ARAMCO Report - The Mother of ALL Mortgage Blogs!

Down payment assistance programs growing in popularity

Posted by Mehran Aram on Fri, Jun 21, 2019 @ 05:06 AM

Affording the monthly mortgage payment is managable for many young would-be homebuyers but coming up with the cash for a down payment has proven to be quite challenging. As a result, the use of down payment assistance programs doubled between 2013 and 2016, according to a new study.

The Wall Street Journal reported this week that a Freddie Mac analysis of the National Survey of Mortgage Originations shows the share of buyers using a down payment assistance program rose from five percent to 10 percent over a four-year period.

The most common low down payment loan is available in the form of an FHA loan which has less stringent credit requirements and allows a home purchase with as little as 3.5 percent down.

Meanwhile, conventional conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.375 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Down Payment, homebuyers, Freddie Mac, Mortgage rates, Wall Street Journal, National Survey of Mortgage Originators, Down Payment Assistance

FHA introduced more stringent borrowing standards

Posted by Mehran Aram on Tue, Mar 26, 2019 @ 05:03 AM

The Federal Housing Administration, which insures mortgages for many first-time homebuyers or those with minimal down-payments, is tightening its standards. In an announcement on Monday, the FHA announced that it would begin flagging more loans as high risk which would require them to undergo a more rigorous manual underwriting process.

While some experts are saying that the new standards will not have too much of an effect on those whom it it approves for an FHA loan, it will likely impact those with sub-par credit or higher than average debt-to-income ratios.

This latest move by the government agency is a reversal of a loosening of underwriting standards introduced in 2016. The FHA currently insures $1.3 trillion in home loans.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.125 percent, 15-year rates are near 3.625 percent and the 5-year ARM is averaging 4.00 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: mortgages, Down Payment, first-time buyers, FHA, Mortgage rates, Federal Housing Administration

FHA loan popularity grows by leaps and bounds

Posted by Mehran Aram on Wed, Feb 27, 2019 @ 06:02 AM

In a housing market where a 20 percent down payment on a home can be more than some people make in a year, it should come as no surprise that the number of home buyers turning to low down payment options is increasing rapidly.

More than one million borrowers benefited from an FHA loan in 2018. This is according to the FHA Annual Report to Congress released last month. FHA loans allow borrowers to purchase a qualified home with as little as 3.5 percent down and less stringent credit qualifications.

Currently, $1.196 trillion of America’s mortgage debt is insured by the FHA throughout 8 million households. That is 12.1 percent of all single-family residential mortgage originations by volume.

Today, FHA 30-year fixed mortgage rates are averaging 3.75 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Down Payment, Housing Market, Loan, FHA

San Diego Home Buying – Not So Easy

Posted by The Aramco Group on Tue, Jul 14, 2015 @ 14:07 PM

Young San Diegan families looking to buy a home may have to wait longer than previously thought. A study released last week by real-estate tracker Trulia says the median income does not earn you enough to buy a median house in the county.

A household earning $89,000 a year would have to save 10 percent of its income for 18 years before they would have enough for the requisite 20 percent down payment on a $589,000 home – the median-price in the county.

Fortunately, programs like FHA loans allow buyers to purchase with only 3.5 percent down payments. Meanwhile, the Veterans Administration (VA Loans) allows eligible military and veterans to buy a home with zero down. Buyers looking in rural areas also qualify for no down payment purchases through a USDA loan. Furthermore, seniors with large down payments can purchase with a reverse mortgage and easier qualifications with no mortgage payments.

Low mortgage rates make buying even easier. Currently, no point 30-year fixed rates are averaging 4.125 percent and 15-year rates are averaging 3.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381–8888 and your question may be featured in an upcoming article.

Topics: Down Payment, FHA, Veterans Loan, Low Down Payments

ARAMCO Report - Thursday June 4, 2015

Posted by The Aramco Group on Thu, Jun 4, 2015 @ 16:06 PM

The Catch 22 of Renting before Buying

San Diego rents increased 5.5 percent between April 2014 and April 2015. That is equivalent to an increase of $123 per month as of April of this year, when the median monthly rent was $2,347 according to Zillow.

