Y’all know that I dig The Cromford Report.

And not just because I respect Michael Orr, who founded The Cromford Report and who has been chief analyst and editor since its inception in 2006. The fact that Mike holds a master’s degree in Mathematics from the University of Oxford, has been investing in real estate since 1976, and is director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at Arizona State University, should say something about his credentials.

I’ve mentioned to you in the past that the data in The Cromford Report™ comes from public records and under license from the Arizona Regional Multiple Listing Service (ARMLS) is another source of confidence. Reputable organizations like The New York Times and Get Your PHX regularly refer to The Cromford Report for daily real estate market insight in the Greater Phoenix residential market should come as no surprise. What the magic soup, secret spices, and mathematical wizardry is that makes the data into the graphs, charts, index, etc. at The Cromford Report™ is a mystery, but the results are certifiable.

I first wrote about The Cromford Report in March 2011. I’ve been citing it more frequently, lately, and I’ll be doing more so in the months to come.  If you are a real estate investor in Phoenix, you need to subscribe to The Cromford Report.

The Market Index

If there’s one thing you really need to pay attention to on The Cromford Report, it’s The Market Index. If the market gauge is over 100, it’s a seller’s market. Below 100 is a buyer’s market.

Look at the Market Index for today.

This Index is really handy. Based on this number, well over 100, are we in a seller’s or a buyer’s market?

If you follow The Cromford Index (or you’ve been reading my posts), you’ll know that number has been on the rise for the last year.

Historically, you can see what things looked like before and compare it with today.

Back in September, 2010…

Let’s back up to April 2005 and take a look at the Market Index was in context of the years leading up to 2010.

This is Central Phoenix, all areas and types of residential homes, between 2002 and 2009…

At the peak, in April 2005, the Market Index was way, way over 100, making it whose market? (I know. You don’t even have to look; some of you may not want to). Right now, today, the index is 160-ish. We’ve been seeing this coming for a long time.

Here’s the skinny.

This is a VERY HOT seller’s market.

It will not always be that way. If you’re thinking of selling, you have to get in there now. It’s been going up since late last year, but do not assume prices will go up forever. We know they don’t. We know they won’t. It’s so easy to lull yourself into a false sense, especially when you don’t track invaluable resources like The Cromford Report.

“If I just wait 6 months, the prices will be really high” they say.

Yeah, and maybe, if everyone waits six month, there will be no inventory, and the bubble will burst. Or, maybe, interest rates will go up, and then the bubble bursts.

Move on it now. Contact me when you’re ready. I’ve got your back.

I can be reached on my cell at 602-456-9388 or via email Ken@GetYourPHX.com

Last week, we saw how understanding relevant data is vital to how I inform my gut instincts as an agent.

This week, let’s look at how data on historic neighborhoods informs my gut and how what I’m seeing in several “overflow areas” plays into it. Homes in historic neighborhoods are getting more and more expensive, and they will continue to do so as people who value those homes will continue to buy just outside the historic areas. Why? Simply because there is a finite number of them and more people want homes with that character.

So, over-time more people have renovated historic neighborhoods that neighbor the original historic neighborhoods. The supply increases.

This “spillover” dynamic has given us our 35 historic neighborhoods. Specifically, neighborhoods that were seen as “not ready for prime time” are improving right next to the current neighborhoods.

The first historic neighborhood in Phoenix was Roosevelt. Garfield, FQ Story, Willow, Encanto, Palmcroft, and others followed. People around them started saying:

Wait, we have older homes. We either don’t want to or we can’t afford to buy in the historic districts. Or, we believe our neighborhood is unique historically. Let’s apply for historic designation here.

The number of neighborhoods with historic designation has been increasing over the last 30 years, and very dramatically over the last 10 years. Because of my expertise, immersion in the data, and instincts, I know where the spillover is going to happen next. I’m seeing a lot of renovation in areas which you should not pass over for consideration when looking for a home.

