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Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?

Updated on May 26, 2009

HUD is an acronym for Housing and Urban Development, which is an United States Cabinet established in 1965 to develop and implement policy for housing and city developments. By 1980, it had shifted away from urban planning and concentrated almost exclusively on residential issues.

HUD's major impact on the economy is in its role as a facilitator to allow people with low- to mid-level incomes in the process of purchasing a house. HUD doesn't directly loan money to borrowers but it approves and supports independent lenders.

HUD is also involved in a wide variety of residential assistance programs. In addition to its extensive services for counseling potential home owners, it also is involved in housing discrimination, senior housing, safety issues, home repairs, homeowners' insurance and even rental policies.

There are some programs offered by HUD that are simply spectacular and extraordinary. One of them is the Officer Next Door program which allows police officers to buy a HUD-owned house for half of its market value! If that isn't an incentive to join the police academy, it's hard to imagine what would be!

HUD spent nearly $50 billion last year in handling bail-outs, funding discount incentives, providing educational programs and supplying buyer credits. That is an absolutely astronomical amount of money, enough to buy General Motors, Ford and Chrysler outright, and still have billions left over!

Home Buyer's Recession Survival Guide - Jumbos and Super Jumbos Aren't 747s

Each year, the Federal Government determines the average mortgage amount on an American house and rejigs the maximum figure that Fannie Mae and Freddie Mac are allowed to get involved with. That value currently is $417,650, having more than doubled in the past decade.

Any mortgage of $417,651 and up is termed a Jumbo loan. These Jumbos have an interest rate which is usually one quarter of a percent higher than those which fall below the threshold. That extra is to compensate for the greater risk presented to the investor of a sizeable default.

The most recent Fannie Mae limits are:

1 Family House: $417,650
2 Family House: $533,850
3 Family House: $645,300
4 Family House: $801,950

Those limits apply only to the Lower 48. Fannie Mae will happily apply its threshold a full 50% higher in Alaska, Hawaii and the U.S. Virgin Islands.

A Super Jumbo is a loan which exceeds $650,000 (in the contiguous states) and in these cases there really are no guidelines. Most investors will consider these mortgages on a per case basis. You would think that anyone who can come up with a whopping $162,500 minimum cash down payment would never dream of defaulting, but a single $650,000 loan actually does represent a greater risk to the investors than four individual $162,500 mortgages!

This will not help the residents of Jupiter Island, Florida, as the average house price there is $5.6 million! However with the explosion in hyperpriced properties all over the country it is not difficult to find mortgage companies offering all sorts of Jumbo and Super Jumbo options, such as limits up to $15 million, terms to 50 years (will we live that long?), 1% Super Jumbo MTA Option ARMs (and goodness help you if the rates spike), and even stated income, no documentation needed mortgages and 100% High Ratio, No Money Down Jumbo Mortgages to people with a FICO credit score of 600!

That last one seems like there are some mortgage companies out there who haven't heard of the subprime meltdown!

Read The Entire Survival Guide

Home Buyer's Recession Survival Guide - The Subprime Meltdown
Home Buyer's Recession Survival Guide - The Advantage Of Renting Over Buying
Home Buyer's Recession Survival Guide - Why Rent? Why Not?
Home Buyer's Recession Survival Guide - Five Common Mistakes House Buyers Make
Home Buyer's Recession Survival Guide - Get Your Home Sold Quickly & At Your Asking Price
Home Buyer's Recession Survival Guide - Improve Your Home's Value And Sell It For More!
Home Buyer's Recession Survival Guide - Learn The Value Of Curb Appeal
Home Buyer's Recession Survival Guide - Home Staging: Valid Selling Technique Or Fraud?
Home Buyer's Recession Survival Guide - Before You Go House Shopping
Home Buyer's Recession Survival Guide - The Home Condition Checklist
Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders
Home Buyer's Recession Survival Guide - What To Do After You're Turned Down
Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved
Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?
Home Buyer's Recession Survival Guide - Jumbo Isn't As Huge As He Once Was
Home Buyer's Recession Survival Guide - FHA Q&A
Home Buyer's Recession Survival Guide - The FHA's Credit Requirements Vs. The Bank's
Home Buyer's Recession Survival Guide - Your Credit Score And Your Mortgage
Home Buyer's Recession Survival Guide - Credit Score Confusion
Home Buyer's Recession Survival Guide - Keeping That Credit Score Nice & High
Home Buyer's Recession Survival Guide - Minimize The Interest Payable
Home Buyer's Recession Survival Guide - What Is PMI & Why Do I Care?
Home Buyer's Recession Survival Guide - The LIBOR-COFI-COSI Alphabet Soup
Home Buyer's Recession Survival Guide - REO: Get Rich Quick Or Just Waste Time?
Home Buyer's Recession Survival Guide - Obtaining Flipping Money
Home Buyer's Recession Survival Guide - Consider The Additional Costs
Home Buyer's Recession Survival Guide - What Is Escrow?
Home Buyer's Recession Survival Guide - Tips To Avoid Foreclosure
Home Buyer's Recession Survival Guide - The Changing Value Of Your Mortgage Dollar
Home Buyer's Recession Survival Guide - How To Ride The Interest Rate Spikes
Home Buyer's Recession Survival Guide - Can't Get A Mortgage? What A PITI!
Home Buyer's Recession Survival Guide - Calculating Your Closing Costs
Home Buyer's Recession Survival Guide - Mortgage Broker or Mortgage Banker?
Home Buyer's Recession Survival Guide - The Magic Of A Down Payment
Home Buyer's Recession Survival Guide - A Refinance Checklist
Home Buyer's Recession Survival Guide - Refinancing With Bad Credit
Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze
Home Buyer's Recession Survival Guide - VA Loans
Home Buyer's Recession Survival Guide - Offset & Reverse Mortgages
Home Buyer's Recession Survival Guide - The Reasons To Not Buy An Offshore Retirement House
Home Buyer's Recession Survival Guide - How To Pay Less Than $500 A Month
Home Buyer's Recession Survival Guide - Five Easy And Cheap Tips To Save Big $ On Energy

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