FHA Makes Changes to Mortgage Insurance Premiums

FHA Makes Changes to Mortgage Insurance Premiums

What Does This Mean for Your Home Buyers?

FHA recently increased monthly mortgage insurance premiums on the most standard FHA loans.

How will this impact your home buyers?

This will only slightly increase a home buyer’s monthly payment.

For example, on a $175,000 loan amount the payment will increase by about $15 per month, based on the new premiums.

Another change is the length of time the mortgage insurance will remain in effect. This is inconsequential however, since rarely do borrowers keep loans for the full life of the loan.

Even though monthly FHA payments will increase a bit, FHA still remains the most flexible and affordable loan program for buyers with less than a 5% down payment.

The good news is that home loan rates are still at historic lows right now, and it’s a great time to purchase a new home. If you have any questions regarding these changes or would like to discuss how I can help one of your home buyers get qualified for a mortgage, please feel free to call or email me.


Rich Bersani
FrontGate Mortgage


The Fiscal Cliff Bill and its Impact on the Real Estate and Mortgage Industry

The Fiscal Cliff Bill and its Impact on the Real Estate and Mortgage Industry

With only three hours to spare before the midnight deadline on January 1, the Senate avoided the Fiscal Cliff by agreeing to a deal. Technically, the government went over the cliff, since the Senate’s version didn’t formally pass until two hours after the deadline, and the House of Representatives didn’t approve the deal until close to 24 hours later. However the changes noted in the deal, also known as H.R. 8, will be retroactive as of January 1.

Here are a few of the provisions in the Fiscal Cliff Bill that affect the real estate and mortgage industries:

  • Filers making below $110,000 can still deduct mortgage insurance premiums through 2013–and this was made retroactive to cover 2012.
  • Mortgage cancellation relief–which is for home owners or sellers who have some amount of their mortgage debt (on their primary residence) forgiven by their lender in a situation such as a short sale, foreclosure or modification–was extended for one year to January 1, 2014.
  • The 10% tax credit (limited to $500) for homeowners for energy improvements (energy efficiency tax credit) to existing homes is extended through 2013 and made retroactive to cover 2012.
  • The rate for Capital Gains will remain at 15% for individuals at the top rate of $400,000 and $450,000 for a joint return. Gains over and above these amounts will be subject to a 20% tax. Remaining in place is the $250/500K exclusion for the sale of a principal residence.
  • Individual estates will have the first $5 million dollars exempted and family estates will have $10 million exempted.
  • Qualified leasehold improvements on commercial properties have been extended through 2013 and retroactive to cover 2012 and are subject to a 15 year straight-line cost recovery.

To understand how all of this impacts your specific situation, contact your tax professional. And if I can answer any questions for you, give me a call or send me an email anytime.


Rich Bersani
FrontGate Mortgage

October Updates

Ease on Down the Road What QE3 Means for Home Loan RatesIn  September’s issue of YOU  Magazine, we discussed  the possibility that the Federal Reserve would announce further purchases of Mortgage  Bonds to keep home loan rates low and help the economy continue to grow. On  September 13th, the Federal Reserve announced that it would indeed  begin another round of Bond Buying (known as Quantitative Easing or QE3). If  you’re in the market to purchase or refinance a home, you won’t want to miss  the latest on this story.

Eat That Frog! Getting Things Done Without CroakingThere is something a little intimidating about a long to-do list. And some  days, just seeing tasks written out in list form is enough to awaken the  procrastinator within any one of us.

5 Reasons Layaway Plans May Cost You More This installment-payment plan can help consumers avoid racking up debt when making holiday purchases, but it has its drawbacks. By Cameron Huddleston, Kiplinger.comLayaway has been making  a comeback since the recession. In fact, it’s been in the headlines recently  because several stores that offer this installment-payment program are reducing  or dropping layaway service fees.

Too Much of a Good Thing? The Dangers of Over-ExercisingAccording to the latest statistics from the  Centers for Disease Control, more than one-third of U.S. adults and  approximately seventeen percent of children ages 2-19 are obese. That’s just  one reason why a regular exercise routine is so important for all of us. Equally  important: being careful not to overdo it.

Too Much of a Good Thing? Part 2 Tips to Avoid OverschedulingThese days parents aren’t the only people who need organizers. Between after school activities and weekend events, kids can be just as busy if not busier than  adults. And while sports and extracurricular activities are healthy for children, sometimes it’s possible to have too much of a good thing.

To QE or Not To QE? That Is the Question


To QE or Not To QE?That Is the Question

You may have heard rumblings in the news lately about something called Quantitative Easing, or QE3 for short. If you’re in the market to buy or refinance a home, this is one story to follow.

What is Quantitative Easing?
Quantitative Easing is the concept of the Fed becoming a buyer of Treasuries and Bonds to try and stimulate the economy. Oftentimes, the Fed does Quantitative Easing when they are hoping to achieve the following things:

  1. To create inflation and avoid a deflationary economy
  2. To lower the unemployment rate
  3. To boost Stock prices

Keep in mind that one of the consequences of Quantitative Easing is that the US Dollar will weaken. This makes US exports more affordable abroad, as well as makes imports appear relatively more expensive. This will help large multi-national companies–which have a large influence on the economy and the major Stock market indices–thus stimulating our economy and hopefully our Labor Market, which continues to struggle.

What Happened During the Last Round of Quantitative Easing (QE2)?
It’s important to understand that home loan rates are tied to Mortgage Bonds, and when Bonds improve, home loan rates typically move lower. History has shown that Bonds and home loan rates typically improve in anticipation of Quantitative Easing, but then worsen once the official announcement is made. Think about the old investing adage: “Buy on the rumor, and sell on the news.”

In a speech delivered on August 27, 2010 in Jackson Hole, Wyoming, Fed Chairmen Ben Bernanke mentioned that QE2 may be coming, saying, “I believe that additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.” But the Fed didn’t take action and begin QE2 until November of that year. Bonds and home loan rates enjoyed a nice rally until the actual official announcement was made.

However, once QE2 officially began in November 2010, we saw a big move higher in Stocks. By the time QE2 concluded in June 2011, the S&P 500 had risen 19%. And when investors moved their money into Stocks during this time, Bonds and home loan rates suffered as a result.

The Bottom Line
On August 31st of this year, Bernanke was back in Jackson Hole, Wyoming delivering anotherspeech on Economic Outlook and Monetary Policy. While he did not commit to another round of Quantitative Easing or QE3, he hinted that one was possible.

If rumors of QE3 continue to swirl, we should continue to see great home loan rates leading up to any actual announcement.

But if the Fed decides to move forward with QE3 and Stocks rally like they did during QE2, the Stock rally could come at the expense of the Bond markets–which would in turn push home loan rates higher.

The great news is that home loan rates remain near historic lows, making now a great time to purchase or refinance a home. If you have any questions about your personal situation, or if you’re wondering how you can take advantage of today’s low rates, contact me at 856-401-9090 x103.