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How FHA loans are made. (2009)
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How FHA loans are made. (2009)

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This was created for Realtors, Financial Planners and CPA to understand the FHA standards.

This was created for Realtors, Financial Planners and CPA to understand the FHA standards.


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  • 1. Today’s FHA Loan This is Not Your Father’s FHA!
  • 2. FHA Lending is Exploding • Now represents >30% of loans being written • Geared for: – First time buyers – Borrowers with little to no money – Buyers with less than perfect credit – Non-occupant co-borrowers
  • 3. Hot Features of FHA • 3.500% down payment • 6% seller concessions • All funds can be gifted • No reserve requirements • No income limits • Very competitive interest rates
  • 4. FHA Highlights • Limited to owner-occupied property • Available for 1-4 unit properties • High LTV available for OO 4 unit • No minimum credit score • Flexible down payment sources allowed
  • 5. FHA Highlights (cont.) • Manual underwriting common/allowed • Good documentation is the key • Borrowers in active Ch. 13 can buy • Manufactured housing allowed
  • 6. FHA Overview • Borrower must have 3.500% down payment • Pre-paids do NOT count toward 3.500% • Seller can pay up to 6% in cc/pp • Seller paid costs should always be applied to pre-paids first, then closing costs
  • 7. FHA Overview (cont.) • 1-4 unit purchases allowed • LTVs as high as 96.5% • 2-4 unit properties must be self sufficient • Gifts and grants are allowed toward down payment
  • 8. FHA Credit • 580 minimum credit score! • Some lenders impose 620 min. FICO • Last 12 months should show no late pmts. • Judgments typically must be paid • Collections not required to be paid • Letter of explanation should be in the file for all bad credit • Non-traditional credit allowed
  • 9. FHA Property • Safety – Is the property safe? • Sound – Is the property sound? • Secure – Does the value support the loan? • The days of the VC sheet are gone! • FHA appraisals resemble conventional • Roofs and lead-based paint still an issue • Mfg. homes that have been moved are not eligible
  • 10. Property Flippers Beware! • Current owner must be on title 90 days • PA for the sale cannot be dated before day 91 • Some lenders may require 2 appraisals
  • 11. FHA Loan Limits • Limits vary by county • Our county limit is: $729,750 • Loan limit is before UFMIP is included • Higher loan limits for 2-4 unit properties • Increased loan limits good thru 12-31-09
  • 12. Benefits to Using FHA with Your Buyers • Increases number of potential buyers • Increases traffic • Usually maintains sale/list price • Reduces time of home on market • Reduced cash requirement from buyer • One of few remaining ways to achieve $0 out-of-pocket expense to buyers • Competitive interest rates • No pre-payment penalty • Low monthly MI
  • 13. Discussion Time
  • 14. Partnerships are Critical • Not the time to refer 3 lenders! • You need one “go-to” lender – Wide array of lending products – Underwriting expertise – Credit specialist – Local and accountable – In Your Office – Available by Cell and Answers afterhours
  • 15. FHA Specialist Signup today for 1 on 1 training! Michael Tacconi Mortgage Advisor 925-872-0595 National City Mortgage

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