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Fha Basics

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FHA Basics

FHA Basics

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Transcript

  • 1. How FHA Helps REALTORS® Sell More Homes
  • 2. FHA’s Mission: Insure Mortgages Help consumers purchase and improve homes Give lenders confidence that loans will be repaid
  • 3. Why Use FHA? Good terms because lenders are protected from risk Many products for buying, renovating, and refinancing FHA-approved lenders everywhere
  • 4. Who Benefits Most? First-time home buyers and others who need cash down as low as 3.5 percent Borrowers seeking low monthly payments Those who need help qualifying because their credit is less than perfect
  • 5. Not the Same Old FHA Simpler process for lenders More flexible rules for appraisals and closing costs Loss mitigation to avoid foreclosure
  • 6. The New FHA TOTAL Scorecard credit score system: quick, fair Loan-to-value ratio comparable with other prime products Premiums: Up front cannot exceed 3.0 percent, 2.75 percent for first-time homebuyers who participate in counseling. Plus 0.5 percent annually
  • 7. Appraisal Changes FHA guidelines are the same as for conventional loans No need to repair cosmetic defects or normal wear and tear Focus on valuation of the property
  • 8. No List of Allowable and Not Allowable Closing Costs Borrowers permitted to pay virtually all closing costs RESPA still applies
  • 9. Qualifying Borrowers without Traditional Credit Histories Many lack traditional credit scores FHA permits lenders to accept non traditional histories, such as a report from Payment Reporting Builds Credit®
  • 10. What This Means for You and Your Clients Better pricing Easier access to credit Lower down payments HUD relaxes flipping rule
  • 11. Home Purchase One- to four-family homes (Section 203b) Condominium units Manufactured (mobile) homes, including lots Homes needing rehabilitation
  • 12. One- to Four-Family Homes (Section 203b) New or existing homes Loan limits vary based on geographic area 96.5 percent financing possible Finance upfront insurance premium within the mortgage
  • 13. Adjustable Rate Mortgages for Purchase or Refinance Keep initial rates and mortgage payments low Easier to sell affordable homes even when mortgage rates are high Maximum change over loan lifetime: 5 percentage points
  • 14. Condominium Units Low and moderate income renters stay after conversion Condo must serve as buyer’s principal residence Loan insured up to 30 years
  • 15. Manufactured (Mobile) Homes New or used 5 percent down payment Lender insured to 90 percent of home value, maximum $48,600
  • 16. Manufactured Home Lot and Combination Insurance Lender insured to 90 percent of loan value Up to $64,800 for manufactured home and lot and $16,200 for lot
  • 17. Homes Needing Rehabilitation Buy or rehabilitate homes Property valuation: Pre-rehabilitation plus rehab cost or 100 percent of appraised value after rehabilitation Low insurance premium
  • 18. Rehabilitation Mortgage Insurance — 203(k) Program A single mortgage buys a home requiring $5,000+ for rehabilitation Or rehabilitate an existing home Borrowers save time and money with a loan insured even before the property is offered as security
  • 19. Streamlined 203(k) Limited Repair Program For single-family properties sold by HUD or to refinance an existing mortgage Make improvements up to $35,000 and get a mortgage based on after-rehab value
  • 20. Energy Efficient Mortgages (EEM) Program New homebuyers or homeowners can finance energy-efficient features No separate loan required Up to 5 percent of property value
  • 21. Property Improvement Loan Insurance Light or moderate rehabilitation of property or construction of nonresidential buildings Insured up to 90 percent Up to $25,000 for a single-family home or up to $60,000 for multi-family property
  • 22. Housing Programs for Special Groups Essential public employees Indian reservations and other restricted lands Reverse mortgages for homeowners age 62 or older Designated disaster areas
  • 23. “Good Neighbor Next Door” Program Essential public servants can get up to 50 percent discount off list price Commit to 36 months as sole residence
  • 24. Indian Reservations and Other Restricted Lands Tribe must participate FHA follows tribal policies for land lease Borrowers must be able to meet FHA credit qualifications
  • 25. Homeowners 62 or Older Reverse mortgage/Home Equity Conversion Mortgage Withdraw home equity as cash payments Use cash for any purpose
  • 26. Single Family Mortgage Insurance for Disaster Victims 100 percent financing Current mortgage limits range from $172,632 to over $300,000
  • 27. Education and Counseling HUD offers Housing Counseling Assistance Program Any renter, owner, or potential homeowner can learn how to make rent or mortgage payments
  • 28. FHA Refinance Program Raises loan to value (LTV) for “cash out refinances” 95 percent (85 percent for properties above $417,000) One year’s worth of timely mortgage payments required
  • 29. Protection Against Foreclosure Loss Mitigation program authorizes lenders to assist borrowers in default “Special Forbearance” offers temporary reduction or suspension of payments
  • 30. Choose the Right FHA-Approved Lender Refer clients only to lenders in whom you feel confident They must understand FHA rules Rules change, and your client doesn’t want surprises