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A Complete Guide To FHA Purchase Loans
 

A Complete Guide To FHA Purchase Loans

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Copy of presentation updated and uploaded March 26, 2009

Copy of presentation updated and uploaded March 26, 2009

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    A Complete Guide To FHA Purchase Loans A Complete Guide To FHA Purchase Loans Presentation Transcript

    • A Complete Guide to FHA Purchase Loan Options
      • Sponsored by
      • Broadview Mortgage Corporation
      • 1-866-667-6724
    • FHA Purchase Loan Options
      • The Purpose and Goals of this Class
      • To Create and Empower Home Owners
      • Educate you about the FHA loan options available to purchase a home with minimum down payment
      • Empower you with the ability to make educated decisions about your home financing options
      • Encourage you to ask questions and get informed about the home buying process
    • FHA Purchase Loan Options
      • Topics We Will Cover In This Class
      • What’s new in 2009 with FHA financing
      • A Complete Guide to FHA purchase loans
      • “ Red Flags” – What to watch out for
      • Wrap Up and Take Aways
    • FHA Purchase Loan Options
      • Ask Questions throughout presentation
      • You may type questions in at any time during the presentation – Questions box on your screen
      • FHA loan specialists are standing by to answer your questions during the presentation
      • This is an interactive learning environment. You will get the most value by having your specific questions answered
      • The only dumb question is the one you don’t ask
      • Write number down now in case you get disconnected
        • 1-866-667-6724
    • FHA Purchase Loan Options
      • What’s New in 2009
      • 2009 FHA Loan Limits
        • Based on MSA –up to $729,750
        • “ FHA Jumbo” is anything above $417,000
          • Results in slightly higher interest rates
      • Down Payment Requirement
        • Increased from 3% to 3.5%
      • Private Mortgage Insurance - PMI
        • Upfront PMI increased from 1.5% to 1.75%
        • Monthly PMI increased from .50% to .55%
    • FHA Purchase Loan Options
      • Borrower Eligibility
      • Credit Score Requirements
        • 620 Minimum Credit Score – as of
        • 660 Minimum Credit Score – “FHA Jumbo”
          • Loan amount over $417,000
      • Non traditional credit lines temporarily suspended as of 4 th quarter 2008
        • Lack of credit score or depth of credit supplemented by alternative sources
          • Phone bills, utility bills, auto insurance…etc.
      • Investors not accepting – Market Conditions
    • FHA Purchase Loan Options
      • Borrower Eligibility
      • Employment Requirements
        • Must have 2 year history of employment
          • If in school or military provide transcripts or discharge papers
        • Self Employed must have minimum 2 year history
          • Business license and tax returns
        • Gaps in employment must be explained
          • Must be at new job for at least 6 months
    • FHA Purchase Loan Options
      • Borrower Eligibility
      • Income Qualifying Guidelines
        • TOTAL Scorecard automated approve/eligible
          • Debt to income ratios approved
        • FHA Manual Underwriting
          • Much more restrictive debt to income ratios
        • Non Occupying Co-Mortgagors
          • Can use income of Co-Signer to help qualify
          • Income / Assets added to borrower’s
        • All FHA Loans require full income documentation
          • Tax returns, W2’s, Pay Stubs
    • FHA Purchase Loan Options
      • Borrower Eligibility
      • Income Qualifying Guidelines
        • Converting Existing Homes into Rentals
          • Bad Apples - Effective September 19 th , 2008
          • Temporary exclusion of rental income from vacated property
            • Must qualify for full PITI payments on both homes
          • Must have 6 months reserves – Exceptions
          • Exception – Relocation with new employer or transferred by the current employer
            • Must have executed 1 year lease
            • Copy of deposit check
          • 75% LTV – Min. 25% Equity
    • FHA Purchase Loan Options
      • Borrower Eligibility Highlights
      • Do not have to be first time home buyer
      • No income limitations
      • Flexible qualifying criteria
      • Can own other properties
      • Can use non occupying co-mortgagers to qualify
    • FHA Purchase Loan Options
      • Property Eligibility
      • 1-4 Units ok – Owner occupied only
      • Loan limits increased for 2,3,4 units
        • Limits determined by MSA – See site for link
      • No asset requirements for 1-2 unit homes
        • 3 months PITI required for 3-4 units
      • Can buy any eligible property including short sales and foreclosures
        • Typically must be owned minimum of 90 days
        • Foreclosures are the exception
    • FHA Purchase Loan Options
      • Property Eligibility
      • Appraisal requirements are much more strict than conventional lender guidelines
        • Inspection is significantly more thorough
        • Property must be in “livable condition”
          • Toilets work
          • Sinks work
          • Heating, electrical
          • Light switches, outlets
      • Be cognizant of damage – especially to bank owned foreclosures
    • FHA Purchase Loan Options
