Changes to VA & USDA Funding Fees! Oct 1st 2011 – Still 100% Financing Available

This is my first blog and there has been many changes along life’s way and certainly in the lending industry.

Back in 2008 there were over 13,000 loan officer/mortgage brokers in Washington State.  Now, we are under 4,000.  It has a lot to do with all the lending and educational hurdles.  The folks in this industry typically are full-time hard working professionals.

For all those people you knew who use to do loans, here is my advertisement.

I am still in business and would be happy to hear from you!  Why would you call or want to do business with me???  Fair question.  I can say this, after licking all my wounds from this crazy business, I am still standing!  Why?  Because I love this business.

Yes, it is now more difficult to do home loans but I am still doing them and having a great deal of success by educating the buyers and sellers along with my extensive follow-up.

I can definitely say that today’s real estate agents have been knocked around harder than we (lenders) have.  The seller needs to sell even though the values have dropped.  That is not a fun conversation to have!  I get it!  For those Realtors still doing business – good job!  That will pay dividends as there is always ebb and flow, with the pendulum swinging too far left and then too far right but soon it settles in the middle and evens out.  Okay to chuckle here…For those that are new in real estate that is all you know and for the veterans, you know the motto and creed: contacts, shake those hands and plenty of face time.  That is what it is all about!

Now to address the title question: Yes, these are still 100% Financing – Zero Down Loans*

VA Funding Fees Are as Follows:

Purchase and Construction

Loan Type Down Payment Active Duty Personnel / Veterans National Guard / Reservists
Purchase & Construction 0% 2.15% Funding Fee 2.40% Funding Fee
5% 1.50% Funding Fee 1.75% Funding Fee
10% 1.25% Funding Fee 1.75% Funding Fee

All Other VA Home Loan Types (First Time Use)

Loan Type Active Duty Personnel / Veterans National Guard / Reservists
Regular Refinance
(including cash out)
2.15% Funding Fee 2.40% Funding Fee
Interest Rate Reduction
(IRRL) Refinance
0.50% Funding Fee 0.50% Funding Fee
Native American Direct Loans 1.25% Funding Fee 2.00% Funding Fee
Manufactured Housing
& Mobile Home Loans
1.00% Funding Fee 1.00% Funding Fee
VA Home Loan Assumptions 0.50% Funding Fee 0.50% Funding Fee


Additional Use / Subsequent Use:

Purchase and Construction

Loan Type Down Payment Active Duty Personnel / Veterans National Guard / Reservists
Purchase & Construction 0% 3.30% Funding Fee 3.30% Funding Fee
5% 1.50% Funding Fee 1.75% Funding Fee
10% 1.25% Funding Fee 1.75% Funding Fee

All Other VA Home Loan Types (Other Than First Time Use)

Loan Type Active Duty Personnel / Veterans National Guard / Reservists
Regular Refinance
(including cash out)
3.30% Funding Fee 3.30% Funding Fee
Interest Rate Reduction
(IRRL) Refinance
0.50% Funding Fee 0.50% Funding Fee
Native American Direct Loans 1.25% Funding Fee 2.00% Funding Fee
Manufactured Housing
& Mobile Home Loans
1.00% Funding Fee 1.00% Funding Fee
VA Home Loan Assumptions 0.50% Funding Fee 0.50% Funding Fee

The funding fee on VA Assumptions and Interest Rate Reduction Refinance Loans is currently 0.5%. This rate remains unchanged regardless of the number of times it is used.

VA funding fee must be paid within 15 days of closing or included in the loan amount.

Veterans whose entitlement is based on active duty will pay a 2.15% fee on their first VA loan and 3.30% on all future loans for the purchase of a home or cash-out refinances.

Veterans whose entitlement is based on Guard/Reserve service will pay 2.40% on their first loan and 3.30% on all future loans for the purchase of a home or cash-out refinances.

USDA – Not just for Beef! It is a loan too…. who would of guessed? Your Home Buyers????

