Black Friday came and went, and if you camped out after feasting on turkey for the best of the best deals in electronics, then those deals will pale in comparison to the deals on homes now. Watch this to find out more:

If you don’t own a home now, consider buying your first home in the New Year. Small down payments will get you in; or even a grant to cover the down payment. Click here to get a free rate quote.

And, if you are worried about the stock market right now and are worried about the economic climate, then consider diversifying your portfolio and investing in good, cash flow real estate. Oh, and here is a closer look at the Chart from the video.

I will be happy to get you pre-approved and show you loan options that you qualify for. Call me at 1-800-MY-LOANS (1-800-695-6267).

Related posts:

1. The Easy Way to Buy Investment Real Estate
2. Investment Property & Debt Consolidation Change
3. In Studio on The John Adams Radio Show

But, now that we are heading toward Halloween, several changes are upon us affecting the range of Government insured loans.

Trick, or Treat?

A quick review of the Georgia VA, USDA rural housing loans, and FHA loan changes. Then, you can decide.

In October, 2011, the changes are taking effect o all of these loans – and even though they are all government insured, they are managed by different goverment agencies, so the change date is simply coincidence.

• Georgia FHA Loans: Metro Atlanta FHA mortgages were available to a maximum loan amount of $346,250; but now that loan limit has been reduced to a maximum loan amount of $320,850.So, if you are looking at a home and planning to get an FHA loan due to the low down payment required, be careful, don’t get caught in the change and have to either change products or come up with a larger down payment.
• Georgia USDA Rural Housing Loans: For years, those buying in outlying areas outside of metro Atlanta have had access to a USDA rural housing loan, which does not require a down payment. The great thing about the Rural Housing loan has been that there is no monthly mortgage insurance.  Well, that is no longer. The Funding Fee, which took the place of mortgage insurance, is DROPPING from 3.5% of the loan amount to 2.0% of the loan amount. Concurrently, there will now be annual mortgage insurance.  It’s not much – adding $18 to the payment on a $100,000 loan, and adding $42 to the monthly payment on a $200,000 loan. Not bad, and still a very good loan.
• Georgia VA Mortgages:  Similar to USDA Rural Housing loans, VA loans have a ‘funding fee’ which takes the place of mortgage insurance.  Now the funding fee is simply decreasing. In general from 2.15% to 1.5%. But, the chart below will lay out the detail of the funding fee decrease for your situation. Good news for active duty military and veterans.  Oh, and remember, Georgia VA loans still do not require a down payment.

Related posts:

1. Georgia USDA Rural Housing Loans Getting Less Expensive
2. Georgia USDA Update
3. Update on Georgia USDA Rural Housing Funds

You see, HUD announced that as of April 18, 2011 there will be a significant increase in the annual Mortgage Insurance premium. In order to further bolster FHA’s financial strength and ensure that they can continue helping homeowners, HUD will increase the monthly mortgage insurance premium by a .25 point. Right now, when a home buyer puts 3.5% down on an FHA loan, the buyer will pay a monthly mortgage insurance premium of .90. For new case numbers assigned on or after April 18, 2011, the monthly mortgage insurance rate will rise to 1.15.

Let’s take a look at how this will affect a buyer’s monthly mortgage payment. If a buyer was purchasing a $200,000 home today and using FHA financing, they could expect to pay $144.75 for the monthly mortgage insurance. After this new change takes place, they will now pay $184.96 in monthly mortgage insurance which is a $40.00 increase in their payment.

Here is the increase shown from HUD’s mortgagee letter, based on a $163,000 sales price:

Remember, as with any changes that are made to the mortgage insurance premiums, they are effective the date the case number is pulled and NOT the date the contract is accepted. So, my advice is to have the case number pulled if you are in negotiations and it looks like your contract will be  accepted around the mid-April timeframe so you ensure you will receive the lower monthly MI rate.

Inventory is high and rates are low – it’s a great time to buy.  Let’s get those contracts in and case numbers ordered before April 18, 2011!

Related posts:

1. Proposed FHA Changes Will Increase Homeownership Costs
2. Georgia Veterans Still Get the $8000 First Time Home Buyer Tax Credit
3. Atlanta FHA Loans A Little More Expensive

“Mortgage Rates rise again this week…”, stated another newscast.

Uncertainty. That’s what all the newscasters convey about housing.

