Mark's Introduction - NMLS# 267431


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Mark's Introduction - NMLS# 267431

  1. 1. FHA MADE EASY Presented by
  2. 2. WHY FHA? <ul><li>FHA loans </li></ul><ul><ul><li>Have no prepayment penalties </li></ul></ul><ul><ul><li>Have no income limits (except Utah Housing) </li></ul></ul><ul><ul><li>Do not have to be a first time homebuyer </li></ul></ul><ul><ul><li>Easy process with an experienced Loan Officer </li></ul></ul><ul><ul><li>Allow up to a 6% seller contribution </li></ul></ul><ul><ul><li>Are able to streamline refinance for minimal or no cost </li></ul></ul><ul><ul><li>Cash out refinance at 95% </li></ul></ul>
  3. 3. MORTGAGE INSURANCE <ul><li>Mortgage insurance is now tax deductible as of January 1, 2007 </li></ul><ul><li>( Less than $100K AGI ) </li></ul>
  4. 4. CH...CH…CHANGES! <ul><li>For case number assignments on or after 10/1/08 , FHA will no longer base mortgage insurance premiums on credit score and LTV ratios. </li></ul><ul><li>Upfront premiums: </li></ul><ul><li>Purchase money & full credit qualifying refinances = 1.75% </li></ul><ul><li>Streamline refinances = 1.50% </li></ul><ul><li>FHA Secure (delinquent mortgagors) = 3.00% </li></ul><ul><li>Annual premiums: </li></ul><ul><li>FHA Secure with LTV < 95 annual MIP = .50, loans with LTV > 95 have annual MIP = .55 </li></ul>25 > 90 55 > 95 NONE < 90 50 < 95 < 15 YRS LTV >15 YRS LTV
  5. 5. MORTGAGE INSURANCE <ul><li>If the loan has an up front mortgage insurance premium of 1.5% of the loan amount. </li></ul><ul><li>Example: If the loan amount is $100,000 the up front fee would be $1,500. </li></ul><ul><li>Total loan amount = 101,500 </li></ul><ul><li>If the loan also has a monthly mortgage insurance premium of .50% of loan amount divided by 12. </li></ul><ul><li>Example: If the loan amount is $100,000 X .005 / 12 = $41.67 monthly fee. </li></ul>
  6. 6. DOWN PAYMENT REQUIREMENTS <ul><li>3% down payment is required. Sources include: </li></ul><ul><li>Gift from relative </li></ul><ul><li>Secured borrowed funds – including 401k loan </li></ul><ul><li>Sales proceeds (real estate or personal property with supporting documentation) </li></ul><ul><li>Utah Housing seconds (additional requirements apply) </li></ul>
  7. 7. CREDIT REQUIREMENTS <ul><li>Chapter 7 bankruptcy – 2 years from discharge </li></ul><ul><li>Chapter 13 bankruptcy – can still be in repayment process with 12 months on-time payments </li></ul><ul><li>Foreclosure – 3 years </li></ul><ul><li>Consumer Credit counseling – 12 months on-time payments (Treated the same as a Chapter 13 bankruptcy) </li></ul>
  8. 8. CREDIT REQUIREMENTS <ul><li>If the borrower has no traditional credit, three alternative trade lines can be obtained. At least one must be from Group I and covering the most recent 12 months. </li></ul><ul><li>GROUP I GROUP II </li></ul><ul><ul><li>Utility rating child care payments </li></ul></ul><ul><ul><li>Rental rating auto payment </li></ul></ul><ul><ul><li>Cable TV cell phones </li></ul></ul><ul><li>Ratings must be verified through a credit bureau. If rental rating is through family, verification must be done with 12 months of cancelled checks </li></ul>
  9. 9. EMPLOYMENT REQUIREMENTS <ul><li>The borrower must have a two year work history. </li></ul><ul><li>Income that varies from month to month such as tips, commissions, overtime, self-employment, bonus, etc. must have received for 2 years. Income will be averaged. </li></ul><ul><li>Declining income is generally not acceptable </li></ul>
  10. 10. EMPLOYMENT REQUIREMENTS <ul><li>To use second job income, the buyer must verify they have worked both a full time job and a part time job, consecutively, for the last two years, and the income has the probability to continue. </li></ul><ul><li>Non-employment sources of income, such as child support, social security, etc., can be used as long as it will continue for no less than 3 years. </li></ul>
