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FHA Purchase Loan Options

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First time home buyer's Complete Guide to FHA purchase loans. We also discuss the $7,500 federal tax credit - guidelines released this week by IRS

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FHA Purchase Loan Options

  1. 1. A Complete Guide to FHA Purchase Loan Options Thank You for Attending Class will begin at 10:00am Presented By: Broadview Mortgage Corporation Presenter: Scott Schang Contact Information: Phone: 866-667-6724 [email_address]
  2. 2. A Complete Guide to FHA Purchase Loan Options <ul><li>The Purpose and Goals of this Class </li></ul><ul><li>To Create and Empower Home Owners </li></ul><ul><li>Educate you about the FHA purchase options available to you in today’s market </li></ul><ul><li>Empower you with the ability to make educated decisions about your home financing options </li></ul><ul><li>Encourage you to ask questions and get informed about the home buying process </li></ul>
  3. 3. A Complete Guide to FHA Purchase Loan Options <ul><li>Topics We Will Cover In This Class </li></ul><ul><li>What’s new in 2009 with FHA financing </li></ul><ul><li>A Complete Guide to FHA purchase loans </li></ul><ul><li>Qualifying for the $7,500 Federal Tax Credit </li></ul><ul><li>Wrap Up and Take Aways </li></ul>
  4. 4. A Complete Guide to FHA Purchase Loan Options <ul><li>Ask Questions throughout presentation </li></ul><ul><ul><li>You may type questions in at any time during the presentation – Questions box on your screen </li></ul></ul><ul><ul><li>FHA loan specialists are standing by to answer your questions during the presentation </li></ul></ul><ul><ul><li>The only dumb question is the one you don’t ask </li></ul></ul><ul><li>Write number down now in case you get disconnected </li></ul><ul><ul><li>1-866-667-6724 </li></ul></ul>
  5. 5. A Complete Guide to FHA Purchase Loan Options <ul><li>What’s New in 2009 </li></ul><ul><li>2009 FHA Loan Limits </li></ul><ul><ul><li>Based on MSA – from up to $625,500 </li></ul></ul><ul><ul><li>“ FHA Jumbo” is anything above $417,000 </li></ul></ul><ul><ul><ul><li>Results in slightly higher interest rates </li></ul></ul></ul><ul><li>Down Payment Requirement </li></ul><ul><ul><li>Increased from 3% to 3.5% </li></ul></ul><ul><li>Private Mortgage Insurance - PMI </li></ul><ul><ul><li>Upfront PMI increased from 1.5% to 1.75% </li></ul></ul><ul><ul><li>Monthly PMI increased from .50% to .55% </li></ul></ul>
  6. 6. A Complete Guide to FHA Purchase Loan Options <ul><li>Borrower Eligibility </li></ul><ul><li>Credit Score Requirements </li></ul><ul><ul><li>580 Minimum Credit Score as a guideline </li></ul></ul><ul><ul><li>Can go lower on exception basis </li></ul></ul><ul><ul><li>620 Minimum Credit Score – “FHA Jumbo” </li></ul></ul><ul><ul><ul><li>Loan amount over $417,000 </li></ul></ul></ul><ul><li>Credit History Requirements </li></ul><ul><ul><li>If no history established, can use non-traditional credit lines </li></ul></ul><ul><ul><ul><li>Phone bills, cable bill, auto insurance </li></ul></ul></ul><ul><ul><li>May be used for “thin” files or if No Score Found </li></ul></ul><ul><ul><ul><li>Can not be used to supplement poor credit </li></ul></ul></ul>
  7. 7. A Complete Guide to FHA Purchase Loan Options <ul><li>Borrower Eligibility </li></ul><ul><li>Employment Requirements </li></ul><ul><ul><li>Must have 2 year history of employment </li></ul></ul><ul><ul><ul><li>If in school or military provide transcripts or discharge papers </li></ul></ul></ul><ul><ul><li>Self Employed must have minimum 2 year history </li></ul></ul><ul><ul><ul><li>Business license and tax returns </li></ul></ul></ul><ul><ul><li>Gaps in employment must be explained </li></ul></ul><ul><ul><ul><li>Must be at new job for at least 6 months </li></ul></ul></ul>
  8. 8. A Complete Guide to FHA Purchase Loan Options <ul><li>Borrower Eligibility </li></ul><ul><li>Income Qualifying Guidelines </li></ul><ul><ul><li>Automated underwriting approve/eligible </li></ul></ul><ul><ul><ul><li>Debt to income ratios approved </li></ul></ul></ul><ul><ul><li>FHA Total Scorecard – Manual Underwriting </li></ul></ul><ul><ul><ul><li>Much more restrictive debt to income ratios </li></ul></ul></ul><ul><ul><li>Non Occupying Co-Mortgagors </li></ul></ul><ul><ul><ul><li>Can use income of Co-Signer to help qualify </li></ul></ul></ul><ul><ul><li>All FHA Loans require full income documentation </li></ul></ul><ul><ul><ul><li>Tax returns, W2’s, Pay Stubs </li></ul></ul></ul>
