark in case Tropical Storm Fay - or any other storm for that matter - damages your home or business. The Florida Office of Insurance Regulation Web site includes a database of all insurers: http://www.floir.com/CompanySearch . Similarly, Citizens Property Insurance Corp., the state’s insurer of last resort, has its own Web site (https://www.citizensfla.com) that offers all kinds of helpful information. If you need to report a claim on your Citizens policy, the company asks that you call (866) 411-2742.
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Florida settles insurance dispute with Allstate
Related Posts: Real Estate News, What If Realty News
hiTALLAHASSEE, Fla. (AP) – Aug. 18, 2008 – Homeowners insured by Allstate Corp. in Florida will get an additional 5.6 percent rate cut through a settlement state regulators announced Friday.
The Northbrook, Ill.-based company also agreed to insure 100,000 more Florida homeowners against hurricanes and other perils, forgive a $175 million loan to its Florida subsidiaries and pay a $5 million fine, said Insurance Commissioner Kevin McCarty.
The latest reduction will bring total rate cuts to 19.8 percent since June 1, 2007. That’s when a 14.2 percent cut went into effect to comply with a new law designed to reduce windstorm insurance premiums. They had skyrocketed following a series of hurricanes in 2004 and 2005.
The agreement resolves McCarty’s complaints that Allstate failed to provide rate-related documents regulators had demanded, falsely claimed the material contained trade secrets and falsely certified a request to raise rates by more than 40 percent.
“It’s unfortunate that Allstate’s disregard for Florida’s laws required the office to take such drastic actions, however, I’m glad that we’ve reached this agreement,” McCarty said. “We’re looking forward to restoring the confidence of Allstate insurance companies.” This will help the Florida real estate market.
Allstate has 10 Florida companies that will be affected by the agreement. They operate under the names Allstate and Encompass.
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