HI mortgages : HI mortgage rates and home loans

FHA Loans

The FHA (Federal Housing Administration) Loan is fully backed by the Federal Government. FHA loans are generally less expensive than traditional, conventional loans. Qualifying for a FHA is also easier!

Recent changes in the past couple of years has streamlined the FHA appraisal process, which helps your loan close faster! Here are some key features of the loan:

Great for first-time homebuyers
Forgiving of past credit scores
Low downpayment requirements
95% refinancing available
96.5% financing for purchases
1% Funding Fee (can be financed)
.95% PMI (Private Mortgage Insurance)
Can get up to 3% seller credit to pay closing costs, pay off consumer debt, and negotiate down to a lower rate!
Less cash out-of-pocket expenses than a typical "conventional" loan
Purchase and renovate a house with only one loan: the FHA 203K program
Cosmetic fixes previously required to closing now acceptable "as is"
May qualify even if currently in Chapter 13 or credit counseling programs
Only two years discharged from Chapter 7 required

Private Mortgage Insurance for FHA Loans

FHA Announced that they will be changing their Mortgage Insurance Premiums (sometimes called MIP or PMI) again effective April 18, 2011. This change, like so many others is not going to make the program any cheaper!

FHA does not underwrite mortgages - they insure them against default, just like Private Mortgage Insurance Companies. Because of this, they set their own guidelines for underwriting the file, and they set their own rates.

There are currently two types of Mortgage Insurance or PMI associated with every FHA loan we make.

Up Front Mortgage Insurance Premium (sometimes referred to as UFMIP): The current rate on this premium is currently 1 percent of the loan amount. At THIS TIME, if you sell the property or refinance it – you will NOT get a refund of the fee as you did in year’s past.

Annual or MONTHLY Mortgage Insurance (I’ve seen it referred to both ways because pay for it MONTHLY – but it’s calculated on an annual basis): The NEW rate for this FHA Mortgage Insurance Premium varies depending upon your downpayment – and the length of your loan

Annual Premiums for Loans Longer than 15 Years

(So 20 and 30 year mortgage loans)
If you borrow 95.000% of the value of the home or Less 110 BPS
If you borrow MORE than 95 percent of the value of the home 115 BPS

Annual Premiums for Loans 15 Years or Less

If you borrow 95.000% of the value of the home or Less 25 BPS

If you borrow MORE than 95 percent of the value of the home 50 BPS

How do I know what the BPS means to my monthly payment??

In the simplest of terms (for these purposes) here’s how you calculate it:

Sales Price is $300,000

3.5% Downpayment makes your Loan Amount $289,500

Multiply $289,500 by 1.15% which equals $3,329.25 per month. Divide that by 12 months – and your Mortgage Insurance payment is roughly $277 a month.

If you apply for a mortgage PRIOR to April 17, 2011 (meaning the CURRENT rate), your monthly Mortgage Insurance payment is $229 on that mortgage. Here’s the letter from FHA about all of this.

My personal feeling is that these premiums are too high… but that is what the government is aiming for. They want more Banks and PRIVATE Mortgage Insurance Companies to be in the mortgage arena. The good news is that house prices are SOOOO low – that even with the higher mortgage insurance premiums – there’s good value available!

If you have questions about purchasing a home and qualifying for a FHA mortgage loan in Hawaii, please call Bryon Tucker @ (808) 224-6309

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USDA Loans

The USDA Rural Development's Guaranteed Rural Houing (GRH) Loan Program is designed to assist rural home buyers who have the dependable income and satisfactory credit history needed to qualify for a conventional mortgage, but not the down payment funds. The GRH program encourages lenders to provide financing to qualified home buyers by reducing the amount of risk involved for the lender.

Program Highlights

100% financing. No down payment required
Income limits: 115% of US median
Maximum loan amount up to 102% of appraised value. Guarantee Fee may be financed into loan amount regardless of appraised value
One time 3.5% Guarantee Fee for purchase transactions and 0.5% Guarantee Fee for refinance transactions. Funding Fee may be financed!
Loan can include closing costs if appraisal is higher than the sales price
No monthly mortgage insurance premium
No cash reserves requirement
Borrowers do not have to be first time home buyers
No limit on seller contributions (however, some lenders may limit that to 3%)
1-day compliance review turnaround time from USDA
Lender processes loan package using own forms
USDA Rural Development required only 1 additional form to be signed by lender and borrower and included in the submission package

Benefits to Lenders

Loans can be purchased by Fannie Mae, Freddie Mac, Ginnie Mae, and Cal HFA
100% of the loan can be sold
Quick, streamlined lender approval process
No imposed fee structure on lender for closing costs
Lender may choose any state licensed appraiser. No approved appraiser requirement
Loans qualify for the Community Reinvestment Act (CRA)

Loan Purpose

Purchase transactions-new construction or existing dwellings are elligible
Existing GRH loans may be refinanced with the new GRH loan

Interest Rate & Terms

30 year fixed-rate, fully amortized loans only
Interest rate is negotiated between the lender and the borrower
2/1 buydown - qualifying ratios at start rate with compensation factors

Property Requirements

Property must be located in an eligible rural area
Site value should not exceed 30% of the total appraised value
One-unit, non-farm, primary residences, including single family dwellings, condos, and PUDS
Incomd producing properties are not eligible

Underwriting, Income and Credit Requirements

Qualifying ratios are 29/41. Higher ratios considered with strong compensating factors
Credit score of 660 or higher considered a strong compensating factor. Credit score of 700 or above considered excellent compensation factor
Source of income must be adequate and dependable, typically with 24 month history
No more than one 30-day late payment in the last 12 months
Bankruptcies to be discharged for at least 3 months
Adverse credit waivers may be granted for mitigating factors such as loss of job, reduction of income and illness

USDA Property and Income Qualification Website:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

USDA local contact phone number is 808-483-8600