  9. 9. A Complete Guide to FHA Purchase Loan Options <ul><li>Borrower Eligibility Highlights </li></ul><ul><li>Do not have to be first time home buyer </li></ul><ul><li>No income limitations </li></ul><ul><li>Flexible qualifying criteria </li></ul><ul><li>Can own other properties </li></ul><ul><li>Can use non occupying co-mortgagers to qualify </li></ul>
  10. 10. A Complete Guide to FHA Purchase Loan Options <ul><li>Property Eligibility </li></ul><ul><li>1-4 Units ok – Owner occupied only </li></ul><ul><li>Loan limits increased for 2,3,4 units </li></ul><ul><ul><li>Limits determined by MSA – See site for link </li></ul></ul><ul><li>No asset requirements for 1-2 unit homes </li></ul><ul><ul><li>3 months PITI required for 3-4 units </li></ul></ul><ul><li>Can buy any eligible property including short sales and foreclosures </li></ul><ul><ul><li>Typically must be owned minimum of 90 days </li></ul></ul><ul><ul><li>Foreclosures are the exception </li></ul></ul>
  11. 11. A Complete Guide to FHA Purchase Loan Options <ul><li>Property Eligibility </li></ul><ul><li>Appraisal requirements are much more strict than conventional lender guidelines </li></ul><ul><ul><li>Inspection is significantly more thorough </li></ul></ul><ul><ul><li>Property must be in “livable condition” </li></ul></ul><ul><ul><ul><li>Toilets work </li></ul></ul></ul><ul><ul><ul><li>Sinks work </li></ul></ul></ul><ul><ul><ul><li>Heating, electrical </li></ul></ul></ul><ul><ul><ul><li>Light switches, outlets </li></ul></ul></ul><ul><li>Be cognizant of damage – especially to bank owned foreclosures </li></ul>
  12. 12. A Complete Guide to FHA Purchase Loan Options <ul><li>Down Payment and Closing Costs </li></ul><ul><li>3.5% Down payment required </li></ul><ul><ul><li>100% of down payment may be a gift </li></ul></ul><ul><li>Gift funds can be from relative, employer, government grant </li></ul><ul><ul><li>No expectations of repayment </li></ul></ul><ul><ul><li>No liens against property </li></ul></ul><ul><li>Can use community seconds </li></ul><ul><ul><li>City, State, Federal down payment assistance programs ok </li></ul></ul><ul><ul><li>Will allow up to 100% of purchase price with approved secondary financing </li></ul></ul>
  13. 13. A Complete Guide to FHA Purchase Loan Options <ul><li>Down Payment and Closing Costs </li></ul><ul><li>May receive up to 6% of purchase price from seller </li></ul><ul><ul><li>Can be used to cover closing costs </li></ul></ul><ul><ul><li>Can be used to “buy down” interest rate </li></ul></ul><ul><ul><li>Can not be used for down payment </li></ul></ul><ul><li>Buying down the interest rate </li></ul><ul><ul><li>Ability to pay upfront fees to permanently reduce interest rate </li></ul></ul><ul><ul><li>Significant long term savings </li></ul></ul><ul><li>May have challenges asking for max in competitive offer environments </li></ul>
  14. 14. A Complete Guide to FHA Purchase Loan Options <ul><li>Mortgage Insurance </li></ul><ul><li>FHA Loans require 2 types of Mortgage Insurance Premiums - MIP </li></ul><ul><ul><li>Upfront Mortgage Insurance Premium </li></ul></ul><ul><ul><ul><li>1.75% of Loan Amount </li></ul></ul></ul><ul><ul><ul><li>Can be financed into loan amount </li></ul></ul></ul><ul><ul><li>Monthly Mortgage Insurance Premium </li></ul></ul><ul><ul><ul><li>.55% of Loan Amount </li></ul></ul></ul><ul><ul><ul><li>Included in monthly payment </li></ul></ul></ul><ul><ul><ul><li>Included on mortgage statement </li></ul></ul></ul>
  15. 15. A Complete Guide to FHA Purchase Loan Options <ul><li>Mortgage Insurance </li></ul><ul><li>Calculating your UFMIP Payment - Example </li></ul><ul><ul><li>$200,000 Purchase Price x 96.5% </li></ul></ul><ul><ul><ul><li>$193,000 base loan amount </li></ul></ul></ul><ul><ul><li>$193,000 x 1.75% = $3,377.50 add to base </li></ul></ul><ul><ul><ul><li>$196,377.50 is financed loan amount </li></ul></ul></ul><ul><li>Calculating your MIP Payment - Example </li></ul><ul><ul><li>$200,000 Loan amount x .55% = $1,100 </li></ul></ul><ul><ul><li>Divided by 12 = $91.67 MIP </li></ul></ul>
