New Petition Urges Mortgage Re-HARPing

Well, file this one under “was bound to happen,” or, “was only a matter of time.”

A clever guy by the name of Marcus J. from Clementon, New Jersey has created an online petition to eliminate the securitization cut-off date for HARP eligibility.

At the moment, this ever-important cut-off date is May 31, 2009, meaning if your mortgage was sold to Fannie Mae or Freddie Mac after that date, you’re not eligible for a HARP refinance.

Unfortunately, many homeowners already refinanced their mortgages under HARP, perhaps when it wasn’t as attractive as it is now, seeing that there is a much more flexible HARP 2 nowadays.

At the same time, mortgage rates have marched lower and lower since HARP was originally unveiled, again, likely frustrating homeowners who refinanced early on.

There are also the many people who purchased homes after that cut-off date, who are now underwater and likely seeking a HARP refinance.

Eliminate HARP Cut-Off Date?

The petition essentially calls for the elimination of the cut-off date, which Marcus J. refers to as “arbitrary,” along with the one-time HARP limit. This would allow for so-called “reHARPing.”

He argues that removing these roadblocks would permit millions of Americans to refinance their mortgages to lower rates, thus saving thousands on their monthly mortgage payments over time.

Note: You can reHARP a Fannie Mae loan that was refinanced under HARP from March to May 2009.

Interestingly, he isn’t the first to propose such an idea. Back in May 2012, U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) proposed extending the cut-off date an additional year to May 31, 2010.

That seemed to fall on deaf ears, so it’s unlikely a complete removal of this key date will be approved.

As much as it sounds like a good idea (maybe), it’s a bit of a slippery slope. If you remove the date, borrowers could just refinance over and over until they saw fit, assuming rates continued to fall.

And this isn’t a traditional refinance program – it’s essentially a loss mitigation tool for distressed borrowers, or those at risk of walking away.

A line has to be drawn somewhere, otherwise it would become something of a free-for-all.

Does the cut-off date deserve a second look? Absolutely; the FHFA should dissect the data to determine if extending it will provide a net benefit.

But removing the date entirely might be a bit extreme.

When it comes down to it, timing can be your best friend or your worst enemy, and we can’t rely on the government to extend the program every time rates drop, especially when there’s not even a refinance program for non-agency mortgages.

Ironically enough, you can blame the government for creating this situation, seeing that they simultaneously worked to push mortgage rates lower and lower long after HARP was released.

Petition Needs 25,000 Signatures


It will certainly be interesting to see if the petition receives the necessary 25,000 votes to at least “get a look.”

It’s currently available for online signature over at, which is the official website to have your voice heard.

At the moment, it only has 26 signatures, so an additional 24,974 are needed by February 8th, 2013 in order for an official review and response from the Obama administration.

Additionally, it needs at least 150 signatures to be publicly searchable on the website, meaning it’s got zero visibility right now.

If you’re interested, you can sign here.

(photo: Feral78)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.


Housing affordability is increasing — here’s where it’s up the most

Reports show improving affordability

Homebuyers are enjoying increased affordability — at least according to two new reports released last week. Affordability is up most notably in some of the nation’s higher-priced markets, including many along the West Coast.

Verify your new rate (Feb 28th, 2021)

Housing is more affordable than buyers think

According to the latest Housing and Mortgage Market Review released by Arch MI, “housing isn’t as expensive as you think.”

“Housing affordability is actually better now than its historic norms in most states and remains far better than the worst point for each state since 1990,” explains Ralph DeFranco, Arch MI’s global chief economist. “This may be surprising because we tend to focus on home prices rather than affordability. Affordability accounts for the offsetting factors of low interest rates and a 28% increase in median household income since 2012.”

Analysis in the HaMMR shows the majority of U.S. states require homebuyers to spend less than the recommended 30% of their monthly income on housing costs. In states like Arkansas, Iowa, Oklahoma, and West Virginia, it’s less than 20% — the all-time most affordable level for most of them.

Affordable housing: These cities take the smallest salaries to buy a house

Top cities for affordability

But housing affordability hasn’t just improved in the long run. According to a second report from title insurance firm First American, there’s also been serious movement over the last year.

Buying a house in 2020? Here’s who you’re up against

The improvements were biggest in three cities in California: San Jose, Riverside, and San Francisco. It also became considerably more affordable to buy a house in Baltimore and Denver as well.

House-buying power jumped 22% in Baltimore and 21% in Riverside. It also improved in Los Angeles, Portland, Dallas, Boston, and Washington D.C. Overall affordability improved in all 44 markets tracked by First American.

