Currently, most borrowers using an FHA home loan pay an up-front mortgage insurance premium of 1% of their loan amount at closing, a fee which is usually added to their loan amount. In addition, the borrower will also pay an annual mortgage insurance premium of up to 1.15% of the loan amount as part of their monthly payments. This premium is essentially being used to offset losses incurred on existing loans that have not performed.

Proposals that have been floated to address the shortfall are a further increase in credit requirements, higher minimum down payments, and increased mortgage insurance premiums.

It is unlikely that increased premiums will go into effect before 2012, but home buyers should be aware of increased borrowing costs that may be around the corner. Taking advantage of today’s discounted home prices and near record low rates can make a lot of sense for many home buyers.

Many Democrats in Congress opposed the increase as did the Obama administration because they felt this would enable FHA to continue to gain market share at the same time the administration wanted private lending to take on a bigger role in home mortgage financing. Ultimately, both the House and Senate voted to advance the bill beyond the votes needed to override a Presidential veto.

The new loan limits for FHA now cap out at $729,750 in designated high cost markets. The loan limit in the Houston area which also includes The Woodlands, Conroe, Tomball, Spring, Katy and other parts of the metro area will remain at $271,050 for a single family property, $347,000 for a duplex, $419,525 for a three-family home, and $521,250 for a four family home. The FHA continues to provide a necessary funding source for home buyers who cannot meet the rigid underwriting requirements in effect for conventional loans and has kept the Houston housing market relatively stable. Getting pre-qualified for an FHA loan is a fairly simple process that only takes a few minutes on the phone with one of our loan officers.

Once again, both of these averages set new lows for 2011.

Bond investors continue watching the developments in the European Union economies. Germany (this week) has pronounced that they would assist Greece with their critical capital needs to add stability to the Euro. The strength of the German economy appears to be the only factor preventing complete disaster for the EU. Despite the lower averages, major lenders have not reacted with lower mortgage rate postings this week.

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%). We continue to advise refinancing candidates to take immediate action if their existing rate exceeds 4.875% on 30-year loans as long as their outstanding balance exceeds $100,000. It remains an ideal time to uproot old 30-year loans and replace them with 15- (or even 10-year) fixed rate programs as long as no more than 5 to 7 years has elapsed since their current loan was closed.

The average for the 15-year fixed program equaled 3.33%, a decrease of .06% on the week.  Both of these averages set new lows for 2011.

Mortgage-backed security prices have continued to increase this week as the equity markets throughout the world remain under selling pressure. The eager anticipation surrounding President Obama’s Thursday address on job creation did not carry forward in a positive way to stock market trading on Friday.

Also, this week’s jobs data statistics continued to illustrate a total lack of employment growth in the US economy. Simply put: The American investor has lost faith in stocks and is unshakeable in his resolve to avoid risk .

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%).

Our advice to refinancing candidates is to request a breakeven analysis if their existing rate exceeds 4.875% for 30-year terms and 4.125% for 15 year terms. A very simple tool for this purpose can be found on our website (http://www.HLSTX.com/) under mortgage calculators.

Below, we developed a refinance analysis for homeowners who purchased in 2006.   It is stunning how much you can save over the life of your Texas mortgage!

Be sure to call our office at (832) 286-1600 or email Rick@HLSTX.com for your customized analysis!

Original Loan Information

Refinance Today – 30-year Loan

Refinance Today – 15-year Loan

With this seemingly never-ending heat wave gripping the Houston area, here are some simple ways that homeowners can attempt to stay a little cooler while inside their homes.

• Close your blinds and curtains to keep out the sun and the heat.
• Close the vents and doors to any rooms that aren’t being used.
• If you do not have air conditioning, keep your activities to the lowest level of your home since heat rises.
• Avoid using the stove or the oven (use the microwave) and put-off on running the dishwasher (don’t use the heat cycle for drying) or washing laundry until after the sun goes down.
• Replace manual thermostats with programmable thermostats and set them at around 78 degrees or higher during summer months.  Raise the temperature of the thermostat when you leave, but do not turn the air conditioning off. Your unit will have to work too hard to get your home’s temperature back down later.
• Keep your air conditioner clean. Outdoor units can get clogged from weed pollen and other materials that are floating around in our outside air.  Use a hose to spray your a/c unit down; making sure all plant debris is washed away from the unit.  Ensure the inside filters are cleaned or changed monthly.
• Use ceiling fans (or install some) to allow you to be comfortable at a higher ambient temperature. The air movement can make you feel several degrees cooler and make it much easier on your a/c and utility bill.
• Have a pitcher of icy water ready in your refrigerator. Letting the water run from the tap until it turns cold is wasteful and inefficient.

Aside from keeping yourself and your family safe from these brutal temperatures, also be sure to check on your neighbors, friends and relatives you think might be at risk in this kind of weather, and keep your pets inside with you.

Natural disasters are an inevitable part of life, and we need to be as ready as we can.   Recent wildfires, droughts, and floods in the Midwest serve as reminders that these events can happen here in Houston, at any time.

Most people haven’t peeked at their homeowner’s insurance since the day they sat down to sign their closing documents.   Although it isn’t fun to dwell on the possible misfortunes that can transpire with our homes, it is vital you ensure that your homeowner’s policy covers your family’s needs.

Take a few minutes to review the steps below to give your homeowner’s policy the “once over” and guarantee that you have the best coverage in case of an emergency.