Another thing to look for are the “historic-adjacent” neighborhoods. These may never get historic designation, but they benefit from their proximity to historic neighborhoods.

Example: the Woodlea and Melrose districts at 7^th avenue.

The northern of Woodlea is Glenrosa Ave. Technically, north of Glenrosa is not historic because not enough people maintained the original condition of their homes there and not enough people wanted it to be historic.  Homes in the non-historic neighborhood, are much more expensive and enjoy greater stability than they woiuld if they weren’t right next to the historic neighborhood of Woodlea.

What about the east side of 7^th AVe where the houses are very similar to the ones on 7^th Avenue? Unfortunately, they don’t have that historic designation to benefit from.

I’m seeing neighborhoods that were formerly avoided to some degree by agents, but we’re starting to see some good renovations.

Specifically, I’m seeing a lot of renovations in the listings west of 19^th avenue, south of Indian School, and as far south as Encanto. These have a lot of navy brick homes, which are hard to find and very sturdy. New home construction is too expensive and almost never brick. Brick is more stable, better for deterring termites. These were homes built in the 1940’s and 1950’s for the most parts.

I’m also seeing some nice renovations in the area of 24^th street and Thomas; also brick homes. In some areas it’s street by street, where one street is great—with a lot of renovations—and the next street isn’t so good. Another area where I’m seeing a lot of renovation is east of 16^th street, west of the 51 freeway, and south of Indian School. Even compared to a year ago, it’s improved noticeably. It’s happening in that area because it’s spilling over from the Coronado historic neighborhood (which is getting oversold: too many buyers, not enough houses), so people that aren’t finding things under $200,000 are pushing over to the 16^th street areas.

That area has been a little rough in past years, but you’re going to start seeing more and more renovations just outside of the traditional historic neighborhoods, because the historic neighborhoods are pricing higher. Classic supply and demand. You might consider looking into these 16^th street areas because of the action that’s going on there.

There are other neighborhoods further to the east that are going up in price as well, on the other side of the 51, going all the way over to Scottsdale. Give me a call if you’re curious about that.

Shoot, give me a call if you’re curious about other historic spillover areas you’ve got on your mind as well.

I look forward to talking with you. I can be reached at 602-456-9388

This week I want to talk about how data informs my gut sense. What does it mean when I talk about different types of ‘data’ in my posts? A hugely reliable source of my data comes from The Cromford Report.  The Cromford Report takes data directly from the Multi-Listing Service, which is the most accurate report of sales in Arizona. In this next graphic, you’ll see what the Cromford Index does. Two things you need to know about this chart on Phoenix for the last 30 days:  Above 100 and below 100.

Look at the two gauges on the left and right sides. Anything over 100 is a seller’s market. If the arrow is in the green, it’s good for sellers; red, it’s good for buyers. As you can see from the 30-day chart at the bottom of the graphic, the supply is really flat right now. That’s because we’re not getting a new supply of homes into the available inventory, which means it’s a seller market. Between buyers (the Supply Index gauge on the left) and sellers (Demand Index gauge on the right) you’ll see demand is pretty flat (in the yellow zone). In an ideal world, buyers and sellers are equal in getting what they want.

 Macro

This chart below is for Phoenix, for the last couple years.

You can see here, in the pink, that it became better for sellers in 2011. It’s at over 100, so it’s better for sellers. Since 2011, it’s been increasingly better for sellers, there was a little drop off at Christmas 2012, but then it’s popping up again. The long-term Crawford Index tells us that things have been getting better for sellers for a while –for much longer than the media was reporting.

Can I get any worthwhile information on just a month worth of data, or must I have a year’s worth of data to be able to offer any real value?

With the Crawford stuff, you have to look at the micro and the macro, balance them out, and end up with the gut feeling (many authors on decision making whom I’ve read say that the gut reaction is the more accurate than we might think). You have to be in the business and see lots of data to get that gut sense.