Verify your new rate (Feb 28th, 2021)

Get today’s mortgage rates

Are you looking to buy a house in today’s affordable housing market? Then shop around and see what mortgage rates you qualify for today.

Verify your new rate (Feb 28th, 2021)


7 Ways Americans Plan to Ensure a Financially Secure Retirement

Older couple with financial planner
EdBockStock /

A secure retirement is in your hands — and nobody else’s.

For better or worse, we all have to finance our own retirement. Sure, Social Security and Medicare will help. But workplace pensions are rare, and few will inherit fortunes from their parents, or anyone else.

Fortunately, many Americans understand and accept this reality. They are taking steps long before retirement to make sure they will not struggle financially during their post-work years.

Recently, the National Institute on Retirement Security asked 1,200 people 25 and older what they are doing to ensure a financially secure retirement. Below are the methods they cited most often.

7. Seek work in retirement

Senior worker
gpointstudio /

Respondents who plan to do this to ensure a financially secure retirement: 39%

When the chips are down and you need more cash, nothing tops working and earning a regular income. It is the single most effective way to quickly add to your bottom line.

The survey respondents clearly understand that fact. Few of us want to work a full-time job in retirement — we gave up the 9-to-5 for a reason, after all. But there are plenty of opportunities to earn part-time income that can make a crucial difference in retirement.

For more, check out “20 Great Part-Time Jobs for Retirees.”

6. Save about 5% more than you currently do

Woman with piggy bank
Jason Stitt /

Respondents who plan to do this to ensure a financially secure retirement: 40%

Most of us find it difficult to save as much as we do now, let alone 5% more. But saving just a bit extra can make an enormous difference, especially if you do it for many years and invest the money well.

If the thought of saving more scares you, we can relate. Maybe it’s time to sit down with a financial pro who can help you craft a savings and investment strategy that will pay a lifetime of dividends. Stop by Money Talks News’ Solutions Center and search for a fee-only financial planner who can offer expert advice.

5. Delay claiming Social Security

Social Security payments
Steve Heap /

Respondents who plan to do this to ensure a financially secure retirement: 41%

As we have pointed out, sometimes it does not pay to delay applying for Social Security benefits. But in other cases, waiting to file can be one of the smartest financial decisions you will ever make.

For every year you wait to claim past your full retirement age, your benefit will grow by as much as 8%. That is tough to beat.

For many people, this decision — to delay or not to delay — is a vexing one. If you need help, stop by Money Talks News’ Solutions Center and check into working with Social Security Choices, a company that can help you determine when is the best time to claim given your personal situation.

3. Save about 1% to 4% more than currently (tie)

Photo (cc) by American Advisors Group

Respondents who plan to do this to ensure a financially secure retirement: 48%

Remember that notion of saving 5% more? If that is too intimidating a challenge, don’t be afraid to take a more modest approach, like saving 1% to 4% more.

At Money Talks News, we believe that saving a little over a long period of time can add up to big things. It’s a gospel we preach because many of us have lived it out and have seen the power of this strategy up close. The survey respondents apparently agree.

For more tips on getting started saving, read “The 7 Fastest Ways to Catch Up on Retirement Savings.”

3. Cut back spending once retired (tie)

saving money
Dean Drobot /

Respondents who plan to do this to ensure a financially secure retirement: 48%

Those who need more cash but don’t want to work have one option left: to spend less.

This is often easier said than done. But if you find ways to trim back expenses, you open up more breathing room in your budget.

One way to spend less during your golden years is to retire in a place where the cost of living is lower. Money Talks News founder Stacy Johnson discussed some options in a recent podcast, “5 Countries Where You Can Retire on $2,000 a Month or Less.”

2. Cut back current spending

A surprised man looks at his empty wallet in shock
ToffeePhoto /

Respondents who plan to do this to ensure a financially secure retirement: 55%

Cutting back on spending in retirement can be painful. It’s a lot easier to trim your budget now, while you are still working and have a steady income.

Trim your sails today, and you will have more money to invest in a nest egg that will see you through your golden years. Creating a budget can help you find places to cut expenses.

Some people find budgeting to be a pain, but Money Talks News partner YNAB (short for “You Need A Budget”) makes the process easy. The YNAB app helps you track day-to-day expenses, prepare for unexpected costs and build savings.

You can even connect the program directly to your bank and credit card accounts, which allows you to download transactions to YNAB automatically so you don’t have to manually enter them one by one.

For more, check out “An Easy Way to Track Your Spending and Build Your Savings.”