New USDA Funding Fee Changes:

For the first time in the history of USDA, the Single Housing Guaranteed Loan Program has implemented an Annual Fee.   The annual fee will be calculated based on the guaranteed loan amount and based on the average annual scheduled unpaid principal balance for the life of the loan. 

Effective October 1, the upfront guarantee will decrease from 3.5% to 2% for purchase loans.   The up-front guaranteed fee for refinance loan transaction will remain at 1 percent.   In addition, an annual fee of .30 will be calculated when the loan is made and every 12 months thereafter until the loan is paid in full or no longer outstanding and the guarantee cancelled or expired.

Well I hope you enjoyed the reading, and if you made it this far you are still awake and ready to do some business!

Look forward to hearing from you.

David Haley

David Haley | Mortgage Loan Officer MLO-76555
Contact David Haley
6100 219th St SW, Ste 480
Mountlake Terrace, WA 98043

FHA Mortgage in Bothell, Mill Creek, Lynnwood, Edmonds, Seattle vs.Conventional Mortgage

fha-updateWhen you are looking into your first home to purchase in the Bothell, Mill Creek, Lynnwood, Edmonds, or Seattle area and you are starting the loan pre-approval process, there are a few different loan programs to choose from.

1. FHA financing – which always has the up front mortgage insurance and monthly mortgage insurance built into your payment. The monthly mortgage insurance premium is 1.15% if financing over 95% or 1.10% if less than 95% with a 30 year mortgage and 15 year over 90% is .50% and from 89.99% to 78.01% it is .25% per month.

2. Conventional with mortgage insurance or no mortgage insurance per month, there are different ways to make this happen, there is always a premium to be paid, you can pay it all at one time, the seller can pay it through the closing costs, but be careful as conventional financing allows only so much in closing costs over 90% financing, make sure you are working with an experienced loan officer on these programs.

Another way to structure this is to have your monthly mortgage insurance premium be a little higher per month, reason for this is there is no premium paid in advance, but it does increase your monthly payment.

With conventional financing there are more considerations of what is called credit risk pricing to take into account, the higher your credit scores the better your mortgage rates can be, due to the risk layering set in place by FNMA and Freddie Mac guidelines.

To know which one is best for you, it is important to know your FICO scores, your total debt to income per month, also known as credit liabilities, your reserves i.e. savings, retirement funds, stocks, etc., and the loan to value, which will be your down payment.

When seeking pre-approval around the Seattle, Edmonds, Bothell or Mill Creek area your loan officer will ask for your financial paperwork over the last 2 years and will need to pull your credit, to give you the best way to structure your loan program and options.

Here is a good informational website:

Seeking Good Loan Officer in Seattle connect with David Haley

Happy Mortgage Shopping!

VA Loan – Risk Assessment

In case some of you were not able to make it to the online web discussion – here is one of the biggest items we targeted on. VA loan and Risk Assessments:

Last Week’s Questions & Answers: 12/20/2011

Q: Did you know that there have been updates in DU to the Credit Risk Assessment for VA Loan casefiles? 

A: During the weekend of  Dec. 17, 2011, there were updates to DU for VA loan casefiles and evaluating
credit risk assessment. You may see loans impacted as follows:

  • Overall improved credit characteristics for loan
    casefiles may receive an Approve recommendation
  • A change in the underwriting recommendation for some
    loan casefiles. For example, some loan casefiles that previously received an Approve recommendation may now receive a Refer recommendation, particularly ones with back-end debt-to-income ratios over 45%.
  • Reduced Approve recommendation rates. The overall
    reduction may vary by customer depending on the credit characteristics of the VA loan casefiles submitted to DU.

VA Loan casefiles created on or after the weekend of Dec 17, will be evaluated using the new credit risk assessment. In addition, VA loan casefiles created prior to Dec 17, and resubmitted to DU for any reason (i.e. change in appraised value) on or after the weekend of Dec 17, will be evaluated using the new credit risk assessment if there are any changes to any key credit characteristics of the loan casefile (e.g. LTV).

When we run to find out if a home buyer for a VA Loan will qualify we run it through an automated underwriting system. This will give us specific criteria and tolerances for our loan approvals.

