Today's Topics:
- FHA Loans
- An Optimistic Investing Approach in 2009
As I have been saying for quite some time now, this is a great time to buy a home. Dropping prices, a large inventory of homes, and low interest rates have created a unique opportunity for those who are ready to buy. And, for those who are staying in their current homes, now is the perfect time to refinance. Read on for valuable information for the New Year...
FHA LOANS
Thanks to Sandy Richards of The Richland Group at CFS Mortgage for the following information regarding
FHA loans:
FHA (Federal Housing Administration) is a part of HUD (Housing and Urban Development) and insures home loans for lenders so that borrowers can get better rates, low down payment, low closing costs and easy credit qualifying.
Currently, FHA loans require 3.5% down for a purchase and 1.75% of the loan amount for Up Front Mortgage Insurance. In addition, there is a factor of .55 per month for monthly mortgage insurance.
Here is an example:
Purchase price: $200,000
Down Payment: -7000
Base loan amount $193,000
Up Front MIP 3377
Total loan amount: $196,377 5.25% rate Principal & Interest payment: $1084
5.964% APR includes mortgage insurance in calculation, no points
Some of the great aspects of FHA are the acceptance of gift funds from a relative for down payment and/or closing costs and they allow 6% of the purchase price as seller contribution towards settlement costs.
FHA wants to see a two year consistent job history in the same line of work. They will allow college to serve as part of that as long as borrower can provide degree that is related to current employment.
FHA will also allow lower FICO scores, usually down to a 620 mid score. Bankruptcy needs to have been discharged at least three years prior to obtaining a new FHA loan. This also applies to foreclosure, short sale and a Deed in Lieu of Foreclosure. Borrower will need to have re-established credit after any of these events listed.
There are also FHA loans that will help borrowers who are purchasing homes that need to be rehabilitated. The first type will allow for small items such as paint, appliances and flooring. If there is anything beyond this sort of rehab, there is a loan available but is quite extensive, similar to a construction loan so contact an experience FHA loan consultant for more details on this loan.
FHA also allows for refinances of many sorts, but he most popular for borrowers is the Streamline Refinance which does not require an appraisal. The costs are capped are minimal to borrower and the loan is very easy to do. There may be circumstances that prevent this loan from being done, in which a Streamline with appraisal and credit can be done, or if the borrower has equity and wants to take cash out to pay debt, there is a full FHA refinance loan that is available.
The best way to see if an FHA loan is right for you or someone you know is to speak to an experience FHA loan consultant. For more information, you can contact me, Sandy Richards at 602.999.2406.
AN OPTIMISTIC INVESTING APPROACH IN 2009RISMEDIA, January 12, 2009-If you're like most folks, you're entering 2009 clutching your wallet, keeping an anxious eye on your stock portfolio, and bracing yourself for the next dose of economic bad news that's surely coming down the pike. Yes, if you believe everything you hear and read, we're heading straight for financial apocalypse. But what if you decided to opt out of the doom & gloom club? What if, instead, you decided to look for treasure hidden amid the ruins? Choose the latter approach in 2009, says financial expert Eric Tyson, and you'll open yourself up to some great investment opportunities. "Unfortunately, most often, you can find only the worst case scenario in the nightly news," says Tyson, author of Investing For Dummies®, 5th Edition (Wiley, 2008, ISBN: 978-0-470-28965-5, $21.99) and coauthor along with Robert Griswold of the upcoming Real Estate Investing For Dummies®, 2nd Edition (Wiley, March 2009, ISBN: 978-0-470-28966-2, $21.99). "That's because bad news sells. What you aren't hearing or seeing is that 2009 will bring some great investment opportunities in two areas you might not expect-real estate and the stock market. You simply need to change your perspective a bit."
In other words, by taking an optimistic investing approach during the upcoming year, you can actually profit from the sluggish economy.
Tyson explains how:
1. Take advantage of low prices… Instead of looking at deflated housing and stock values as a bad thing, look at them as opportunity makers. Because prices have fallen, these investments are more affordable and you can buy now and watch current values increase over time. Take real estate, for example. Recent data out from the National Association of Realtors (NAR) shows that their home affordability index (HAI) is at the best level in more than three decades. The current HAI value of 141.8 means that a family earning the national median family income has 141.8% of the income necessary to qualify for a conventional loan covering 80% of a median-priced existing single-family home. So if you have good credit and can put down at least 10-20% of the price, investing in real estate is actually more viable an investment than it has been in years.
"The same is true of stock prices," says Tyson. "Because of the downturn, many strong companies have stocks that are undervalued. If you buy these stocks now, as the market stabilizes and things improve, values will increase and your portfolio will be the benefactor."
2. …But look before you leap. In other words, do your due diligence before you plunk down the cash, says Tyson. Some companies' stocks are low for a reason. Before choosing which companies you would like to invest in, you have to do the research and make sure that they are fundamentally strong. Where real estate is concerned, there are still areas where properties are overvalued-parts of the Pacific Northwest, for example-so you'll have to do the research to make sure you buy in an area where prices have already fallen in line with market fundamentals.
"These caveats are just reminders that you shouldn't go into any investment without doing your homework first," says Tyson. "Making irresponsible investment decisions is what created the problems we are having. By researching your options, you will be able to make sounder, more profitable decisions."
3. Be careful where you get your advice. Misinformation abounds. There are a lot of pundits and so-called financial experts out there who are giving questionable advice and are making terrible predictions, says Tyson. What's more, their past track records indicate that we should take their words with a substantial grain of salt.
"Financial pundits are a dime a dozen right now," says Tyson. "Be very careful about whose advice you follow and whose economic predictions you buy into. For what it's worth, two experts I do respect are professors Burton Malkiel, author of the classic A Random Walk Down Wall Street, and Jeremy Siegel, author of the excellent Stocks for the Long Run. Their work and books have stood the test of time-decades, not months or years-and I know I've profited handsomely from things I've learned from them."
4. Keep thinking long-term. If you make investments thinking you are going to see quick returns, you will be disappointed. Where real estate is concerned, the days of buy it, flip it, and sell it quickly for a huge profit are over. What you can do is buy property now-particularly in areas where it's now properly valued and even undervalued-and watch its value accrue over time as the market stabilizes and improves. You should take the same approach to any stock investments you make.
"It might be tempting to want to time the markets, but just because you get one market turn right doesn't mean you'll see the next one coming," notes Tyson. "Even the best investors make mistakes, some of them huge ones, regarding future timing moves. When it comes to stock investments, slow and steady wins the race."
"It's true that 2008 was a sobering year," admits Tyson. "And now we hear from many pundits and experts that the upcoming one could be as bad or even worse. But if you invest calmly and rationally, rather than reacting emotionally, 2009 can be remembered as the year you made some smart, long-term financial decisions. I think if you take advantage of what's going on in the real estate and stock markets right now, you could be setting yourself up for a very profitable future."
Eric Tyson, MBA, is one of the nation's best-selling personal finance book authors and has penned five national bestsellers (he is also the only author to have four of his books simultaneously on BusinessWeek's business book bestseller list).
For more information, visit www.erictyson.com.
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Pook