1. Stay in your current job as long as possible

Senior at a computer
Stocklite /

Respondents who plan to do this to ensure a financially secure retirement: 60%

Even if you really want to retire soon — like yesterday — sometimes it simply makes more sense to stick with that job a little longer.

The survey respondents are clearly a tough-minded, clear-eyed bunch. A full 60% say they plan to work as long as possible to ensure they have a secure retirement.

It is a great idea — tough to beat, actually. But it is not always practical. Gallup polling has found that the average age at which workers retire is a fairly young 61. Sometimes unexpected life changes or health problems can prevent you from working as long as you planned.

So, if you are working today, remember that now is the best time to save and to create a plan for that dream retirement down the road.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


The Fair Housing Act now applies to LGBTQ renters and home buyers. Here’s what changed

HUD is expanding the Fair Housing Act

Trans and other members of the LGBTQ community are now protected under the Fair Housing Act, according to an announcement from the Department of Housing and Urban Development late last week.

The agency will now investigate complaints of housing discrimination relating to sexual orientation and gender identity — two classes not previously protected under the law. 

This is a critical change; HUD has recognized the history of housing discrimination against LGBTQ individuals and is offering legal protection to those affected for the first time.

Verify your home buying eligibility (Feb 16th, 2021)

LGBTQ housing discrimination: An “urgent” issue

“Housing discrimination on the basis of sexual orientation and gender identity demands urgent enforcement action,” said Jeanine M. Worden, the acting assistant secretary of HUD’s Fair Housing office.

“That is why HUD, under the Biden Administration, will fully enforce the Fair Housing Act to prohibit discrimination on the basis of gender identity or sexual orientation.”

Worden continues, “Every person should be able to secure a roof over their head free from discrimination, and the action we are taking today will move us closer to that goal.”

This change is in line with the Biden Administration’s goals to reduce discrimination in housing, and to make renting and home buying more accessible and affordable.

What are Fair Housing protections?

The Fair Housing Act — technically Title VIII of the Civil Rights Act of 1968 — protects Americans from discrimination when:

  • Renting or buying a property
  • Applying for a mortgage
  • Seeking housing assistance
  • Participating in any other housing-related activity

Seven classes are explicitly protected in the Act, including race, color, national origin, religion, familial status, disability and sex. 

Prior to HUD’s latest announcement, “sex” had meant biological sex.

Now, under the new expansions, the Fair Housing Act also protects against discrimination based on gender identity and sexual orientation as well.

How this change helps LGBTQ renters and homebuyers

Thanks to the changes, LGBTQ Americans can now file complaints with HUD if they feel they’re discriminated against at any point while seeking housing.

This could include discrimination by a real estate agent, mortgage professional, rental property owner, apartment manager, or anyone else involved in the housing process.

HUD offers two examples of what LGBTQ housing discrimination might look like:

  • “A transgender woman is asked by the owner of her apartment building not to dress in women’s clothing in the common areas of the property.”
  • “A gay man is evicted because his landlord believes he will infect other tenants with HIV/AIDS.”

If you’ve experienced these or any other types of housing discrimination because of your gender identity or sexual orientation, file a complaint at

Complaints dating back to January 20, 2020, will be investigated.

Why the Fair Housing Act is being expanded

There are three reasons HUD has expanded Fair Housing protections to trans and other LTBTQ Americans.

First, there’s President Biden’s Day 1 executive order, which calls on government agencies to “prevent and combat discrimination on the basis of gender identity or sexual orientation.”

According to agency spokespeople, HUD is the first department to comply with this executive order.

A new interpretation of the law

The recent Supreme Court case Bostock v. Clayton County also plays a role. In the 2019 case, the court found that a transgender worker’s firing was a direct violation of the Title VII of the Civil Rights Act and that “sex” protections did indeed apply. 

“Homosexuality and transgender status are inextricably bound up with sex,” Justice Neil Gorsuch wrote.

“Not because homosexuality or transgender status are related to sex in some vague sense or because discrimination on these bases has some disparate impact on one sex or another, but because to discriminate on these grounds requires an employer to intentionally treat individual employees differently because of their sex.”

According to HUD, the ruling clarified how the Civil Rights Act — including its Fair Housing provisions — should be interpreted moving forward.

“Enforcing the Fair Housing Act to combat housing discrimination based on sexual orientation and gender identity isn’t just the right thing to do-it’s the correct reading of the law after Bostock,” said Damon Y. Smith, HUD’s principal deputy general counsel.

“We are simply saying that the same discrimination that the Supreme Court has said is illegal in the workplace is also illegal in the housing market.”

