FHA Mortgage Insurance Premiums Will Increase Soon

If you are considering buying or refinancing a home, you should know that the Federal Housing Administration (FHA) will soon increase mortgage insurance premiums on FHA home loans.
The Department of Housing and Urban Development (HUD) announced it would increase the annual mortgage insurance premium (MIP) by 0.10% for FHA loans under $625,500. ...This would raise the fee from 1.15% to 1.25% of the total loan amount. This annual premium increase — which is broken down into monthly payments — takes effect April 1, 2012.
In addition, HUD announced it would raise the FHA's upfront annual mortgage insurance premium (UFMIP) from 1% to 1.75% effective April 1, 2012.
Starting June 1, 2012, the MIP for FHA loans over $625,500 will increase 0.35%, raising that fee to 1.50% of the total loan amount.
The primary reason for the changes is to bolster capital reserves for FHA's Mutual Mortgage Insurance Fund. Congress has mandated the fund keep 2% in reserves. Last year, that reserve had slipped to 0.2%. The changes are expected to generate about $1 billion annually for the fund.
The increase in mortgage insurance costs applies to the purchase or refinancing of all FHA loans regardless of the amortization term or loan-to-value (LTV) ratio. The increases will not apply to borrowers already in an FHA-insured mortgage, a Home Equity Conversion Mortgage (HECM), and other special loan programs to be outlined in a forthcoming FHA Mortgagee Letter.
If you are considering refinancing or making a purchase, you might want to act before the new mortgage insurance premiums take effect.
If you would like more information about what these higher fees will mean for you , please contact me today.

www.ChicagosMortgageChoice.com
keith@northpointlending.com
773-529-7000

Mandatory Increase In Mortgage Loan Fees Directed to Fannie Mae and Freddie Mac

On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Freddie Mac & Fannie Mae by no less than 10 basis points from the average guarantee fee charged by these companies in 2011 on single-family mortgage backed securities....

This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury rather that retained as reserves by Freddie Mac and Fannie Mae.

Basically what this means is mortgage rates are going up and are being "taxed" in order to pay for the payroll tax cuts. So essentially, homeowners will pay for this program. Not to mention it will put a downward pressure on home values as new buyers will have reduced buying power. This definatley does NOT help to stimulate the struggling housing market. Additionally the money will be transfered from Fannie and Freddie to the Treasury.

Fed Policy Could Be Wrong on Inflation

Is the Fed's model on measuring inflation wrong? Outdated? The answer is Yes according to top economic forecasters Michelle Girard and Omair Sharif of RBS Securities.

I thought I would share this very intersting article about inflation and the model the Fed is using. I am by no means an economist but I have heard many times that there is no inflation. I ask myself how could that be when the cost of everything is going up. In some areas....skyrocketing. After reading this article on how the Fed determins inflation it is very clear how they make there claim. The model says that there cannot be inflation unless wages are rising in tandem with costs of goods and services. With unemployment at record highs (and expected to remain high for quite some time) we all know that wages are definatley NOT rising. For that reason they say there is no inflation. Please, I dont know about you but my pocketbook can definatley feel it.

What does all this mean to you and me? The Fed has implemented many tools to keep interest rates low in an effort to fule both the econpmy and the housing market. If inflation is evident-they will be forced to begin raising the prime rate to offset. This means mortgage rates will rise sharply. If the FED is wrong and inflation exists and is "sneaking up" on them, we could see mortgage rates spike up which in my opinion would have a negative imapct on a crippled housing market. If you have been considering taking advantage of these low rates it may be best to act sooner rather than later.

Read Article Here

Keith Stewart
773-529-7000

Interest Rates Falling on Jobless Claims Surge

The recent news reported that the number of people who filed initial requests for jobless benefits surged by 43,000 to a seasonally adjusted 474,000 in the week ended April 30, the Labor Department reported.

Economists surveyed had expected claims to decline to 412,000. Claims in the prior week were revised up slightly to 431,000.

This is good news for mortgage rates which have pulled back again over the last few days. It may not be too late after all to refinance and save money.

Call Today if you would like to discuss your options. 773-529-7000

Fed Hikes 2011 Inflation View and Cuts GDP Outlook

WASHINGTON (MarketWatch) -- The Federal Reserve hiked its forecast for inflation and cut its economic growth view, though the central bank's board members and presidents have become more optimistic on the jobless rate. The Fed now sees the U.S. economy growing between 3.1% and 3.3% this year, down from a prior projection of 3.4% to 3.9% but still above Wall Street economist views around 2.9%. On inflation, they now see the price index for personal consumption expenditure growing between 2.1% and 2.8% this year, compared to the view in January of 1.3% to 1.7% growth. Some but not much of the PCE increase has filtered into core inflation, which excludes food and energy prices, which is now seen growing between 1.3% and 1.6%, vs. an earlier view of 1% to 1.3%. The unemployment rate however is now seen falling to a range of 8.4% and 8.7%, against an earlier estimate of 8.8% to 9%. The 2012 estimates aren't changed that much, though core PCE inflation is now seen ranging between 1.3% and 1.8%, up from 1% to 1.5%. The U.S. economy is seen growing between 3.5% and 4.2% in 2012 and between 3.5% and 4.3% in 2013.

Spring Purchase Market Update

Its very exciting to be coming into another spring purchase market. As the weather get warmer I am seeing a considerable amount of increased activity. I am hopful we will have a stronger purchase market this year than last.

Record-low mortgage rates -- who cares? Amy Hoak's Home Economics - MarketWatch

Record-low mortgage rates -- who cares? Amy Hoak's Home Economics - MarketWatch