  11. 11. APPRAISAL REQUIREMENTS <ul><li>The appraiser must be an FHA approved appraiser </li></ul>
  12. 12. CONDITIONS THAT ARE STILL REQUIRED BY FHA <ul><li>Inadequate access from bedrooms to exterior of home </li></ul><ul><li>Leaking roof </li></ul><ul><li>Defective paint surfaces in home constructed post-1978 when finish is otherwise unprotected </li></ul><ul><li>Any items that are a health and/or safety issue </li></ul>
  13. 13. INSPECTIONS THAT ARE STILL REQUIRED <ul><li>Standing water against the foundation and/or excessively damp basement </li></ul><ul><li>Hazardous materials on the site or within the improvements </li></ul><ul><li>Faulty or defective mechanical systems (electrical, plumbing or heating) </li></ul><ul><li>Evidence of possible structural failures (settlement of or bulging foundation wall) </li></ul>
  14. 14. CONDITIONS THAT NO LONGER ARE REQUIRED BY FHA: <ul><li>Missing handrails </li></ul><ul><li>Cracked or damaged exit doors that are otherwise operable </li></ul><ul><li>Cracked window glass </li></ul><ul><li>Defective paint surfaces in homes constructed post 1978 </li></ul><ul><li>Minor plumbing leaks (such as leaky faucets) </li></ul><ul><li>Defective floor finish or covering (worn through the finish, badly worn carpet) </li></ul><ul><li>Rotten or worn out countertops </li></ul><ul><li>“ Cosmetic” repairs </li></ul>
  15. 15. CONDITIONS THAT NO LONGER ARE REQUIRED BY FHA: <ul><li>Termite inspections (unless appraiser notes an issue) </li></ul><ul><li>Damaged plaster, sheetrock or other wall and ceiling materials post 1978 </li></ul><ul><li>Poor workmanship </li></ul><ul><li>Trip hazards (cracked or partially heaving sidewalks, poorly installed carpet) </li></ul><ul><li>Crawl space with debris and trash </li></ul><ul><li>Lack of an all-weather driveway surface </li></ul>
  16. 16. PROPERTY FLIPPING <ul><li>Properties resold under 90 days are ineligible. </li></ul><ul><li>Properties resold between 91-180 days and sold for 100% more than original list price, requires two appraisals supporting value </li></ul>
  17. 17. UTAH HOUSING <ul><li>Requires a minimum fico score of 660 </li></ul><ul><li>Low interest rate, 30 year fixed loan </li></ul><ul><li>Acquisition costs limits (SL Co. and Summit Co. = $362,790) </li></ul><ul><li>Stimulus package to $729,750 </li></ul><ul><li>Income limits (based on family size and targeted/non-targeted areas) </li></ul><ul><li>Must be a first time homebuyer </li></ul><ul><li>Tax returns are no longer required </li></ul><ul><li>Applicants can borrow up to 6% of the first mortgage amount using a Utah Housing subordinate second </li></ul><ul><li>Underwritten per FHA guidelines </li></ul>
  18. 18. <ul><li>Temporary loan limits increased until 12/31/08 </li></ul><ul><li>Salt Lake County and Summit Co: $729,750 </li></ul><ul><li>Fixed rate and ARMs are available </li></ul><ul><li>Additional credit overlays for loans above $417,000 </li></ul><ul><li>Cash out maximum LTV of 85% </li></ul>FHA Economic Stimulus
  19. 19. What YOU should know! <ul><li>An FHA/VA addendum to the sales contract signed by all parties, is required. This form incorporates the Real Estate certification and the Amendatory clause. </li></ul><ul><li>There are maximum mortgage limits based on the county in which the property is located. </li></ul><ul><li>There are requirements for loans on new construction properties, but the builder is no longer required to be FHA approved . </li></ul>
  20. 20. NOTICE! <ul><li>Effective January 1, 2009 </li></ul><ul><li>Revised down-payment requirement to 3.5% </li></ul><ul><li>Closing costs may not be used to help meet the minimum 3.5% down-payment requirement </li></ul>