A history of housing discrimination

HUD also cited numerous studies surrounding housing discrimination and the LGBTQ community in its decision to expand Fair Housing protections.

One study, for example, found that same-sex male couples were significantly less likely to receive responses when seeking a rental property. Another found discrimination against transgender women in homeless shelters.

With the expansion of the Fair Housing Act, there’s now a legal path to recourse for individuals who have been barred from housing or discriminated against in this manner.


Biden administration could reduce FHA mortgage insurance premiums. Here’s what it means for you

FHA mortgage insurance might get cheaper this year

“Mortgage industry abuzz with speculation of FHA MIP cut,” stated one trade magazine on January 28. And that journalist was right.

Many insiders are confidently predicting a big cut in the Federal Housing Administration’s (FHA’s) annual mortgage insurance rates.

FHA borrowers currently pay 0.85% annually in mortgage insurance premiums (MIP). That’s $1,700 per year, or $140 per month, on a $200,000 mortgage.

So it’s no wonder a possible MIP rate cut is big news. It could help new home buyers and refinancing homeowners save big on their housing payments.

Verify your FHA loan eligibility (Feb 8th, 2021)

Why experts think Biden will lower mortgage insurance premiums

Lowering FHA mortgage insurance rates isn’t a new idea from President Biden. It’s a holdover from former President Obama’s agenda.

American Banker magazine explains “The Department of Housing and Urban Development under former President Barack Obama had announced a scheduled 25-basis-point [0.25%] reduction in the FHA’s annual mortgage insurance premiums just before President Donald Trump took office.”

But Trump reversed this change at the start of his term, leaving FHA MIP rates at 0.85% per year.

Now, says American Banker, “observers expect the Biden administration to follow through on that 25-basis-point cut and potentially go even further.”

Lowering FHA MIP costs would be right in line with President Biden’s goals of expanding affordable housing opportunities for low- and middle-income families.

Of course, this is only speculation for now. No official announcements have been made.

But the pervasiveness of the rumor — and the absence of denials from the administration — mean a change seems likely.

So potential home buyers and FHA homeowners should be aware of what the (potential) change would mean for them.

What an MIP reduction could mean for you 

There’s good news and bad news.

The bad news is that if you already have an FHA loan if and when the reduction takes effect, you won’t see any savings. You would have to refinance into a new FHA loan to see the reduction.

The good news is that if you haven’t applied for an FHA loan yet if/when the cut is announced, you can likely take advantage of the new, lower fees.

But just how much would home buyers and refinancers stand to save?

A 25-basis-point reduction means MIP rates would fall by 0.25%. So you’d be paying 0.6% of your loan balance each year instead of the 0.85% that nearly all FHA borrowers now pay now.

These mortgage insurance rates are calculated annually but charged monthly.

Example: 0.25% MIP rate cut

Let’s say you plan to borrow $200,000 with an FHA loan. Your MIP rate at current levels would be 0.85%, making an annual charge of $1,700 — or $140 per month.

Now let’s assume the new MIP rate falls to 0.6%.

Your annual charge tumbles to $1,200. And your new monthly MIP cost would be exactly $100 per month.

That’s a saving of $500 a year, which few of us would sneeze at. But there’s a possibility that the savings could be even bigger.

Example: 0.50% MIP rate cut

American Banker wondered whether the Biden administration might “potentially go even further.”

So how does the math work if annual MIP rates were to be cut a little more — to 0.5%?

Assuming the same $200,000 loan, a 0.5% rate would reduce the annual payment to $1,000. And that would make the monthly payment just $83 versus $140 per month at current levels.

That would save you $700 a year over your current payment.

Rates haven’t changed yet…

Remember: this is just speculation. Unless and until an official announcement is made, you should continue to budget for your full, existing 0.85% MIP rate.

But if you’re considering a home purchase or refinance later this year, you should keep an eye out for news from the Department of Housing and Urban Development (HUD).

If a change is announced, it could be worth waiting on that application until you can secure the lower rate.

Verify your FHA loan eligibility (Feb 8th, 2021)

What happens to existing FHA loans?

Homeowners with an existing FHA loan may not benefit from lower mortgage insurance premiums right away.

An MIP rate reduction likely would not change the terms of your current mortgage.

So if a change is announced, you’d have to refinance into a new FHA loan to take advantage of MIP savings.

Keep Streamline Refinancing in mind

The good news is that FHA borrowers may well be in line for an FHA Streamline Refinance — a simplified, low-doc refi program.

FHA Streamline loans typically come with minimum paperwork, low costs, and no credit check. You likely won’t need a new home appraisal or income verification.