Inventory Your Home

In a study cited by the National Association of Insurance Commissioners, 48% of homeowners surveyed stated they had not taken inventory of items in their home; of those who did, 32% had not taken photographs and 58% had no receipts.  Having this information will not only make it easier to establish what you have lost in the case of a catastrophe, but it will also help you determine whether you currently have the correct level of homeowner’s insurance coverage.

How to create a home inventory

Click here for a home inventory checklist from the NAIC or iPhone users can download the free app here, where you can take photos of your possessions, write descriptions for each picture, and store the information online.

• The first items on your list should be the more expensive in your home; jewelry and fine art, family heirlooms or other collections, flat-screen televisions to musical instruments.
• Don’t forget to list items you keep stored away for most of the year, such as holiday decorations, sports equipment, tools, etc.
• Take detailed photographs or videotape of each item.   Write a brief description of each item including purchase price, purchase date and estimated current value.
• Categorize your possessions for easy review.  You can sort by room, by hobby, by season, etc.
• Organize all copies of original sales receipts and/or appraisal documents.  Include model numbers and serial numbers.  Scan these receipts into your computer for extra back-up.
• Store this inventory online, on a removable disc or hard drive, in a fire-proof safe, or even a safe deposit box at your bank.  It is good to keep this information at a secure off-site location, just in case the worst happens.

Know your policy terms

Different policies contain different provisions with regard to losses.   Some provide replacement cost, which is how much you would have to pay in order to replace items or rebuild your home based on current rates.  Replacement cost coverage on your house does not mean the market value of your home, nor does it include the value of the land on which it stands.   It is the cost supplies and work needed to repair your home.

Others provide actual cash value coverage, which is the cost to replace your home and possessions minus the depreciation of those items from the time they were purchased.  These policies tend to cost less, however they also provide notably less coverage to the homeowner.

Know your policy terms and have the correct coverage

Most homeowner’s policies provide coverage in three areas of loss: structure, contents and additional living expenses.  Typically, insurance companies pay their claims for each of these coverages separately.

After a dwelling loss such as a fire, the insured will likely receive an advance check for additional living expenses to defray the immediate cost of accommodations and as a show of good faith from the company.  Beware that claimants with second homes, rental properties, and “kiddie condos” may be denied coverage for additional living expenses as the carrier may argue that acceptable accommodations were available at alternative sites.

Content coverage offers additional hazards for the claimant.  Every item (down to the oldest dishcloth) must be inventoried.  Most carriers then will pay the depreciated value for each which normally amounts to pennies on the dollar.  Only after acceptable replacement items have been purchased and receipts rendered will the insured receive adequate compensation.  This creates enormous cash flow issues and requires the utmost patience by the claimant to complete the arduous process.

Collecting for structure damage can also be tedious unless the homeowner hires their own advocates (engineers and consultants etc.) to contend with penurious adjusters who have only the company’s interest at heart.  Even before the fire is doused, adjusters are on-site pressuring claimants to sign waivers – thus paving the way for “carrier-preferred” contractors to begin the reclamation and rebuilding process.   Refusal to grant these concessions by the homeowner can start an endless series of contentious negotiations that will often end in expensive court battles to settle the structure claims.

Know how much your house and possessions are insured for.   Review your policies annually to make sure that you are not over- or under-insured.   The NAIC suggests you insure your home for at least 80% of its replacement value.   This is where your home inventory can come in handy – use it as a gauge for your personal property coverage.  If you want a third-party evaluation of your coverage, speak with your insurance agent or you can even hire an appraiser to evaluate your situation.

Disaster Coverage

According to State Farm, the four most common claims made by Texas homeowners are wind/hail, water, crime, and fire.  For the most part, these claims are covered under your standard homeowners’ policy; however, it should be noted that flood insurance needs to be purchased separately (through FEMA’s National Flood Insurance Program (NFIP)).

Make certain that your insurance policy covers these damages.   Some homes in the Houston area do not have the wind/hail coverage, for instance.   Also, review the local flood chart to determine whether it is better to be safe than sorry from flooding during a particularly brutal hurricane or tropical storm.

Have a rainy, rainy, rainy day fund

As much as we understand our homeowner’s insurance to be our home’s financial parachute, we have to remember that no policy covers everything; whether fire damage is sustained, an infestation of termites is discovered, or a burst pipe wreaked havoc on your home, it is advantageous to have a separate fund specifically set aside as your personal parachute for home repairs.

It is important that you always discuss changes you want to make with your insurance provider.   Explore your options, and make sure to review your coverage each year.   Make it your policy to prevent a second disaster before the first one hits.

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.52% this week. This represents a change of +.01% over last week’s average.

The average for the 15-year fixed amortization equaled 3.66%, also increasing .01% on the week. Both averages are within .02% of 2011 weekly lows.

Mortgage backed security prices have rebounded this week as fixed rate investors worldwide are favoring US Treasuries over Euro back offerings. Economic chaos across Europe appears to be influencing bond traders more than the potential for American debt default looming August 2nd if a political compromise is not reached.

Today, Home Loan Specialists is posting par rates of 4.25% on 30-year fixed conventional and FHA loan programs. 15-year conventional rates are listed at 3.5% with 10 year rates available as low as 3.25%.

This article regarding reverse mortgages was found on the AARP website, and it is definitely pertinent to anyone who is considering a Texas Reverse Mortgage/HECM.

At Home Loan Specialists, we DO originate reverse mortgages, so please contact us if you feel a Texas Reverse Mortgage might be right for you or someone you know.

A Reverse Mortgage for Less