Georgia FHA Home Loans - (& Opinion)

Once upon a time in a land where gas was 75 cents a gallon and bread was 33 cents a loaf interest rates were in the high teens. Of course I'm writing of the 1980's when our economic situation was not too unlike the one we have today although there were vast differences. Yet during this time and shortly thereafter the FHA streamline refinance was born with one purpose in mind: Get FHA borrower into a lower rate and lower their monthly cost of home ownership.

It was much simpler back then to see the savings. Many families came in to refinance from interest rates as high as 15% or 16% down into rates like 9% or 8.5% - that was then - this is now. Families today are scurrying to refinance from 6.25% to 5% and I can't say I blame most of them. After all on a $250,000 loan we're talking about a couple of hundred dollars a month in savings on interest alone.

First let's dispel a couple of myths about the FHA streamline refinance program. Most importantly the FHA streamline is not a "no closing cost" refinance. There are closing costs and they can be paid one of three ways:

The borrower (home owner) can pay them out of pocket
The lender can pay part or all of them with an interest rate higher than par
They can be rolled into the refinance loan amount

However you choose to pay them, paid they must be. The attorney will not work for free. The underwriter will not work for free. The processor and loan officer will not work for free. Now I know there are a couple of very large banks/lenders telling people they are offering no cost loans. No, they are not. The home owner is paying the closing costs one of those three way. If you are dealing with a mortgage broker instead of a direct lender they are require by Federal law to show you how their commission is applied in the closing costs. Banks and direct lenders are exempt from it but it's still there - nobody does loans for free except maybe a very minuscule number of true non-profits which I have not lately seen.

Qualifications for an FHA streamline refinance vary from lender to lender. Oh I know you thought HUD made the rules. In a way they do make the rules but those are the base line rules. In other words FHA will not insure a loan that does not conform to their qualifications. The lenders (who actually write the check for the loan) have what are called "lender overlays" to make sure their investors are satisfied with the quality of borrowers getting the funds. In other words if you're a deadbeat you ain't getting no money. (Ain't is Greek for "are not", "can not" or "is not".)

Most lenders today are requiring a minimum middle credit score of 620 or higher even to qualify for a streamline refinance. Fortunately we can still get FHA streamline refinances closed with:

No credit examination (all we may need is a mortgage payoff statement - we order it)
No verification of income (employment is required to be verified)
No verification of assets (no bank statements or tax returns)
No appraisal of value (this applies in almost every instance but check with your FHA professional)

Keep in mind the above applies in most cases when I am doing the loan but you really need to check with your loan officer (not all of them are qualified to handle FHA streamline refinances so I can give you names if you're not in Georgia or Florida or the southeast).

Marietta, Georgia is one of the most progressive cities in the South. Our schools in the city and surrounding county are rated some of the highest in the nation and our State School Suprintendent, Kathy Cox, was the first person to ever win $1,000,000 on "Are You Smarter Than A Fifth Grader?"

If you are planning a move to Marietta, Georgia there is plenty of information avaiable. From condos and town homes to luxurious multi-million dollar mansions lining the Chattahoochee River the Marietta area is highly diverse in people, culture and opportunity. We have produced many great names and boast many opportunities for entertainment, worship, work, education, and socializing. In fact one of my old high school friends has a son who stars in the hit television show "Heroes". You may know Randall Bentley the star. I know his father Randall Bentley the attorney.

Marietta is home to Lockheed/Martin as well as dozens of other major national employers and thousands of mid to small sized businesses. It is the county seat for Cobb County one of the most conservative counties in the nation. Newt Gingrich is one of our most well know politicians. Other celebrities from Marietta include Travis Tritt, Julie (Julia) Roberts, Robert Patrick (T-1000 the metal cop in Terminator 2 and a thousand other roles), and if you like the Food Network you are probably familiar with Good Eats star Alton Brown.

Having said all of that if you are moving to Marietta, Georgia I can tell you things your agent can't and I can also get the check for you to buy your home. FHA, VA, Fannie Mae, jumbo and construction loans. I am a life long resident of the area (that's 50 years worth) and know where the old oak tree used to be by the cow farm that is no more. I know Marietta, Georgia very well.

As a mortgage banker I have the distinct privilege of being simultaneously a genius and an idiot. The viewpoint is reached as a matter of perspective and today I get to be an idiot because I have to, once again, undo what the news networks have done. This means I am spending extra time (15 minutes or so) with all of my customers and educate them in what most of the media needs an education. You see it's all over the news today that rates are headed to the fours. Orly?

First let me say I agree that rates are down and may stay down for a week or more. The danger of reporters (here I go again) putting forth information that "rates are headed down into the fours" is that they have no idea what would cause this or even if it is a fact. Having attended a University where many journalism majors have gone on to great things and having known some of them in school I still have to wonder if they are as ditsy today as they were 30 years ago. This is not intended to disrespect all journalists just most of them - BECAUSE they terribly muddy the waters on highly important issues by delivering information they do not understand to the masses who also do not understand.

Next let me add rates are driven by the market - the government does not (yet) mandate rates. Once we become fully socialist then the government can set rates but we are not quite there ... yet. If Mortgage Backed Securities are not producing a profit for investors rates are up - if those same securities are producing a profit for investors rates are down.

Rates are still based on risk. Riskier loans still have higher rates. FHA rates are not the same as straight Fannie rates. Rates in Florida are not the same as rates in Georgia. Rates on a $60,000 loan are not the same as rates on a $180,000 loan. Rates on a loan with 20% down are not the same as rates on a loan with 10% down. Rates with a 680 credit score are not the same as rates with a 755 score. Some investors (Fannie, Freddie, Ginnie) offer programs at Fixed 30 terms that others do not offer. It's not as simple as saying, "the mortgage rate today is 5% and tomorrow will be 4%".

The biggest lie the mortgage industry has ever told you is "Today's Fixed 30 Rate Is ..." and the second biggest lie they have ever told you is "No closing costs ..."

One thing you could see happen over the next few weeks to help keep rates down is based on the very basic economic principal of supply and demand. It is possible that so many people will be buying and refinancing over the next few weeks that rates will need to adjust to help keep the supply of money in check with the demand. This is where the rubber really meets the road and we get to see how many deep pocket investors step to the plate. I don't know the answer, CNN doesn't know the answer and the mighty supreme Congress does not know the answer (they don't seem to know the answer to many questions).

Yes, rates are down. Your local mortgage broker (the one within driving distance from your home so you can throttle them when they mislead you) is required by Federal Law to show you ALL of their income. The lender 3 states away is NOT required to show you all of their income. With a local broker from your area you should easily be able to get the best rates and best closing costs and if you can't that's simply because you don't know how to shop for a mortgage and are continually misled by the media.

I can fix you. If you are in Georgia or Florida visit my work blog and subscribe for almost daily updates.

EDITED: Only five hours after posting this the rates did a U-turn and headed back up. What say ye media geniuses now, eh?

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