However, you’ll have to pay closing costs yourself — only the upfront mortgage insurance charge can be rolled into the loan balance.

And cashing out is not allowed with the FHA Streamline program. If you want cash-back with your refinance, you’ll need the FHA cash-out loan, which requires full underwriting.

How the MIP cut could contribute to the FHA Streamline “net tangible benefit” rule

Right now, FHA Streamline Refinances have a requirement that you gain a ‘net tangible benefit’ (some clear monetary advantage) as a result of using one.

This typically means you need to lower your ‘combined rate’ (mortgage interest plus mortgage insurance) by at least 0.5%.

Say the Biden administration does cut MIP rates by 0.25%. Under the current rule, you’d also need to lower your mortgage interest rate by 0.25% to be eligible for Streamline Refinancing.

But with rates trending downward through 2020 and into 2021, it’s quite likely that a 0.25% reduction is in reach.

But do keep in mind that your current FHA loan has to be at least 210 days old before you’re allowed to refinance.

When could the change take place?

Some mortgage industry insiders are expecting an announcement during President Joe Biden’s first 100 days in office. And they may be proved right.

But there’s a reason we rarely quote speculation from mortgage industry insiders. They’re often wrong.

And the fact is, nobody outside the government knows whether there will be an announcement at all, let alone its likely date. Which raises an important question: What are you supposed to do with this information?

What are you supposed to do with this information?

We wouldn’t be sharing this speculation with you if we didn’t think there was a good chance of the rate cut really happening. But there’s no guarantee it will.

So you probably shouldn’t change immediate plans to purchase a home or refinance.

Today’s FHA mortgage rates are at historic lows — and your interest rate has a much bigger impact on your total loan cost than your mortgage insurance rate.

If you wait on a rate cut and miss today’s low interest rates, it could negate your savings. You could also risk losing out on your dream home by waiting for financing.

Keep in mind, you only need to wait 210 days — about 7 months — from your FHA home purchase or refinance before you can refinance again.

If Biden does cut MIP rates, the change will be long-term. So you can always refinance if it makes financial sense for you to do so later on.

Verify your FHA loan eligibility (Feb 8th, 2021)

Will other aspects of FHA loans change?

Most people who opt for an FHA loan do so because it’s the easiest, most affordable path to homeownership that’s open to them.

American Banker describes FHA borrowers as, “traditionally first-time homebuyers and largely minorities and lower-income earners.”

And they choose FHA loans because they can get approved with lower credit scores and higher existing debts than Fannie Mae, Freddie Mac, and other conventional loans usually allow.

None of that’s likely to change if the Biden administration comes through with the rumored changes.

The only difference should be the amount these borrowers have to pay for their annual mortgage insurance.

Remember, there’s also an upfront mortgage insurance (UFMIP) fee equal to 1.75% of the loan amount. Most borrowers roll this into their loan balance so they don’t have to pay it at closing.

So far, we haven’t heard talk of the UFMIP rate changing — only the annual mortgage insurance premium of 0.85%.

The bottom line

An FHA MIP reduction would be a great win for borrowers, helping to keep monthly housing costs low.

If you plan to buy a home or refinance via an FHA loan later this year, there’s a good chance you could see lower mortgage insurance premiums.

But if you’re already in the process of buying or refinancing, we don’t recommend waiting on news of lower MIP rates. You’re likely to see bigger savings by taking advantage of today’s ultra-low mortgage rates.

Verify your new rate (Feb 8th, 2021)


DACA home loans — FHA will now approve home loans for ‘Dreamers.’ Here’s how to get approved

‘Dreamers’ can now get approved for FHA home loans

‘Dreamers’ — U.S. residents with DACA status — just got a huge boost to their homeownership dreams. The Federal Housing Administration (FHA) announced it had changed its policy on DACA home loans.

From this day forward, FHA is willing to approve home loans for DACA recipients — meaning they’ll get access to the low-down-payment FHA mortgage program that’s so popular with U.S. home buyers.

This new rule opens up the field of mortgage options for Dreamers, giving them access to a wider variety of affordable, accessible paths to homeownership.

Check your home loan options (Jan 25th, 2021)

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FHA’s new stance on DACA home loans

In a statement, U.S. Sen. Sherrod Brown (D-OH), who’s expected to soon chair the Senate Committee on Banking, Housing, and Urban Affairs, summed up what the change means: “DACA recipients are fully eligible for FHA loans.”

FHA’s new policy should make it easier for many Dreamers to buy real estate in the United States.

You might assume that this change was one of the first acts of the Biden administration. But, actually, it was one of the last of the outgoing Trump administration.

