Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead–submit all FHA mortgage applications by the last week of March.

If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business.

Contributed by:

Margie Morris
Loan Officer

Cell: 334-657-1338
Fax: 334-351-0575
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Posted on Jan 29, 2010 | 11:31 AM

Alabama Among First States Expected to Recover

Alabama Among First States Expected to Recover, says NAHB Economist
Originally posted by the Home Builders Association of Alabama on January 11, 2010

Alabama is among the top twenty percent of states expected to recover from the economic downturn, according to National Association of Home Builders Chief Economist Dr. David Crowe. Crowe was the keynote speaker for the 2010 Economic Forecast program presented last week by the Greater Birmingham Association of Home Builders.

More than 200 members of the Home Builders Association of Alabama, along with various legislators and other officials, attended the program. Crowe began his presentation by focusing on macro conditions such as, GDP growth, employment rates, mortgage rates and consumer confidence. His research showed that a true recession recovery will begin when “Wall Street meets Main Street.”

“When you begin to see unemployment rates decrease you will then see consumer confidence increase, thus leading to a natural recovery process,” stated Crowe.

His projections for the new home industry were cautiously optimistic. Crowe advised that the home building industry will have a slow and steady pace back to normal. The industry will not have the ability to jump right back into building, due to the complexities bank loaning and other hurdles.

However, Crowe did project throughout 2010 and 2011, with a minor dip between May and June 2010 when the Housing Tax Credit has expired. Crowe pointed out that the Greater Birmingham area and the state of Alabama never experienced the outrageous upswing in home prices as were seen in other parts of the country. Therefore, the state is placed among the top 20 percent of states predicted to recover first. The graphic below gives more detail about what we can expect across the country.

The presentation concluded with a summary of prospective home buyers for the upcoming year. Crowe pointed out that there are more people in the “echo boom” generation (children of the baby boomers) than there are of baby boomers. The echo boomers are currently first-time homebuyers and will continue to buy for several years to come. The presentation began and ended on a cautiously optimistic note, giving members hope for the future of the home building industry.

Click here to view expectations of recovery across the country.

Source: Greater Birmingham Association of Home Builders

Posted on Jan 20, 2010 | 2:14 PM