On March 6, the Acting Federal Housing Commissioner announced significant price cuts to FHA's Streamline Refinance Program. The cuts could benefit millions of borrowers whose mortgages are currently insured by FHA.
Beginning June 11 of this year, FHA will lower its Upfront Mortgage Insurance Premium to just .01 percent and reduce its annual premium to .55 percent, for certain FHA borrowers. This could save borrowers an average of about $3,000 per year.
To qualify, borrowers must be current on their existing FHA-insured mortgages that were endorsed on or before May 31, 2009, reported the Department of Housing and Urban Development.
Last month, FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500.
"This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today's low interest rates," the HUD report noted. "By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden, which will benefit the housing market and the broader economy in the process.
"Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a 5 percent annual interest rate on their FHA-insured mortgages. By refinancing through this streamlined process, it's estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month."
FHA's new discounted prices assume no greater risk to its Mutual Mortgage Insurance Fund, HUD reported. It will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting. FHA-insured homeowners should contact their existing lender to determine their eligibility.
Questions from readers
Question: Are house-flipping seminars worth their fee?
Answer: Investing in real estate has tremendous potential, particularly in today's market. But, in my opinion, the highly promoted "flipping" seminars, often promoted in television infomercials, have little real value in most cases.
The promotional pitches usually focus on fabulous riches that can be quickly generated by flipping houses -- the purchase and quick resale of those properties. And it often touts the seminar leader as someone who has become rich by flipping.
The seminar pitches keep pushing the potential benefits and profits in this type of investing without mentioning the downsides and risks involved. Also, keep in mind that the seminar leader has invested considerable time and money in organizing and promoting his series of seminars. He obviously thinks he will make more money in seminar fees than in continuing to flip houses.
Here's an item carried on the MortgageGuide101.com website regarding the current potential in house-flipping.
"We've been following house-flipping and its demise for some time. With the market how it is, house-flipping in its preferred form (where the investor gets double digit gains just for holding the property for a relatively short time) has generally stopped working."
Q: Are reverse mortgage sales increasing?
A: Yes, applications for reverse mortgages are increasing. However, there has recently been a sharp decline in the number of reverse lenders.
The number of firms originating federally insured reverse mortgages has plunged more than 60 percent during the past year, reported by Mortgage Daily.
Q: How can I make my home more salable?
A: An interesting article on that subject is carried on the website of Better Homes and Gardens Real Estate, an international network of Realtor firms. Below is a sampling of suggestions cited in the article.
"Assuming your home is priced to sell based on the competition, then you have to make your home stand out by removing deal-killing barriers.
The way to do that is to show buyers instantly how attractive your home is.
"Light, sunshine and easy visibility are powerful positives. To get more light, wash the windows. If you have heavy drapes on the windows for privacy, open them up for showings. Power wash the windows outside to remove street grime, and clean them from the inside so they sparkle.
"Clean out light fixtures. All light fixtures collect bugs and dust bunnies. Change the light bulbs. It's amazing how much more attractive the new daylight bulbs are than yellow fluorescent bulbs. From skin tones to paint colors to fabrics, the colors in your home will be brighter and more pleasing.
"For showings, pull back the drapes from every window. If they overpower the room, take them down and replace with blinds."