Micro micro

Check this out, we can look at zip codes also in The Cromford Index.  Isn’t that cool? This is a micro-micro example of using data. This data shown in the chart below is for $100,000 to $250,000 on Phoenix zip codes for 85003, 85004, 85005, 85012, 85013, 85015. This is SFR in Maricopa county. It’s a 6-months moving sales, and it’s really janky because there aren’t that many homes in that price range.  It’s a pretty small area for home prices.

I have used this kind of data in the past (3/26/10 – “Data is right. Media is wrong” and 8/25/09 – “Can I Say I Told You So?” to make my cases about I saw (based on the data) and felt (based on my gut instincts) was going to occur.

Was I right just because of the data?

Not at all. I took the data and used it to get the gut instinct. You’ve seen me put up images of supply, inventory, and demand, on this posts and in the past, and you’ll see them in posts to come, but what I’ve found is you use the macro and the micro data, but in the end you have to go with your gut.

Next week, we’re going to talk about data as it relates to up and coming areas. I can tell you now what my gut instincts tells me:

The micro data shows price increases, but I also know that people are getting priced out of historic neighborhoods, so they’re going next door. I know those neighborhoods. And not just from an aesthetic perspective, but from gut instinct.

Give me a call, buy or sell.  Go with your gut.

Last week, I shared details of the actual percentage of the increasing value of homes in the downtown Phoenix historic districts between January 2011 and October 2012. This week, I’ll open it up to CenPho, still focusing on the historic neighborhoods. You’ll find this very interesting and informative…

The bold numbers are the percecentage of change in those areas that follow:

No Change

I believe that we have not seen much change in these historic neighborhoods because they are so small and unique. We just have not seen much turnover in homes here.

Ashland Place Historic District
Hoover, Vernon and Ashland Avenues between Central Avenue and Third Street

Alvarado Historic District
Central Avenue, Oak Street, 3rd Street and Palm Lane in Phoenix
Note: I have a great listing at 140 E Coronado, directly behind the Phoenix art museum. This is a great, stable neighborhood.

East Alvarado Historic District
Central Ave., 3rd St., Oak St. and Roanoke Ave.,

East Evergreen Historic District
McDowell and Fillmore Sts., Central and 7th St.,

Up to 15% increase
This is generally the same as those areas noted above. This is a relatively small area and there is not a lot of turn-over.

La Hacienda Historic District
Thomas Rd. and Earll Dr. between 3rd St. and 7th St.

15% – 24.9% increase
The change in these areas is a result of some really nice renovations of historic homes. You are not seeing the huge increase in prices, as with those areas further down in this post because these areas remained surprisingly stable throughout the recession –at least by comparison. These areas prove my premise: that historic neighborhoods survive shocks better than other neighborhoods.

Campus Vista Historic District
Osborn to Thomas, 7th Avenue to 15th Avenue.

Cheery Lynn Historic District
Flower St, Earll Drive, Randolph Road, and 16th Street.

Country Club Manor
7th St. Osborn Rd and Thomas Rd

Del Norte Historic District
Virginia Avenue to Encanto Blvd, 17th Avenue to 15th Avenue

Encanto-Palmcroft Historic District
Encanto Bvd, McDowell Rd., 7th Ave. and 15th Ave.,

Encanto Vista Historic District
Encanto Bvd, Thomas Rd., 7th Ave. and 15th Ave.,

Fairview Place Historic District
15th Ave., McDowell Rd., 18th Ave., and Encanto Blvd

F.Q. Story Historic District
McDowell Rd., 7th Ave., Roosevelt St. and 17th Ave.,

Idylwilde Park Historic District
11th St and 12th St. Weldon Ave. and Fairmount Ave.

Margarita Place Historic District
15th Ave and 16th Ave along Edgemont Ave.

Medlock Place Historic District
Missouri and Camelback Rds. Central and 7th Aves.