Previous FHA rules for DACA recipients

Official policy before January 19 (it was changed the day before it was announced) was that DACA recipients were ineligible for FHA loans.

According to the FHA Single Family Housing Handbook, “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.”

And up until January 19, those classified under the Deferred Action for Childhood Arrivals program (DACA) did not count as lawful residents according to HUD (the agency that manages the FHA).

FHA loans are one of the easiest mortgage programs to qualify for, having more lenient guidelines than many other home loans.

So for many Dreamers, the reversal of this policy is a significant change.

New FHA rules for Dreamers

Of course, the new rule only levels the playing field for DACA recipients.

Applicants still need to meet the same eligibility guidelines as every other lawful resident in order to get their FHA loan approved. More on those in a minute.

Note that Dreamers weren’t entirely locked out of homeownership even before the change.

They have always been eligible for some conventional loans, subject to lenders’ policies, including conforming ones that are offered by Fannie Mae.

Check your home loan options (Jan 25th, 2021)

FHA loan benefits

If Dreamers have been able to get some mortgage loans all along, what difference will access to FHA loans make?

Well, they’ll be able to access the same advantages that attracted more than 8 million borrowers who currently have single-family mortgages backed by the FHA.

Some of the biggest benefits of an FHA loan include:

  1. Small minimum down payment — Only 3.5% of the purchase price is required
  2. Lower credit score — Lenders approve applicants with FICO scores of just 580 and 3.5% down. You might even get a loan if yours is 500-579, if you can make a 10% down payment (though it will be harder to find a lender)
  3. More flexibility with existing debts — FHA loans typically allow higher debt-to-income ratios (DTIs) than other types of mortgages. So if you have a lot of existing debt, it could be easier to qualify

No wonder FHA loans are popular among first-time buyers and those who’ve been through difficult financial patches. And why they’re likely to appeal as DACA home loans.

One more thing. If you’re struggling to come up with a 3.5% down payment and cash for closing costs, explore the grants and loans (sometimes forgivable loans) that are open to homebuyers everywhere.

These down payment assistance programs are available in every state, and are often targeted toward first-time and lower-income home buyers who need a little extra help with their upfront housing costs.

FHA loan drawbacks

Inevitably, there’s a downside along with all those perks. FHA loans typically have higher borrowing costs than many other sorts of mortgage loans.

It’s not that FHA mortgage rates are higher. They’re actually pretty competitive.

Rather, the added cost comes from FHA loan mortgage insurance premiums (MIP).

MIP adds an upfront cost equal to 1.75% of your loan amount (most home buyers roll this into the mortgage balance). And it adds an annual cost equal to 0.85% of the loan balance (paid monthly).

Conventional loans charge mortgage insurance, too, if you put less than 20% down. But this can be canceled later on. With an FHA loan, by comparison, you have to refinance to get rid of MIP.

Mortgage insurance is not a bad thing if it helps you buy a home. But if you qualify for both an FHA loan and a conventional loan, be sure to compare the cost of mortgage insurance on each one so you understand which has higher long-term costs.

Which DACA recipients are eligible for an FHA mortgage?

If you’re a Dreamer, you may well find FHA loans appealing. And you’ll be anxious to know whether you personally are eligible.

So here, quoting extracts from the announcement, is what the FHA says borrowers will need:

  1. A valid Social Security Number (SSN), except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by the Department of Housing and Urban Development (HUD)
  2. Eligibility to work in the U.S., as evidenced by the Employment Authorization Document issued by the USCIS
  3. To satisfy the same requirements, terms, and conditions as those for U.S. citizens

To the third point, those requirements include a credit score of at least 580; a down payment of at least 3.5%; and a debt-to-income ratio below 50%.

Your lender you apply with will require documents to verify credit, income, savings, and employment when you turn in your loan application.

You also need to make sure your loan amount (home price minus down payment) is within the FHA’s loan limits for your area.

FHA also requires that the property be your primary residence, meaning you must plan to live there full time.

Employment Authorization Document

That Employment Authorization Document is clearly central to your application succeeding. But suppose yours is due to expire within a year.

That shouldn’t be a problem. The FHA says:

“If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the lender may assume that continuation will be granted. If there are no prior renewals, the lender must determine the likelihood of renewal based on information from the USCIS.”

In other words, you should be fine if your status has already been renewed at least once. There’s an assumption it will be again.

If it hasn’t already been renewed, the lender will check with US Citizenship and Immigration Services (USCIS) to see how likely a renewal is.