Renting is traditionally the stepping-stone to homeownership in the American dream, but while higher rents motivate people to buy a home and get out of the rental market they can also hinder homeownership by siphoning potential savings away from being used for a down payment.

Renters in high-income areas like San Diego can often pay higher than average percentages of their monthly income—sometimes up to 50 percent vs. an average of 30 percent nationally—on rents. This is because San Diegans’ median incomes have been 18.8 percent higher than the national average (approx. $63,000 vs. $50,000, via US Census), but their median monthly rental costs have been 72 percent higher than the national average ($2,347 vs. $1,364), as they were April 2015.

Mortgage programs from FHA, Freddie Mac and Fannie Mae—that have low down payments and that historically have lower interest rates—are meant to help qualified first-time homebuyers break this problematic cycle.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Topics: San Diego County, home buying, San Diego, Down Payment, 30 year fixed rates, renting, Rent

ARAMCO Report - Thursday February 19, 2015

Posted by The Aramco Group on Tue, Feb 24, 2015 @ 11:02 AM

According to Realty Trac last year the share of home buyers using low down payment loans plunged to an 11 year low. But the new 3% down payment Fannie Mae and Freddie Mac loans as well as a big reduction in the FHA mortgage insurance premium is expected to boost the numbers for 2015. Meanwhile housing inventory continues to tighten nationwide with total listings year over year, down by 8.7%. Conforming no point 30 year fixed mortgage rates now average 3 7/8ths with 15 year rates closer to 3 1/8th. And now for something completely different… Did you know that owning an electric car in Norway grants you free public parking, free ferry trips, and even the right to drive in bus lanes?

 For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

Ask Mehran Aram

Topics: RealtyTrac, Down Payment, Norway, inventory, Mortgage Insurance Premium, 30 year fixed rates, Fannie Mae, Freddie Mac, Electric Car, FHA, Housing

Various Loan Options For Your Down Payment

Posted by The Aramco Group on Wed, Nov 13, 2013 @ 16:11 PM

When purchasing a home, one of the main things to consider should be a pre-approval
letter from a reputable mortgage company. A pre-approval letter will help guide one of the Down Payment, Home Loans, Conventional Loan, VA Loan, Federal Housing Administrationlargest financial decisions you will make in your life. One of the first questions that should be addressed in the qualification process is the down payment. There are many loan options with varying down payment requirements. These vary from a VA loan with a $0 down payment, to an investment property needing a minimum of 20% down.

One of the most common loan options for first time borrowers has been a FHA loan. This has been the product of choice for many homebuyers that are restricted to a limited down payment. The down side to a FHA loan is the mortgage insurance. Although FHA allows a low down payment of 3.5% the cost of mortgage insurance can sometimes divert borrowers to another loan product. FHA has an upfront mortgage insurance fee of 1.75% and an annual mortgage insurance fee of .40% to 1.45%, depending on the loan amount.

Another popular loan product is the “Lender Paid Mortgage Insurance” loan where the down payment can be as little as 5% with no upfront or annual mortgage insurance charged to the borrower. In exchange for not being charged mortgage insurance, the LMPI loan has an interest rate of about .40% higher than a conventional interest rate if the borrower was going to have a 20% down payment.

An option that has become even more popular ever since FHA increased the term of mortgage insurance from 5 years to the full 30 year term, is the conventional loan with mortgage insurance. The conventional loan with mortgage insurance allows the borrower a choice to pay the mortgage insurance upfront or pay as part of the monthly payment. One of the nice features of this product is once a borrower has 20% equity, either by appreciation or paying down the loan, the borrower can order an appraisal and have the mortgage insurance eliminated.

The most attractive interest rates and loan products are available when a borrower has 20% for the down payment however these three loan products can be great financial tools when looking to purchase a home with a limited amount of available funds for the down payment.

 

Topics: Down Payment, Interest Rates, Aramco Mortgage, home ownership, FHA, Loan Options