Should you have any questions please contact me.

FHA Mortgage – Gift Funds – Bothell, Mill Creek, Lynnwood WA

Gift funds still allowed for Home Buyers seeking to become a home owner, with home prices that are compared to 2000-2003 prices, and with today’s low interest rates, often times you can get into a home lower than what your rent payments are.

Gift funds can come from family members and all that is needed is 3.5% for your down payment, so if you were to purchase a home for as little as 150,000.00 then you will only need: 5,250.00  as a gift down payment.

There are other ways that you can accomplish this down payment if you choose to not receive a gift from your family, you can take a loan on your 401k up to 10,000.00 when you are a First Time Home Buyer.

When you are ready to go out and begin the home search make sure you have your finances, credit, and employment all worked out, by this I mean get pre-approved before you take the step to go out and look for your home. You must know what your payment and debt to income ratios will be, as well as what you can truly afford.

Buying a home can be easy when you have the right steps done in the right order, believe me, make sure you know what you can truly afford before you go out looking for a home.

Stanwood-listing-003 Who can qualify for a FHA Home loan, just about anyone, you do not have to be a first time home buyer! If you have owned a home before that is fine, you can have one FHA loan at a time, is the main guideline, however some exceptions have been seen before.

So to quickly summarize you can still purchase a home Zero Down* if you do receive a Gift! Should you seek more information and want to know what you qualify for go to the top right side of the website, click “Apply Now” and put David Haley as the loan officer and I will be glad to help you get started to owning your new home!

FHA – Increase in Mortgage Insurance – No April Fools Joke!

April 1st of 2012 will not be a good April Fool’s joke – once again FHA has been looking at their overall solvency concerns and has deteremined they need to pass along the added costs to the new borrowers.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.  Example: Loan Amount = 100,000.00 new Upfront Mortgage Insurance Premium is 1.75% = 1,750.00 being financed into new loan.

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or after April 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012. UPDATE: Here is the HUD LINK

So for quick examples and here is the easiest equation. Take  your loan amount 100,000.00 time new Monthly Mortgage Insurance Cost of 1.25% = 1,250.00 then divide this number by 12 to give you the Monthly Mtg Ins Premium Cost = 104.17 per month vs. the old MI factor of 1.15% = 1,150.00 / 12 = 95.83 per month.

Now these are all numbers based on if you are only putting the 3.5% minimum investment down for this type of loan.

Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.

Should you have any questions please give contact me.

MI basics: tax-deductible MI

Untitled-7-01MI Tax Deductibility passed as part of the American Taxpayer Relief Act of 2012.

Borrower-paid MI premiums are tax-deductible through the year 2013. Borrowers should consult their tax advisors regarding MI tax deductibility. See disclaimer note below.


Does the bill apply to mortgage insurance?

Yes, borrower-paid MI provided by qualifies for the deduction. This includes the Monthly, Single and Split Premium plans. There are varied opinions on the deductibility of lender-paid MI as the IRS has not yet clarified the deductibility. It is recommended that borrowers consult their tax advisors regarding the amount that is deductible.

What types of mortgage loans qualify for the MI tax deduction?

Loans used for “acquisition indebtedness” — that is, money borrowed to buy, build or substantially improve a residence — are eligible, as long as the debt is secured by the same residence.

This includes purchase loans and refinance loans, up to the original acquisition indebtedness. (Money borrowed against the equity in a home or when refinancing a home for any reason other than to buy, build or substantially improve a residence is called “equity indebtedness.”)

When refinancing a piggyback loan originally used to acquire a property, is the original loan amount considered the sum of the two mortgages or only the primary mortgage amount without the second lien included?

The original acquisition indebtedness is considered to be the sum of the two mortgages.

Is deductibility applicable for all loan types?

There is no differentiation among loan types.

What types of properties are eligible for tax deductibility?

The deduction applies to “qualified residences,” as defined in the Internal Revenue Code. Generally, that includes the borrower’s primary residence and a non-rental second home. As with mortgage interest, borrowers can deduct mortgage insurance premiums paid on both their primary residence and one other qualified residence each year. Investor loans are not eligible.