Melrose-Woodlea Historic Neighborhood
15th ave to 7th ave and Indian School to the canal

Oakland Historic District
Van Buren and Jefferson Sts. 7th and 15th Aves.

Pierson Place Historic District
Camelback and the Grand Canal Central and 7th Aves.

Woodland Historic District
Grand and 19th Aves. and Van Buren and Fillmore St

Yaple Park Historic District
The Canal and Indian School Rd., 7th and 15th Aves.

25% – 34.9%
Willo saw some terrible price drops, but really started coming back in 2011. I believe a lot of this prices increases in Willo became apparent earlier than those shown far below.

Los Olivos Historic District
Located along Monte Vista Road between Third and Seventh streets

Roosevelt Historic District
McDowell Rd and Fillmore St. Central Ave. and 7th Ave.

Willo Historic District
Central and 7th Aves. McDowell and Thomas Rds.

35% or more increase
These areas really saw a huge dump in prices during the recession. The Coronado neighborhood, for example, was priced incredibly high on a per foot basis before the drop and they saw a huge downturn. Garfield neighborhood is increasing for other reasons –can you say “ASU expansion?” Garfield is going to be an important downtown neighborhood in the coming years and everybody is jumping in on it. I just hope that those who are jumping in are actually renovating the homes and not just acting as absentee landlords.

Brentwood Historic District
McDowell to the I-10, 16th Street to the 51

Coronado Historic District
Virginia Avenue to Coronado Road, 8th Street to 14th Street

Country Club Park Historic District
Thomas Road to Virginia Avenue, 8th Street to Dayton Street.

Earll Place Historic District
Earll Drive and the north side of Pinchot Ave between 16th and 18th st.

Garfield Historic District
7th St. 16th St. VanBuren St. and I-10

North Encanto Historic District
Osborn and Thomas Rds. 15th and 19th Aves.

Windsor Square Historic District
Missouri and Camelback Rds. Central Ave. and 7th St.

We were not certain that The Mortgage Forgiveness Debt Relief Act of 2007 was going to survive into 2013, regardless of the much ballyhooed fiscal cliff. The Debt Relief Act simply says that you will not pay taxes on the amount of debt you are forgiven if you short sell or foreclose on a home. 

The 11th hour congressional extension means homeowners will not have to pay taxes on forgiven mortgage debt from short sales or loan modifications until 2014. The Relief Act was set to expire December 31, 2012.

Without the tax break, a homeowners forgiven debt could be considered taxable income.

“Housing advocates and lawmakers [were] worried that the exemption [would] disappear just as thousands of homeowners [were] receiving large amounts of mortgage debt relief from the nation’s five largest banks as part of a national settlement of foreclosure abuse investigations.” ~ Jim Puzzanghera, Chicago Tribune

The five big banks the reporter for the Tribune is referring to are Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. As of September 20 last year, the article goes on to say, “Nearly 140,000 homeowners received some type of relief under the settlement, averaging about $76,615 each.”

As we are all well aware, homes today are worth much less than what they were purchased for in the housing bubble. By reducing the value of a troubled mortgage to the current value of a house, banks are frequently able to save themselves money. If the tax break had not been extended, any mortgage debts a bank forgave would then be counted as taxable income. In other words, if a $350,000 mortgage were reduced by the bank to a then current value of $250,000, the happy homeowner would suddenly become the proud owner of a $100,000 income tax bill.

“As a result, a homeowner struggling to pay the bills would be faced with tens of thousands of dollars in taxes. That would destroy any hope of establishing future mortgage debt relief for troubled homeowners, as any bank leniency would result in heavy tax trauma for borrowers.” ~ Zach Carter, The Huggington Post

According to CNN/Money, over 50,000 families lose their homes to foreclosure every month.

A sigh of relief is in order. Whew.

Here is the important take-away: Take advantage of this fiscal-cliff debt relief tax extension…now…while the next 12 months are still in play. Give me a call or drop me an email. I will absolutely sell your home, even if it is short sale.