So, let’s cut through a bit of the uncertainty, and specifically for the would-be first time home buyer in the Atlanta metro market.

It is true to home prices seem to be dropping or ready for another drop of a certain percent.  But not all homes.  They say all real estate is local, which is true, but it is also segmented according to price points.

The lower end of the market – that which most first time home buyers look at – has stabilized in nearly all Atlanta metro counties and neighborhoods.  Last Fall we were beginning to see the prices in that first time home buyer range rise somewhat. Now, over the Winter months, they have plateaued again; and at very affordable levels.  But, now mortgage rates are beginning to rise as well. And that further affects affordability of homes.

Let’s take the average rent that an individual or newly married couple pays in Atlanta.  Without begin scientific, but rather based on my experience, most rents range from $800-$1200 per month in metro Atlanta.

So, let’s go with the high end, say a young couple with one small child living in a 2 bedroom apartment paying $1200/mo in rent.

Now, the child is growing and they want both a good school district – thinking ahead – and a yard to play in in a safe neighborhood.  That couple can buy a home for $160,000 with 3.5% down; or a  Georgia HUD home for just $100 down payment, and this is what their payment would look like:

Yes, all in, their payment would be less than their current rent, even including taxes and insurance.  And, assuming the couple makes a combined income of, say, $70,000 and were in the 25% income tax bracket, then the new payment minus the tax savings would be just $1,114/per month.

And, they got the yard and the pride of owning their own home.

Does this sound like you?  Then perhaps this is the year to buy your own home.  Call me, and I will run each of these numbers specifically for your circumstances.

Related posts:

1. Want to Buy a Home in 2012
2. First Time Home Buyers Will Be Happy
3. $6500 Tax Credit, If You’ve Lived in Your Home 5 Years

And, most people don’t know that 100% financing still exists in some cases – specifically for VA loans and Georgia USDA Rural Housing loans.  And, just $100 Down payment for a HUD home when financing the home through FHA.

Other options for lower down payments are also there, with FHA loans that require 3.5% of the purchase price as a down payment, and using various new forms of PMI to put 5% or so down.

So, John and I discussed this a bit, even getting into FHA gifts for the down payment.

Again, be sure to catch John’s real estate radio show every Saturday from noon-2pm on WGKA 920 AM

Related posts:

1. How to Get a Georgia Pre-Approval
2. 2011 is the Year of the Investment Property in Georgia
3. Fixed Rate or Adjustable – Which is Right for You?

This short video explains the changes:

So, Atlanta FHA loans are set to increase for new loans with case numbers issued after September 7.  Be prepared as you make plans to buy a new home with FHA financing; and plan accordingly.

Aug. 10 UPDATE: HUD announced today that the Mortgage Insurance Premium changes will take effect for new case numbers issued on or after October 4, not on September 7 as originally announced.

Related posts:

1. Georgia FHA Mortgage Insurance Set to Rise
2. Big Changes Coming for Atlanta FHA Loans
3. Atlanta FHA Loans A Little More Expensive

A few days ago I wrote a post defining housing affordability for any metro Atlanta folks in the home buying mode.  Take a moment to read that as you then click over a read the Journal article.

The highlight is the graph:

Sometimes it is good to get a visual of where mortgage rates have been; to know where they are headed.  And as rates tick up, home prices have to drop by a similar percentage to be as affordable.  Based on monthly payment, buying a home now at a 5.0% rate will be a better deal than waiting until home prices drop 2 or 3% more, with rates at 6%.

And if you have let news outlets get to you thinking that you may not qualify for the best interest rates, well, don’t be so certain.  An Atlanta FHA loan, fixed for 30 years, is right now at 5.0% if you have at least a 620 credit score.

Food for thought.

Related posts:

1. Georgia FHA Mortgage Insurance Set to Rise
2. Atlanta Housing Rise or Fall When Government Stops Subsidizing Mortgage Rates
3. Why Are Rates Still at 5.5%?

As a result, many prospective home buyers in my Atlanta market ask one basic question: is it better to buy a home now, or wait for home prices to decrease even further – assuming they will do so – and get an even better deal? Let’s explore the factors to consider whether to buy now or hold off.

But first, did you know that a California home buyer who bought at the top of the market – just before the Savings & Loan Crisis – saw their home value drop an average of 15%, before climbing to a 10% increase within 10 years?