  16. 16. A Complete Guide to FHA Purchase Loan Options <ul><li>Only use an FHA Approved lender! </li></ul><ul><li>Many illegal “Branch” companies that are not approved to originate FHA loans </li></ul><ul><li>Check official HUD website for approval status of lender - will provide link on site </li></ul><ul><li>“ Red Flags” include – a different company name and/or address on page 3 of loan application. </li></ul>
  17. 17. $7,500 Federal Tax Credit <ul><li>No-interest loan paid back over 15 years </li></ul><ul><li>Must purchase on or before July 1 st , 2009 </li></ul><ul><ul><li>Between April 8th, 2008 and July 1 st , 2009 </li></ul></ul><ul><li>Must be first time home buyer </li></ul><ul><ul><li>Can not have owned in past 3 years </li></ul></ul><ul><li>10% of purchase price up $7,500 </li></ul><ul><li>$7,500 - Married filing joint or Single taxpayer </li></ul><ul><li>Married filing separate $3,750 </li></ul>
  18. 18. $7,500 Federal Tax Credit <ul><li>Home bought in 2008 can be claimed on 2008 returns </li></ul><ul><li>Home bought in 2009 can be claimed on 2008 (or amended 2008) return </li></ul><ul><li>Income limit is $150,000 for married couple </li></ul><ul><ul><li>Phase out maximum is $170,000 </li></ul></ul><ul><li>Income limit is $75,000 for single taxpayer </li></ul><ul><ul><li>Phase out maximum is $95,000 </li></ul></ul><ul><li>Loan is paid back in 15 equal installments </li></ul><ul><ul><li>First payment paid in the 2010 tax year </li></ul></ul>
  19. 19. $7,500 Federal Tax Credit <ul><li>You would be ineligible for Tax Credit if: </li></ul><ul><ul><li>Your income exceed the phase-out range </li></ul></ul><ul><ul><li>You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild </li></ul></ul><ul><ul><li>You stop using your home as your main home </li></ul></ul><ul><ul><li>You sell your home before the end of the year </li></ul></ul><ul><ul><li>You are a nonresident alien </li></ul></ul><ul><ul><li>Your home financing comes from tax-exempt mortgage revenue bonds - CalHFA </li></ul></ul><ul><ul><li>You owned another main at any time during the three years prior to the date of purchase </li></ul></ul>
  20. 20. A Complete Guide to FHA Purchase Loan Options <ul><li>Wrap up and Take Aways </li></ul><ul><ul><li>We are a direct Lender that specializes in FHA Refinance, Streamline and Purchase loans. </li></ul></ul><ul><ul><li>We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, VA, Conventional and Jumbo Loans </li></ul></ul><ul><ul><li>We are more than happy to be your “second opinion” if you are already working with someone </li></ul></ul><ul><ul><li>We are committed to educating and empowering homeowners - Join us for future classes </li></ul></ul>
  21. 21. A Complete Guide to FHA Purchase Loan Options <ul><li>Wrap up and Take Aways </li></ul><ul><ul><li>You will receive a “Thank you” email with links to the information we’ve talked about here today </li></ul></ul><ul><ul><ul><li>Copy of power point presentation </li></ul></ul></ul><ul><ul><ul><li>Link to search HUD approved lenders </li></ul></ul></ul><ul><ul><ul><li>Link to search MSA Loan Limits </li></ul></ul></ul><ul><ul><ul><li>Dream Home Finder request </li></ul></ul></ul><ul><ul><ul><li>Secure on-line FHA loan application </li></ul></ul></ul><ul><ul><ul><li>Links to tools and resources we talk about in all of our classes </li></ul></ul></ul><ul><ul><ul><li>A schedule of all upcoming classes </li></ul></ul></ul>
  22. 22. Upcoming Home Buyer Classes <ul><li>A Complete Guide to Buying Foreclosures and Short Sales </li></ul><ul><li>A Complete Guide to Closing Costs and the Good Faith Estimate </li></ul><ul><li>A Complete Guide to the CalSTRS 80/17 Home Purchase Program </li></ul><ul><li>A First Time Home buyer’s Complete Guide to Credit and Qualifying </li></ul><ul><li>A Complete Guide to the CalPERS Home Loan Program – No down option </li></ul><ul><li>Check back often for upcoming classes </li></ul>
  23. 23. Thank you for Attending You input is Valuable Please complete 2 question survey when you log off Presented By: Broadview Mortgage Corp. Presenter: Scott Schang Contact Information: Phone: 866-667-6724 [email_address]

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