Choosing an agent is a very personal decision. 

Let’s grab a cup-o-coffee, I’ll explain the Get Your PHX Method and you can see if I’m the right agent for you. Try before you buy!

While some of you will understand instantly what this post’s subject title means, others will get lost along the way if we don’t clarify some road signs.

That ‘FHA Anti-Flipping Rule Waiver’ stop sign is good through ‘Dec 31, 2012’. No California-stops, please. Thank you.

Before moving forward, let’s make sure we all understand the legal definition of “Property Flipping”:

A practice whereby a property recently acquired is resold for a considerable profit with an artificially inflated value.” ~ Housing and Urban Development / Fair Housing Administration (HUD/FSA)

(And for those who think flipping requires anything less than deep pockets and lots of hard work, the creator and star of A&E’s reality show, “Flip This House” has some great insight into the inevitable question: Is house-flipping as easy as it looks on TV?)

The stop sign was put in on February 1, 2010 by HUD/FHA. Before that, there was one of these:

What that meant was that prior to the February 1, 2010, HUD/FHA didn’t allow a home buyer to use an FHA loan when purchasing a home from an investor who bought the home, did repairs and renovations, then listed it for sale within ninety days of the original acquisition date. If you were a buyer with an FHA loan, you had to wait until the 91st day to make an offer on a flipped home sold by an investor.

This prompted investors to stay away from HUD owned homes, which had the kind of negative effects we’ve all seen with REO’s (bank owned homes) being abandoned for long periods of time, leading to vandalism, squatters, and reflecting poorly on the surrounding community. The rule was originally supposed to expire in Feb 2010, but with so many houses distressed and foreclosed the FHA waived the rule (video) to encourage home buying until Dec 31, 2012.

Because of the FHA 90-day flip waiver extension (full PDF guidelines), investors can now accept offers from FHA buyers within the first 90 days.

This has been an important extension because the goal of ‘house flipping’ is (of course) to sell the home as fast as possible and for as much as possible. This helps to stabilize home prices by allowing home investors to purchase HUD or bank-owned houses and sell them quicker, raise housing prices faster, removing all the negative effects of abandoned homes, and therefore turn the housing market around sooner.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.” ~ HUD.gov

Come Jan 1, 2013…

What lies ahead for the U.S. Housing Market…?

What about closer to home, say Central Phoenix? I’ve been writing about that very thing over the last couple months in my series ‘Get Your PHX Market Briefing’ based on my expertise in this area and with invaluable input from Mike Orr at The Cromford Report.

If you would like to be part of a future ‘Get Your PHX Market Briefing’, please contact me at 602-456-9388 or feel free to email me.

If you owe a debt to someone and they cancel or forgive that debt, the canceled amount may be taxable. Same goes for mortgage debts. Hence, the creation in 2007 of the Mortgage Debt Forgiveness Relief Act. The IRS explains the concept surprisingly well. This act expires in 96 days, the end of this year, after the holidays; much sooner than you realize.

People have been opining this whole year about the possible extension of the $1 billion mortgage debt forgiveness relief provision at the end of the year. I’ve been hearing the following:

“Should I short sell before the end of the year?”

“Can I count on the hopeful January 1 extension?”

“The $1 billion mortgage debt relief provision allows me to avoid paying taxes on mortgage debt forgiven by my lender, but it expires at the end of the year! My chance to short sell and still seek tax relief is disappearing quickly!”

“But I hear these holiday months aren’t as slow as one might think. Oh, no! I’m almost out of time to avoid the tax repercussions of selling my home short!”

Let’s be clear on what the act does.

The 2007 Mortgage Debt Relief Act allows taxpayers to exclude up to $2 million of forgiven debt on their principal residence in calendar years 2007 through 2012. With one caveat: The discharge of debt must be directly related to the decline in the residence’s value or in the financial condition of the taxpayer.