      • Down Payment and Closing Costs
      • 3.5% Down payment required
        • 100% of down payment may be a gift
      • Gift funds can be from relative, employer, government grant
        • No expectations of repayment
        • No liens against property
      • Can use community seconds
        • City, State, Federal down payment assistance programs ok
        • Will allow up to 100% of purchase price with approved secondary financing
    • FHA Purchase Loan Options
      • Down Payment and Closing Costs
      • Seller Paid DPA Discontinued Oct. 1 st , 2008
        • Nehemiah
        • AmeriDream
        • HART
      • Scramble to avoid discontinuation failed
      • H.R. 600 introduced earlier this month
        • Reinstate seller paid DPA
      • Earlier discussions of reinstatement
        • Higher mortgage insurance premiums
    • FHA Purchase Loan Options
      • Down Payment and Closing Costs
      • May receive up to 6% of purchase price from seller
        • Can be used to cover closing costs
        • Can be used to “buy down” interest rate
        • Can not be used for down payment
      • Buying down the interest rate
        • Ability to pay upfront fees to permanently reduce interest rate
        • Significant long term savings
      • May have challenges asking for max in competitive offer environments
    • FHA Purchase Loan Options
      • Mortgage Insurance
      • FHA Loans require 2 types of Mortgage Insurance Premiums - MIP
        • Upfront Mortgage Insurance Premium
          • 1.75% of Loan Amount
          • Can be financed into loan amount
        • Monthly Mortgage Insurance Premium
          • .55% of Loan Amount
          • Included in monthly payment
          • Included on mortgage statement
        • MIP required for minimum 5 years
          • LTV must be 78% or less to remove
    • FHA Purchase Loan Options
      • Mortgage Insurance
      • Base Loan Amount = 96.5% of Purch Price
        • $200,000 Purchase Price
        • - 3.5% Down Payment
        • $193,000 Base Loan Amount
      • Calculating your Up-Front MIP - Example
        • $193,000 Base Loan Amt. x 1.75% = $3,377.50
        • Added to Base Loan Amt = $196,377.50 Fin. Amt.
          • Payments based on this loan amount
      • Calculating your MIP Payment - Example
        • $193,000 Base Loan Amt. x .55% = $1,061.50
        • Divided by 12 = $88.46 added to payment
    • FHA Purchase Loan Options
      • “ Red Flags” – What to watch out for
      • Only use an FHA Approved lender!
      • Many illegal “Branch” companies that are not approved to originate FHA loans
      • Check official HUD website for approval status of lender - will provide link on site
      • “ Red Flags” include – a different company name and/or address on page 3 of loan application.
    • FHA Purchase Loan Options
      • The Dangers of Shopping for Interest Rate
        • Interest rates are determined by the markets on a daily and sometimes hourly basis
        • Your interest rate is not guaranteed until locked
          • Purchase – can not lock until you have a property address
        • There are many factors that go into determining your interest rate
          • Credit scores, Loan amount, Loan to value, Loan purpose, condominium, occupancy
      • Interest rate is the most abused loss leader in the mortgage industry!
    • FHA Purchase Loan Options
      • The Dangers of Shopping for Interest Rate
      • The most common “excuse” that brokers, lenders and loan officers have for a change in rate is……………
        • “ Well, the interest rates change on a daily basis and that was the rate at the time, on that particular day”
      • How can you argue with that, right?
      • You can now!
    • Five 100% Financing Loans
      • Wrap up and Take Aways
      • We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, FHA, VA, USDA, Community seconds programs, MCC programs and homeownership education
      • We are more than happy to be your “second opinion” if you are already working with someone
      • We are more than happy to refer you to a qualified Real Estate Agent that shares our values for education and empowerment
      • We are committed to educating and empowering homeowners - Join us for future classes
    • Five 100% Financing Loans
      • Wrap up and Take Aways
      • You will receive a “Thank you” email with links to the information we’ve talked about here today including
        • Copy of power point presentation
        • Secure on-line loan application
        • Links to all the topics we discussed in class
        • Dream Home Finder request
        • Link to more information about Tax Credit
        • A schedule of all upcoming classes
    • Upcoming Homebuyer Classes
      • Hiring a Real Estate Agent and Finding the Best Deals
      • A Complete Guide to Closing Costs and the Good Faith Estimate
      • A Complete Guide to Buying Foreclosures and Short Sales
      • A Complete Guide to FHA Purchase Loans
      • A Complete Guide to the CalPERS Home Loan Program
      • Five 100% Financing Loans You Should Know About
      • Working to record and archive all classes for viewing anytime – I will keep you updated
      • Check back often for upcoming classes
    • Thank You for Attending If you enjoyed this class – Tell a friend 
      • For more information
      • 1-866-667-6724
      • Presented by
      • Scott Schang
      • Sponsored by
      • Broadview Mortgage Corporation