Check your FHA loan eligibility (Jan 25th, 2021)

Other home loan options for Dreamers

We already mentioned that some lenders of “conventional loans” (meaning those that are not backed by the government) consider applications from Dreamers.

Fannie Mae’s conforming loans are also open to those in the DACA program.

Most mortgage lenders offer loans backed by Fannie Mae, and these include a wide variety of options like:

  • The 3% down Conventional 97 loan
  • The 3% down HomeReady loan for low-income buyers
  • Loans with less than 20% down WITH mortgage insurance (PMI)
  • Loans with 20% down payment or more and NO mortgage insurance

The situation is less clear for Freddie Mac (the other agency that backs “conforming” home loans).

Freddie’s guidance uses language that was similar to the FHA’s old wording. And those who lacked “lawful residency status” were ineligible. A search of its website on the day this was written revealed no hits for “DACA” or related terms.

But it may well be that Freddie will soon update or clarify its DACA policies now that the FHA has — and now that a new, more Dreamer-friendly administration is in place.

And it would be no surprise if other organizations (including the VA and USDA) similarly refined their policies in coming weeks to reflect those factors.

If you’re a DACA recipient in the market for a home loan in the coming year, keep an eye on the news and do periodic Google searches of these agencies to see whether any new loan programs have been added to your list of options.

Explore your home loan options (Jan 25th, 2021)

Which DACA home loans are best for you? 

On average, DACA recipients are younger than the US population as a whole, because they had to be under 31 years as of June 15, 2012. But, besides that, it may be a mistake to generalize about them.

Just as other American residents, some Dreamers will have stellar credit scores and others bad ones. Some will have plenty of savings and others won’t. And some will be laden with student loans and other debts, while others owe nothing.

So a DACA borrower needs to seek out the type of loan that best suits their personal financial circumstances — just like everyone else.

Those most attractive to lenders (high credit scores, 20% down payment, and small debts) will likely find a conventional loan to be their best bet.

Those with low scores, 3.5% down payment, and lots of debts may need to go for FHA loans.

And those between the two might find Fannie Mae offers their best deals. Better yet, Fannie requires a minimum down payment of just 3%.

Shop for loan options and mortgage rates

Whichever type of loan you choose, be aware that you’ll be borrowing from a private lender. The mortgage rates and overall deals you’ll be offered are likely to vary widely from one lender to the next.

So be sure to comparison shop for your mortgage, getting competitive quotes from several lenders and comparing them side by side.

That’s the best way to find a low interest rate and save money on your home loan, no matter which program you choose.

Verify your new rate (Jan 25th, 2021)


The 9 Best Retirement Plans Available

We have a lot of choices about where to invest our money, both before and after retirement.  Some options are clearly bad investments. Others seem like a good bet, but they probably aren’t. While we would all like to find a shortcut to massive wealth, a more steady approach is probably the best route to a secure retirement. Save early and regularly, and invest surely.

bad investments

You may know someone who has a friend who won the lottery, bought a Picasso at a garage sale, or who invested on the ground floor in an amazingly successful company.  However, those stories are the exception, not the rule.

The following advice came to us from Mr. Henry K. “Bud” Hebeler, a legendary retirement guru who developed his own special methods and gave numerous seminars on retirement until his death in 2017. Hebeler learned a lot of bad investment lessons from both his own and his associates’ experiences, and he put together a list of 13 truly “unlucky” investments that you should avoid. The following commonsense advice is in Bud’s own words.

When I was a kid, my father had a bad experience with an investment to raise animals. He told me frequently, “Don’t invest in anything that eats.”  One of my business associates told me his worst experience was investing in cattle, and he said he wished he had heard my father’s words.

I took my father’s advice when I was approached by a friend who had a great sales pitch. He wanted some seed money for a catfish farm.  The farm and his fish went belly-up, one in the water and the other in bankruptcy.

Another business associate got involved with options trading and speculated in eggs.  He was at the end of the chain of trades and ended up with a boxcar full of eggs that he had to distribute.

Once, I met with a member of the Chicago Board of Exchange.  His advice was, “Don’t invest in commodities.  I can make money from fees on every trade, but it’s very unlikely for the novice.”

My wife and her friends bought hundreds of Beanie Babies, jokingly speculating on their future price.   She and her friends still laugh about it, but the Beanie Babies wait in a chest for our great-grandchildren.

More seriously, an eye doctor of mine was an expert in ancient armor.  I believe he actually may have been successful at that, but he ended up leaving the country to avoid a large number of malpractice suits.  Investing in valuables –  from diamonds to art – requires real expertise and very close ties with buyers.