The Mortgage Forgiveness Debt Relief Act was originally going to expire at the end of 2010, but lawmakers decided to extend it until the end of 2012. If it does expire, anyone who receives mortgage forgiveness on day one of 2013, or after that, will have to face paying income tax on a forgiven debt.

Isn’t it in the President’s budget?
Didn’t it pass the committee level in the Senate?

Yes/But… We don’t know the outcome of the election in November and nothing is moving in Congress for the next 6 weeks. This time bomb very likely won’t be voted on before the end of the year, what with their attention consumed with the nation’s budget crisis.

Furthermore, given that it takes 3 to 6 months to close on a short sale…Are you really willing to take the risk that the act will be extended?

What’s the bottom line?

List now and be more certain that you will avoid that tax liability. I strongly advise you consult with a tax attorney!

[referee photo: compujeremy] [house photo: surprise truck]

Nobody has any idea. But I predict that, while it won’t be as dramatic as our last, it may go on for a while.

Here’s the analysis:

After the presidential elections in November, regardless of the winner,  prices will continue to move upward. How do I know this? And why does this sound like a weather report prediction?

It’s because the coming change in home-buying patterns is showing evidence of a refreshing rain moving our way. After a six-year long summer of dry, cloudless skies, we’re beginning to smell the change in the air. A break from the scorching heat is a ‘comin.

To say it without the weather analogy, the increase in buying will continue, in part because a lot of companies are holding off on major projects and hiring until after the elections’ fallout. However, that upswing won’t be dramatic because our national debt and energy prices will continue to be a drag on our economy.

In regards to prices, we don’t see where new inventory in our Phoenix market will come from, especially in CenPho. Tight inventory means higher prices.

Mark Zandy, one of the nation’s preeminent housing analysts was on the Diane Rems Show yesterday morning talking about prices and how they are continuing to move upward as distressed properties are going away.

In Phoenix house prices have gone up 30% from last year. Yes 30%.

Take a look at the graph below, showing the Monthly Average Sales Price Per Square Foot. You can’t see the wind, but you can tell how and where it’s moving by watching the things it affects.

This chart shows a snapshot of four years worth of housing prices on the move. The brown line on top, the one with the greatest upward spiking is 2012.

My expert conclusion?

The heat is unbearable and so many people are walking around with sunburned proof of the long, hot summer. If you’re thinking of buying, make your move and buy now.

I want to say this very clearly: while prices will be going up for the foreseeable future, they won’t return to 2007 levels for years. So, if you are thinking to BUY, do it now before you lose another 30% of your buying power. If you think you want to hold off SELLING until you hit 2008 prices again, don’t expect to see that again until 2020.

If you want more information, please contact me at 602-456-9388.

Our go-to gal, Nova Home Loan’s Sr. Loan Officer, Jeannie Bolger,  mentioned Reverse Mortgage’s the other day and I thought you’d all appreciate some insight into them.

Like the name implies, a Reverse Mortgage is a product that allows you to convert some of your home’s equity, from all those mortgage payments you’ve been making over the years, into cash without the need to sell your home or pay additional monthly sums. The only point of entry is age: You must be 62 or older to be eligible for a reverse mortgage. And if the state of your credit is on the rocks because it has “issues”? Get this: no credit check required.

If you’re still reading, you’re eligible, you know someone who’s eligible, you’re not so far from being eligible, or I’m just a captivating blogger who you read because you know you’re gonna’ hear something good. Whatever the reasons, having extra money for home improvement, taking care of healthcare expenses, paying off your current mortgage, or adding to your retirement income are all common reasons why people apply for a Reverse Mortgage.

