As interest rates rise FHA Loans become more affordable

    SCVnest ensures clients have best valueSanta Clarita Valley California is our home, where we live, have raised (are raising) kids and have friends and family. Plus – the SCV is where our real estate business is headquartered.

    Since 1998 we have had hundreds of home buyers and home sellers in Santa Clarita Valley encounter a type of loan known as an FHA Loan.

    The FHA loan type is very popular due to it’s low down payment requirement when buying a Santa Clarita home or other FHA qualifying property.

    3.5% is the price of admission to owning a piece of the American Dream in Santa Clarita Valley.

    The Santa Clarita Valley real estate market is currently priced, for residential real estate, from the high $200,000’s to multiple millions of dollars.

    For example, for less than $10,000 down payment you can buy a Condo/Town-home in the Santa Clarita Valley. With a mortgage interest deduction and other benefits of homeownership in the Santa Clarita Valley Cities, it’s something to smile about – from ear to ear ­čÖé

    Rising interest rates and FHA loans

    It’s no secret that interest rates are rising and have been. Today real estate interest rates are in the mid 4’s, as far as interest rates go and that is causing some alarm amongst real estate buyers in the Santa Clarita Valley cities.

    However, it would just so happen that FHA just lowered their property mortgage insurance fee for those utilizing a FHA loan to buy real estate.

    Property Mortgage Insurance, AKA – MI, is a fee to use an FHA loan to borrow money when a person is putting less than a 20% down payment. As stated, with FHA you only have to put down 3.5% when buying residential real estate on conforming properties.

    A word about “conforming properties”. It used to be the case where a majority of properties which had Home Owners Associations in place were FHA approved. The pendulum┬áhas swung the other way following the last fall of the real estate market.

    Find FHA approved real estate listings here.

    This “swinging” was due to the HOA’s not having their fee’s paid, causing some of the properties to become insolvent and FHA not renewing their approval of those real estate properties. We see that very few HOA controlled properties are FHA approved in the Santa Clarita Valley.

    For town-homes and condos which have Home Owners Associations in place – It’s up to the properties to seek FHA re-approval again. As far as Single Family Homes, most SFR’s in the SCV cities are FHA approved. Even those with Home Owners Associations, if they are Single Family Homes, they are typically green lighted by the FHA. If they are in horrible shape, FHA may still refuse to loan on them, it will be up to the appraiser to report on the properties condition.

    There was a higher requirement and additional payment due to the past price of mortgage insurance, MI. This fee has been lowered and adjusted in accordance with the rising interest rates. While the “rising interest rates” were not a direct cause of the MI reducing, it was a thought out plan to keep people interested in owning a piece of the American Dream in Santa Clarita and Beyond.

    What the FHA MI reduction means in real numbers

    Santa Clarita home loans

    Mortgage insurance was “price” applicable. If you were buying a home with an FHA loan and you were paying $450,000 you had a particular MI attached to that loan when only putting down 3.5%. If the home was more expensive, then your MI was more and if less expensive, then less.

    I asked a lender friend of mine what this means for the FHA home buyers in the Santa Clarita Valley and to break it down in simple terms so I may speak about it.

    My Question:

    “Mike,
    Would you break down by 100k increments the FHA(federal housing administration) MI (mortgage interest) reduction please, for me so I can share it?
    Thanks. “

    Meena’s Response:┬á

    “It is $21.00 per month per 100K!

    it is like a .375% reduction in your loan rate! “

    Where that leaves us when using FHA to buy

    This FHA MI reduction was truly a great idea with the rising interest rates. This made a lot of our home buyers take a breath in relief. If you look at the second line of Mike Meena’s response you will see that he has even broken down the “interest rate impact” as related to the “FHA Mortgage Interest reduction”.

    santa-clarita-fha-lending

    And that is why I appreciate him as being our Top Real Estate lender for our home buyers in the Santa Clarita Valley and Beyond.

    Have a GREAT day and please reach out to me when wanting to buy or sell real estate in the Santa Clarita Valley Cities.

    We have a lot of great intel as well when it comes to real estate. Just tune into our Santa Clarita Radio Show.

    I am also very active on YouTube when it comes to speaking about Santa Clarita homes and real estate. Here is the latest YouTube video I posted where I am speaking about a Santa Clarita real estate news article I wrote about this week. Call Me – I’ll be here to assist you and your’s with what you will need when it comes to SCV real estate and beyond.

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    Paris and Connor MacIvor

    Connor and Paris MacIvor are in the Top 1% of Realtors Nationwide, starting their real estate business in 1998 with RE/MAX Gateway - Santa Clarita Valley and Valencia CA. Their becoming licensed real estate consultants and representatives came from the horrible experience they had when they bought their first home. There were many things that the agent they had hired did not explain and disclose, which per law he should have. Getting that agent on the phone after they closed escrow and after he had gotten paid was impossible. Paris and Connor called the broker, the board of realtors, the office manager and all they received was the promise of a phone call back. The remedy did come, but not as fast and in the way they wanted. That act - that bad agent was the reason why Paris and Connor became Realtors. That was all they needed to vow to never let the same fate befall anyone else, that befell them. Today Connor and Paris are focused on client service. Protection and top-shelf service with regard to their real estate clientele. They primarily work within the Santa Clarita Valley and Valencia CA. However, for a referral, where 80+ of their business is referrals they have License and Will Travel to other parts of Ventura County, Los Angeles County, and Orange County to handle real estate transactions for those who trust their real estate operation. Writing on their Real Estate Blog is a passion. SCVnest.com/blog is where you will find over 10,000 real estate articles. Go to SCVnest.com/radio to listen to their latest real estate radio broadcast.

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