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Jan 2006
Index of all
past
Affiliate Corner columns
Changes In Mortgage Banking For 2006
By Ann Abraham
Wells Fargo Home Mortgage
The Federal Housing Authority (FHA) announced earlier in 2005 that the banking industry would see changes on the Mortgage Insurance Premium (MIP). This took effect Jan. 1, 2006; FHA Condos, and 203Ks (renovation) will now also have a 1.5 percent upfront premium plus the monthly. This is how it has worked for town homes and single families.
FHA has also changed the way a refund is calculated on a refinance. Effective for mortgages endorsed for insurance on or after Dec. 8, 2004, FHA will no longer refund a portion of the upfront MIP except when the borrower refinances to another FHA loan. If they go to another FHA, a three-year table will be used. FHA Condos are still requiring a minimum 51 percent owner occupancy.
The other change is the way FHA appraisals are worked up. They will now use the same forms as conventional loans. The biggest thing to watch for is where the conditions will appear. "As Is" can mean one of three things: 1) No repairs or required inspections; 2) Establishing the "as is" value for a regular 203k; or 3) The property is being recommended for rejection. Make sure your lender looks all the way through the appraisal for any possible conditions. There will be no more VC sheets showing conditions or the five-day notice to home buyer.
FHA is now offering a 95 percent cash out refinance.
Also effective Jan. 1, conventional loan limits will be increased as follows: $417,000 for a one unit, $533,850 for a two unit, $645,300 for three unit and $801,950 for a four unit. With these higher limits, buyers will be able to take advantage of better rates over jumbo rates.
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