Word on the street, is that there are numerous restrictions on how someone who qualifies for a Reverse Mortgage can use the funds, but Jeannie Bolger gives us the facts:

“The senior can use the proceeds anyway that they wish with one exception: they cannot pay someone simply for advising them to get a reverse mortgage. Seniors can use the money for:

• Medical expenses
• Travel
• Pay property taxes or insurance
• Purchase an equity or long-term health coverage
• Large purchases (RV, a second home, etc.)
• Early inheritance distribution
• Normal household expenses
• In-home health care
• Home repair or improvement
• Eliminate an existing mortgage payment
• Anything you want or need

And according to the Department of Housing and Urban Development’s FAQ on Reverse Mortgages, “Unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.”

You can receive additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301 or   downloading their free booklet, Use Your Home to Stay at Home, a guide for older homeowners who need help now.

The Federal Housing Administration’s HECM reverse mortgage eligibility guidelines require that you:

• Be a homeowner 62 years of age or older
• Own your home outright
•         or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan,
• You must live in the home.
• Your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. (HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.)
• You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan.
• You can find a HECM counselor online or by phoning (800) 569-4287.

The difference between a reverse mortgage and a home equity loan.

“With a second mortgage, or a home equity line of credit, borrowers must have adequate   income to qualify for the loan, and they make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.”

~ HUD

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal. See this link and Get the Facts before Cashing in on Home Equtiy

See Jeannie Bolger, Sr. Loan Officer for your direct connection to a Reverse Mortgage.

Licensed Mortgage Consultant #194387
Nova Home Loans
2850 E. Camelback Road, #270
Phoenix, AZ 85016
602-550-8674  Mobile
602-385-4812  Office
602-464-7322  Direct Fax
jeannie.bolger@novahomeloans.com
http://www.novahomeloans.com/jeannie.bolger

First, a quote from our resident expert, Sr. Loan Officer of Nova Home Loans, Jeannie Bolger:

Effective June 11, 2012–for  any FHA note that was endorsed by HUD on or before May 31^st, 2009–qualifies for reduced MIP on a Streamline Refinance (No Appraisal).  Upfront MIP goes to .01% and Annual MIP will be .55%. Current upfront MIP is 1.75% and the Annual is 1.25%. HUGE SAVINGS.

What? You don’t speak Klingon or Mortgagease?

This may help.

The Federal Housing Administration (FHA) is a branch of the Department of Housing and Urban Development (HUD). The FHA was developed during the Great Depression as as an effort to stimulate the real estate housing market. The main purpose of the FHA is to encourage home ownership in the United States. To accomplish this, the FHA insures mortgages against the default of borrowers. 

Do you have a current FHA loan (note) that was endorsed (or closed) by HUD prior to May 31, 2009? If so, your FHA loan qualifies for a significant reduction in your upfront Mortgage Insurance Premium (MIP; an insurance policy that compensates lenders/investors for losses in the event of a defaulted mortgage loan) on a Streamline Refinance (No Appraisal).

The current upfront MIP is 1.75%. Let’s say your FHA Streamline Refinance of your home is for a new $100,000 mortgage. The FHA will charge you $1,750 upfront on the mortgage insurance premium (MIP). You pay this at closing and the $1,750 payment  automatically rolls  into your new loan balance.

On June 11, the new upfront MIP will be  .01%  This is a HUGE SAVINGS. Using the $100,000 new mortgage example above, you would only pay $1 !

Also beginning June 11, 2012, the FHA will reduce it’s 1.25% annual MIP ($1,250) to just .55 % for certain FHA borrowers (or $550)–more than a 50% savings!

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. 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,” said Federal Housing (FHA) Commissioner, Carol Galante. Read the full HUD Press Release here.

Read Jeannie Bolger’s quote at the top of this post, again, and you’ll be amazed at how much Klingon Mortgagease you speak!

REMEMBER: For home loans endorsed by HUD before May 31, 2009

PLEASE NOTE: Loan application may be started prior to June 11^th, but FHA case # must be ordered after June 11^th, 2012 to qualify for program and reduced MIP.

Call Jeannie Bolger, Sr. Loan Officer Nova Home Loans, for more information:  (602) 550-8674

[Photo: Images_of_Money]