I personally have been in about a dozen of these. I’ve lost money on many, and I was very fortunate to make up for the losses with one of them.

Tax returns are much more complicated, especially with some oil and gas ventures.  I still have a real estate partnership that I have great difficulty selling.  It makes a good return but does not fit in at all with our estate plans.

And I haven’t been able to get the general partner to sell after almost 40 years.  Stick with public investments where the market prices are posted and you can easily sell a part.

The small print often exceeds the large print because explains how you are the responsible party.  By reading carefully, you’ll find how the seller makes its money.

You likely have seen some get-rich-quick ads on television, or financial articles written by shills of the company. Read the small print, whether it’s a life insurance product, specialized annuity, reverse mortgage, or any other investment contract. If you see the phrases,  “Ever upwards, never downwards” or “convert your …..,” they may be red flags.  Don’t understand the small print?  Consult with a certified financial planner (CFP).

You are making a big bet that you know what will happen in the future when you pick funds specializing in a market sector.

I had a lot of experience trying to predict the future when I was Boeing’s officer responsible for its strategic planning for six years.  Stick with broad-based index funds.  Over the long haul, you’ll do better and feel more comfortable. The major components of those specialized funds are likely components of the indexes anyway.

When Boeing had its big crash (and Seattle was going down with it), there was a large billboard that said, “Will the last person out of Seattle please turn off the lights.”  I was appointed by the governor to be on his Economic Development Council. We joined with a number of bank officers to try and promote some new businesses. 

Most of the choices we made were marginal at best; the one that most of the members thought had the least chance turned out best.  You need lots of money to really know what you are doing and succeed in this.

When I was a young man, and before I had a CFP help me with investments, I took the advice of a stockbroker and from several financial magazines. Supposedly, these were sure-winner stock picks.  I did horribly.

I know a number of people who have done extraordinarily well in various kinds of real estate, but it’s their full-time job.  They are good at it and are able to get low-interest financing.

Flipping houses has proved to be a disaster for most that try it. They often end up with bills they cannot afford.  Stick with low-cost diversified real estate investment trusts (REITs) index funds that have a daily market value. You can sell a small part when needed.

Vacation properties that offer points or certain periods of time are better lifestyle purchases (rather than investments).  They presuppose that you have the ability to know their use often a year in advance and that you will use them for many years.

They are difficult to sell and carry annual charges.  Heirs often do not like their obligations.

Always consider if investments are “liquid.”  These are purchases that have a published market value and generally are divisible so that you can sell only a part.

Antiques, art, collectibles, timeshares, most partnerships, and real estate are not liquid and make poor investments for those who are not otherwise wealthy. Think carefully about considering the total value of your home as a retirement investment.

There is a good reason that economic pundits finish their pitch with something like “On the other hand ….”

Even this Grandpa here can’t see the future and knows that predicting when the markets will fall or grow is futile.   I was lucky in many respects for our long stretch of personal investment successes during the six years I was responsible for Boeing’s strategic planning.  Furthermore, I was well-connected in the economic, academic, business, and government worlds, and I was paid to know what was happening.  Still, all that would not guarantee that I would be right.

Do not listen to financial advice from television ads, long internet infomercials, your beautician, or drinking buddies. Authentic-sounding financial and media pundits can be just as bad.  I read numerous financial publications and have written articles in them as well.

There is no harm in spending $1 or more on a lottery ticket so long as you know that it is for entertainment, not investment purposes.

The best advice comes from Warren Buffet: stick with low-cost broad-based index funds.

An index fund is a type of mutual fund.  Each index fund has a set of strict rules about the types of stocks in the fund and how they will be traded. When you buy an index fund, you are getting broad market exposure at a relatively low cost.

People like Warren Buffett, and other index fund managers, have expert staff that can do due diligence (with personal visits to the many components of a company).  You don’t.

If you want a do-it-yourself approach, then be sure to select information sources carefully. Know something about how the author earns money.  In fact, know a lot about that. Authors with good material are John Bogle, Jonathan Clements, and Larry Swedroe.

You should also invest time.  Spend time figuring out what you want to do in retirement with your carefully invested savings.  And, spend time creating and maintaining a complete retirement plan that ensures you have the means to achieve your goals.

The NewRetirement retirement planner is a detailed and personalized tool that makes it easy to track, update and improve your retirement over time.  You can even do “what-if” scenarios with investment returns.

If income is your goal, be sure to read NewRetirement’s piece “Retirement Income Strategies: 18 Ideas for Lifetime Wealth and Peace of Mind.” You will get tips on budgeting, how to handle required minimum distributions (RMDs), and how to create your own pension.