New Conforming Loan Limits Announced For 2009
Posted by Kevin Kueneke | Currently 1 Comment »
After months of speculation, we finally know what the new 2009 high balance conforming loan limits are for San Diego and other “high cost” areas. The Federal Housing Finance Agency (FHFA) said that the $697,500 number we enjoyed for part of 2008 is dropping to $546,250 in San Diego.
Some areas such as Los Angeles-Orange Counties, San Francisco, San Jose, and Santa Cruz are having their 2009 numbers set at the new maximum of $625,500.
According to FHFA’s press release, the 2009 loan limits were calculated using 115% of median house prices as determined by the Federal Housing Administration (FHA) whereas the 2008 loan limits were calculated using 125% of median house prices.
So what does this mean? It means that anyone currently in escrow in San Diego with plans to borrow more than $546,250 needs to do everything they can to get their loan closed before 12/31/2008 or face significantly higher interest rates. There is almost a 2% interest rate difference between loans less than $697,500 and loans greater than $697,500 (also known as true jumbo loans) because conforming loans are guaranteed by the government (FNMA and FHLMC). Guidelines are also more strict for true jumbo loans than for conforming and high balance conforming loans.
As expected, the Federal Housing Administration (FHA) announced that FHA Jumbo limits will match the high balance conforming limits. The Department of Veteran’s Affairs (VA) said that VA Jumbo loans with zero-down payments will be allowed up to the high balance conforming loan limits through the end of 2011. This is good news for FHA and VA buyers as they will still be allowed to take advantage of these programs for higher priced properties.
Any questions or comments? Please email me at Kevin@MyCWMtg.com
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FHA Kiddie Condo…What Is That?
Posted by Kevin Kueneke | Leave A Comment »
Many of my referral partners have asked about the FHA “Kiddie Condo” program. I spoke about this several months ago, but now that FHA loans are more prevalent, I felt that it is a good time to revisit the details. Here are a couple questions I have been asked recently:
Question: My child is now attending college and I do not want to throw money away on their rent. Is there a way to buy a property for them to live in without having to pay an enormously high interest rate? Can I avoid a large down payment typically associated with investment properties? 
Answer: Absolutely. FHA allows a non-occupant family member (for example, mom and dad) to go on the loan and basically carry the load. Income and debt from all parties are used to qualify, but the occupying borrower is not required to have any income or assets of their own. As long as your college student does not have credit that would otherwise disqualify them for a loan, their income and assets (if any) are irrelevant. Hence the term “Kiddie Condo”. Better yet, rent the other rooms to your child’s friends to help with cash flow.
Question: My parents are looking to retire and relocate to a new home closer to my family. Unfortunately, their verifiable income is not enough to qualify for a loan, but they do have a small down payment. Since I had planned to help them with their new mortgage payment, can I help them purchase a new home?
Answer: Absolutely. The term “Kiddie Condo” does not just apply to parents helping their children. Adult children can help their parents!
By the way…in addition to condos, all 1-unit properties are eligible: attached and detached single family residences (SFR’s), and homes in a planned unit development (PUD’s).
Far better option than standard Conventional financing due to significantly lower down payment required (3% versus 25-30%) and still get owner-occupied interest rates! **The minimum down payment for FHA loans is going to 3.5% as of January 1, 2009. Still a dramatic difference.
Remember though: these are full documentation loans for all qualifying parties and property condition is important to FHA. At this time, FHA Jumbo loans do not allow a non-occupant co-borrower…so keep your loan amounts under $417,000.
Questions? Call me at (760)500-1919 or email me at Kevin@MyCWMtg.com
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Encinitas Fire Safety Expo October 4th
Posted by Kevin Kueneke | Leave A Comment »
According to the National Fire Protection Association, the majority of home fires (40%) start in the kitchen. Of these fires, one-third are the result of unattended cooking. 
Extension cord fires outnumbered fires beginning with attached or unattached power cords by more than two to one.
And, in one out of every five homes equipped with at least one smoke alarm installed, not a single one was working.
Fortunately for us, the Encinitas Fire Department is holding a Fire Safety Expo on Saturday, October 4, from 10am to 2pm. The event will be held at the Moonlight Beach parking lot and is part of National Fire Prevention Week.
Activities include an interactive safety demonstration in a Fire Safety House, Jaws of Life demonstration, a helicopter display, fire extinguisher demonstrations, and a “Little Fire Truck” for children.
Kerri Berberet with the City of Encinitas verified that the helicopter, which might be one of the very large firefighting ones, is scheduled to land at 10am. The Jaws of Life are actually going to cut a car in half at 1pm.
I spoke with fireman Tyson Gargas and paramedic Nick Conniry of Encinitas Fire Station #1, and they agreed that this will be a great opportunity for area residents to learn more about fire prevention. See you there!
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FHA Update: Down Payment And Mortgage Insurance
Posted by Kevin Kueneke | Currently 1 Comment »
We finally have some clarification regarding the effective dates of the new Federal Housing Administration (FHA) down payment requirement as well as the new FHA Upfront and Monthly Mortgage Insurance Premiums.
As many of you will remember, FHA is increasing their minimum investment from the buyer from 3.0% to 3.5%. There were rumors that this was going to be effective October 1st, 2008. We now know that January 1, 2009, is the effective date for the down payment increase. 
FHA mortgage insurance, on the other hand, is changing effective October 1, 2008.
For purchase transactions, FHA has both a onetime upfront mortgage insurance premium (UFMIP) as well as monthly mortgage insurance (MIP), except for loan terms less than 15 years combined with a down payment of 10% or more.
The following is a breakdown of the new mortgage insurance for purchase money transactions with FHA case numbers assigned on or after October 1, 2008:
Loan Term > 15 Years
Loan to Value Upfront Premium Monthly Rate
<=95.00% 1.75 0.500
> 95.00% 1.75 0.550
Loan Term < 15 Years
Loan to Value Upfront Premium Monthly Rate
<=90.00% 1.75 None
> 90.00% 1.75 0.250
So how do these changes affect the typical home buyer? Most FHA loans fall into the category of less than 5% down payment and a loan term greater than 15 years. This makes sense since most first-time home buyers are looking for the least amount of down payment and the lowest monthly payment.
The old upfront premium was 1.5% of the base loan amount (base loan calculated using sales price minus down payment for this example, the actual calculation is slightly more complicated), and the old monthly insurance amount was 0.50% of the base loan amount divided by twelve months. Let’s look at a property with a sales price of $350,000:
Base Loan Amount: $339,500
Old Monthly Mortgage Insurance: $141.46
New Monthly Mortgage Insurance: $155.62
Difference of roughly $14.16 per month.
Old Upfront Mortgage Insurance Premium: $5,092.50 (of which $5,050 can be financed)
New Upfront Mortgage Insurance Premium: $5,941.25 (of which $5,900 can be financed)
If these amounts are financed, the difference in the payment at today’s 30 year fixed rate of 5.875% would be $5.03 per month. Add that to the slightly higher monthly mortgage insurance, and you are looking at just over $19 more per month with the new numbers.
An additional $19 per month is still relatively small considering FHA’s more lenient credit guidelines and down payment requirements. FHA is more strict though regarding the condition of the property versus typical conventional financing, helping to assure that the property is in a reasonable and safe condition.
With the new, higher FHA loan limits, FHA is taking more risk. As with any insurance whether it be auto, home, or mortgage, higher risk goes hand in hand with higher premiums. I think an extra $19 per month is worth paying to keep this program around.
Do you have a specific example you would like to discuss? Please feel free to call me at (760)500-1919 or email me: Kevin@MyCWMtg.com
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