FHA Myths and Truths

There are different loan programs and many of you have heard about FHA loan programs. Although it is one of the most common loan programs, it also has a lot of misconceptions that deter buyers from exploring it as a option. Vincent Tomich, from CMG Financial, has outlined some of these myths to give you a better understanding how an FHA loan might be a good fit for you. Feel free to reach out to him if you have any additional questions regarding different loan programs. His full contact info is listed at the end of this post.

Myth: FHA Loans are for First-Time Homebuyers Only.
Truth: FHA loans can be used by all homebuyers. I think that this myth stems from the marketing of FHA loans as a good product for first-time homebuyers because of its low down payment requirements. FHA loans are available for any primary residence and are not limited to first-time homebuyers.

Myth: I Can’t Purchase a Condominium with an FHA Loan.
Truth: If you plan on living in the condo as your main residence, you can get an FHA-insured loan to purchase this kind of property. You can also purchase multi-family homes; the residency rule still applies.

Myth: FHA Borrowers are Poor Risks.
Truth: FHA Borrowers in FY 2014 have an average credit score above 680. FHA credit quality has improved steadily since 2007. Over 40 percent of FHA loans made in every quarter since 2009 had credit scores above 680. In 2006 and 2007, only about 20%of the FHA loans insured in 2006-2007 had credit scores above 680.

Myth: FHA is Experiencing High Defaults and Foreclosures.
Truth :FHA, like every other holder of mortgage risk, incurred financial losses as a result of foreclosures; however, an analysis of FHA data indicates the problem is concentrated in older FHA loans that were affected by the decline in house prices since 2006. There has been widespread improvement in the performance of FHA loans since the market collapsed in 2008. In just the past year, delinquency rates have improved by 14 percent and recovery rates have improved by 23 percent.

Myth: My Bank Won’t Process FHA Home Loans. I should Just Get A Conventional Loan.
Truth: There are plenty of reputable lenders approved and willing to work with you on an FHA guaranteed home loan. It’s true that some lenders refuse to write FHA loans; if your current lender won’t help, ask our trained professionals here at CMG Financial. You’ll find plenty of professionals who want to get you started on the road to an FHA mortgage.


Water Conservation Act

As most of you already know, the state of California has been faced with a mandated 25% water reduction which includes requirements and water-use restrictions. After attending our Women’s Council of Realtors meeting with California Water Service I wanted to share some of the valuable information we learned including how to appeal your budget and rebates Cal Water offers.

*Please note that California Water Service covers most of the South Bay but not all locations. Check your water bill to make sure this information applies to you and your household.

Here are some of the water use restrictions:
-Do not apply water to outdoor landscapes that causes runoff onto adjacent property, non-irrigated areas, private and public walkways, roadways, parking lots, or structures.
-Do not use a hoes to wash motor vehicles unless fitted with a shut-off nozzle or devise that causes it to cease dispensing water immediately when not in use.
– Do no apply water to driveways and sidewalks.
-Do not use water in a fountain or other decorative water feature, except where the water is part of a recirculating system.
-Do not apply water to outdoor landscapes during and within 48 hours after measurable rainfall (.10 of an inch or more).
-Do not fill or refill single family residential swimming pools or spas, except to maintain required operating levels or after structural repairs.
-Do not fill or refill any ornamental lakes or ponds except to sustain existing aquatic life.
-Observe outdoor day of week and hour restrictions in place by Cal Water or your local government.
-Once notified of a water leak that may exist on your property, fix any leak within your control within five business days

What is a water budget?
Each home is given a water budget which is an allowance of water measured in Ccfs that the household may use up to without incurring penalties or higher costs. This budget is specifically catered to each individual household based off the units of water that customer used in 2013. This amount can vary each month and can be viewed on your monthly water bill for the proceeding month or you can visit www.calwater.com to view your entire 2013 usage history. If a customer goes over their allotted budget they will incur a drought surcharge for every Ccf used. This charge will be twice the per-unit charge in the district’s highest quantity rate tier, up to $10 per Ccf. On the other hand, if you do not use your full budget allotment then your unused units of water will go into a “water bank”. Should a customer exceed their monthly budget, any banked units of water will be applied to the overage prior to any surcharges being assessed.

Water Budget Appeals
Homeowners have the ability to appeal their budget to get an increase in allowance if they meet the following criteria:
-Water use necessary for heath or safety
-Business or economic needs
-Significant long-term savings already achieved
-If your household number has changed (ex: new roommate moves in)
-Low water use in 2014
-Significant water savings achieved in 2011
For more information and forms on how to submit an appeal you can visit the site HERE

Cal Water Rebates and Resources
Cal Water offers a variety of rebates, programs, tools, and free items to help customers reduce their water use. You can visit the website HERE for more information on the following resources:
-High-efficiency toilet rebate
-High-efficiency clothes washer rebate
-Smart Irrigation Controller rebate
-Free sprinkler nozzles
-Water use efficiency evaluation program
-Turf replacement rebate
-High-efficiency toilet delivery program
-Home water use reports
-Conservation kits

Visit Cal Water’s website for more information on what’s available to you. You might be surprised at what they offer to help you in your water conservation efforts!