Who qualifies for this itemized deduction?

Households with adjusted gross incomes of $100,000 or less will be able to deduct 100% of their MI premiums. The deduction is reduced by 10% for each additional $1,000 of adjusted gross household income, phasing out after $109,000. (Details below.)

Married individuals filing separate returns who have adjusted gross incomes of $50,000 or less will be able to deduct 50% of their MI premiums. The deduction is reduced by 5% for each additional $500 of adjusted gross income, phasing out after $54,500. (Details below.)

The deduction is not restricted to first-time homebuyers.

Adjusted Gross Income Limits
Single OR
Married, Filing
MI Premium Deduction
MI Premium Deduction

$0 – $100,000


$0 – $50,000


$100,000.01 – $101,000


$50,000.01 – $50,500


$101,000.01 – $102,000


$50,500.01 – $51,000


$102,000.01 – $103,000


$51,000.01 – $51,500


$103,000.01 – $104,000


$51,500.01 – $52,000


$104,000.01 – $105,000


$52,000.01 – $52,500


$105,000.01 – $106,000


$52,500.01 – $53,000


$106,000.01 – $107,000


$53,000.01 – $53,500


$107,000.01 – $108,000


$53,500.01 – $54,000


$108,000.01 – $109,000


$54,000.01 – $54,500



Is adjusted gross income calculated before or after deductions?

Adjusted gross income is calculated before itemized deductions, including the MI deduction.

How does the MI tax deduction work?

Borrowers who itemize deductions are able to reduce their overall taxable income in the same manner as mortgage interest.

Are borrower-paid, single premiums, which are paid up front in a lump sum, eligible for the deduction?

Yes, borrower-paid, single-premiums are eligible for the deduction under the new law. Borrowers should consult with a professional tax advisor to determine the amount of the MI premium eligible for the tax deduction.

If the single premium is financed, are both the mortgage insurance premium and the interest tax deductible?

We believe that if the loan is for acquisition indebtedness, both the interest attributable to the entire loan balance as well as the allocated portion of the mortgage insurance premium is tax deductible.

How would a premium refund issued during the tax year affect eligibility and the amount of the MI deduction?

Borrowers are only permitted to deduct that portion of their MI premium attributable to a tax year. If the MI is dropped, and a refund is paid, the amount refunded would reduce the amount of MI premium that could be attributable to that tax year and be deducted.

Note: David Haley and / or  cannot provide tax advice. Taxpayers should consult their tax advisor to ascertain if they are eligible to take this deduction. The answers to these questions are based on an interpretation of the language of the statute, the Joint Committee on Taxation’s Technical Explanation of the statutory language, and present law. The Internal Revenue Service (“IRS”) will issue guidance interpreting the new provision, and could reach different conclusions for some of the issues raised

Predicting the Impact from Future HELOC Loan Resets Time to Refinance?

by MPA | Nov 26, 2014

The majority of home equity lines of credit (HELOC) were originated at the peak of the home equity boom between 2004 and 2006, so the concern now is the oncoming wave of defaults when the estimated $190 billion in HELOC loans reset between the fourth quarter and 2017.

The fear is that payment shock will not only cause a wave of defaults, but that it also may impact bank balance sheets and the mortgage markets where HELOCs are concentrated. Unlike the first-lien market when banks sold off most of the credit risk, more than 85% or $580 billion worth of HELOC loans are on bank balance sheets, and nearly 50% of them are located in California, Florida, and New York. So, should the market brace itself for the big storm of the reset, or are the fears unfounded?

Should you have a HELOC that was originated in 2004 – 2007 the time is now to Refinance by going to the David Haley Mortgage website and applying now! If you need more info on David Haley, check out his Testimonials or try out his Mortgage Calculator. With home values on the rise, it is time to take advantage of the current market trend! Call David Haley today to see what your true Blended Mortgage Rate is.

weighted-average-rate calculator
Continue reading “Predicting the Impact from Future HELOC Loan Resets Time to Refinance?”