More than just price, the Affordibility of a home is the most important aspect to take into account when considering buying a home for your family. And housing ‘affordability’ is made up of:

1. Current interest rates that you qualify for
2. Current home prices
3. Sustainable income

That will not last. You see, the rates are artificially low, pushed down by a massive Federal program of buying Mortgage Backed Securities (MBS) which are the bonds that determine long-term mortgage rates. And currently Fed Chairman Ben Bernanke has repeatedly said that they will cease this MBS buying program at the end of March, 2010.

There is speculation that the Fed may determine at the last minute that they need to continue buying MBS into the foreseeable future in order to continue to help the housing market. So far, that is simply speculation. Others say that when the Fed does stop buying MBS, then rates will need to increase to attract more buyers to take their place. I agree with the latter position.

Secondly, home prices are down. Moreso in some areas than others. Certainly Florida, Nevada and California are quite depressed from their bubble highs. But even around metro Atlanta, there are pockets where prices are 20% or more off their highs.

And when prices come down, that means things are on sale. Recently I was on a conference call with a leading economist, Harry Dent. He quipped that he just bought a Maserati, at $50,000 less than he would have had to pay 2 years ago. Wow, a Maserati on sale!

And houses are on sale now as well. Will the prices go down further? Possibly. But again, that is not the only factor to consider. “Affordability” is the main factor, and if mortgage rates rise, then home prices have to drop by the same margin to keep prices as affordable as now. That seems unlikely, simply due to demand of a growing population.

Take a look at the following graphs, which track housing affordability:

And this graph that shows, considering the three ingredients in housing affordability, we are now at an all time high, since these stats were tracked:

Finally, the third aspect of housing affordability is income. The graphs above track median household income.

And here’s where your decision-making needs to come into play the most. What is your income? And, what is the likelihood that your income will continue, with stability?

A lot of folks are in companies right now where they can see the writing on the wall – things are not stable. And therefore they may be downsized, or they may need to transfer to another area of the country. If that is you, then wait. Affordable or no, the third aspect in your life to determine if now is the right time to buy a home is simply not there.

On the other hand, if you have no reason to suspect that your income will not remain stable, then you are in the catbird seat.

The next thing to do is to consult with a mortgage professional to determine the amount your are comfortably approved for, and the right loan for your circumstance. Then, you are ready to take advantage of an unprecedented time in the housing market.

Related posts:

1. Time to Lock an Interest Rate
2. Atlanta Housing Rise or Fall When Government Stops Subsidizing Mortgage Rates
3. How Would You Like That 4.5%, 30 Year Fixed Rate?

Now, if you are an Atlanta first time home buyer, call me for Atlanta’s best FHA loan – or any other loan that may work well for your circumstance. The important thing is – to not be a dave . Call me, let’s explore options.

Related posts:

1. A Tip From An Old Dog in the Trenches for Metro Atlanta First Time Home Buyers
2. First Time Home Buyers Will Be Happy
3. Why Now Is The Time to Buy Your First Home in Atlanta

A HUD home for sale in Gwinnett County

But you know the great thing about considering buying a HUD home?  If you finance the property with a new FHA loan, then a buyer only needs $100 down payment.  Right.  Just a Benjamin!  Of course, there are closing costs as well.  When making an offer to buy a HUD home, one can always ask HUD to pay some portion of the closing costs, but plan on needing a bit more than just a hundred bucks to get into the home.

The other great thing about HUD homes is that, although some need some repairs to the home, often times HUD will pay for the necessary repairs as well.

They have each of their properties inspected, and if the inspector notes needed repairs, he will also note an estimated dollar amount to complete the repairs.  And that is the amount that HUD will generally escrow for the repairs, so that you, the buyer, move into a very well-kept home by the time you close and are ready to move.

Certainly Georgia USDA Rural Housing loans are also good loans, which require no down payment.  The reason to consider a HUD home with an FHA loan around metro Atlanta is that USDA requires that the property be in a rural area to qualify, as well as limiting the income of the buyer with ceilings.  So, some properties would not qualify for a USDA loan, and some buyers would not either.

Those limitations do not exist with an FHA loan to purchase a HUD home.  So, if you are in the market and want to consider a HUD home, let me know and I will be happy to direct you to a real estate agent who is well-versed in the negotiating and buying process surrounding HUD homes.

Related posts:

1. Big Changes Coming for Atlanta FHA Loans
2. Atlanta FHA Loans A Little More Expensive
3. Georgia USDA Rural Housing Loans