Mortgage Rates Remain Low – Fees to Increase?

Rates Stay Low, BUT Will Costs Go Up?

We are enjoying extremely low interest rates, for sure. With the global economy, the national economy and unemployment where they are, no one is predicting a dramatic change in rates any time soon. BUT, on Monday, the Obama Administration floated out some interesting proposals they are considering through the Acting Director of the Federal Housing Finance Agency (FHFA), Edward DeMarco. It appears that two significant changes in housing financing are on the table.

You should know that FHFA is the new regulator that is overseeing the restoration of viability of Fannie Mae and Freddie Mac. They are charged with reducing the risk on loans delivered to the GSEs in order to protect the U.S. taxpayer.

In a speech this past Monday, Mr. DeMarco mentioned two potential changes:

Increasing the role of the private sector to lessen the risk held by the public sector.

The method mentioned was increasing the insurance coverages assumed by the PMI (Private Mortgage Insurance) companies. One result could be higher insurance rates for loans where customers put less than 20% down. The second wrinkle is potentially more damaging…the idea that PMI coverage may be required on loans with 21%-25% (maybe even 30%) down! Clearly, this is an attempt to get more fee income to the MI companies to entice them to remain viable and continue to serve those with less than 20% down. Regardless, the net result is that more people will have to pay more money for private mortgage insurance. “How much?” and “To what extent?” is yet to be defined; however, more costs to more people is bad.

Adjusting fees.

Recognize that the GSEs charge fees. Explaining what they are and why they exist is a topic for a different day. Suffice to say, today, fees are fairly standard geographically speaking. Mr. DeMarco is talking about adjusting the fees (i.e., increasing them) for areas that have proven more risky. This proposal means the hardest hit areas will have the most difficult time recovering because the increased fees always get passed on to the consumer. Rather than “spread the risk”, FHFA is talking about punishing the defenseless.

The predictable outcome of these “strategies” is higher costs to the consumer which makes buying a home more expensive. As costs go up, desire to buy goes down (as does the borrower’s ability to be approved for a mortgage).

Message: Buy sooner rather than later!

 We’d like to thank KCM Blog for this post.

Free Trees & Plants – Seattle Curb Appeal & Do A FHA Energy Efficient Mortgage

green-tree Go Green – Plant a Tree!

One of the ways that you can generate curb appeal for your properties is through a beautification effort and that does not mean taking a hit from your operating budget.

Here are three ways to get free trees or plants for your properties. Free Trees & Plants – Very simple way to get trees and plants. This is a not-for profit foundation that collects plants from nurseries that would be thrown away. They nurture the plants and ship them to you. You only pay for shipping and handling.

Arbor Day Foundation – When you sign up for a six month membership, you get 10 free trees shipped for free.

We find that homeowners like the idea of being “Green” for the environment and not having to spend alot of money at the same time. Arbor Day Foundation is one of the best and inexpensive ways to achieve this goal.

I specialize in helping new homeowners in the Seattle, Lynnwood, Edmonds and Bothell area that are interested in receiving an Energy Efficient Mortgage that can be financed above the FHA mortgage loan or a VA Loan. This is often times more attractive and helps in saving money due to better efficiency standards.

We have contacts that will assist us with the HERS Rating and Energy Efficiency that is required when you are interested in this type of financing.

Here are a few examples that can be used in addition to your FHA Loan with the Energy Efficient Mortgage:

  • Replacing a furnace/cooling system
  • Fixing or replacing a chimney
  • Insulating an attic, crawl space, and/or pipes and air ducts
  • Replacing doors or windows

Have questions? Please feel free to contact me.

Seattle VA Loan Limits 2012

VA just released their new loan limits for Seattle, Snohomish, Everett, Tacoma, Lynnwood, Shoreline Area and Surrounding Counties:

King: $458,850 | Snohomish $458,850 | San Juan $432400 | Pierce $458,850

This will allow for 100% Financing for qualifying miltiary servicemen and women.

Let me of service to you as you served our country! Thank you

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