100% Loans | NC FHA Expert

Okay – so here’s something that will stump the loan officer.

You bought a property in Feb. of 2008. You got a Heck of a Deal – and you purchased the home for $237,000. The appraisal in February was for $245,000 (and the appraiser thinks it’s worth more now). The loan in February was a conventional 100% Community Reinvestment loan (those are no longer available). Your credit is good, you qualify, and since your rate is currently 6.875% – you’d like to refinance.

And maybe you’d like to refinance to an FHA loan, which today is 5.625% with no origination fee, and save over $250 a month on your monthly payment…

Well - you have a problem.

Buried in the new FHA guidelines, 702.2… it says:

Property Acquired Less Than One Year. If the property was acquired less than one year before the loan application and is not already FHA-insured, in addition to the calculations described above, the original sales price of the property also must be considered in determining the maximum mortgage. With conclusive documentation, expenditures for repairs and rehabilitatoin incurred after the purchase of the property may be added to the original sales price in calculating the mortgage amount. (this use to be six months)

And there you have it folks. If you are refinancing from Conventional to FHA (or USDA or anything else) then you need to have 12 months history owning the property.

Since it’s not really worthy of a post – you should also know that USDA is for purchases only. Since it’s the only really good 100% program for those of us who are not Vets – figured I’d mention it.

Documents You Need 4 A Loan

A customer who is quickly becoming a friend of mine asked me recently what she needed to gather for a loan application - she’s moving to a new area (the company is relocating them) and before she packed everything up and moved into corporate housing (“Hey,” she said, “Maid Service and it’s free! Are you kidding? I’m taking every day we get in Corporate Housing!”)! Here’s my advice to her:

Great News! The documents needed for a FHA loan are VERY similar to those you would need when applying for most other types of financing these days! Here’s our “Scavenger Hunt” list!

Most Recent pay stubs for 1 full month.
The name, address and telephone number of someone who can verify employment. (We will be sending them a form to complete) We will be verifying your income for the last 2 years.
If either of you are now, or have been self-employed, or earned income OTHER THAN W-2 income in the last two years, we will need full copies of your tax returns. If you ONLY earned W-2 income, we will need a copy of the W-2s for the last 2 years.
Any data regarding the relocation package, and specifically what NASA is covering.
If you owned property, and you’ve sold it, we’ll need a copy of the HUD-1 Settlement Statement. If you own a property that is leased, then we will need a copy of the lease agreement. We need to document 2 full years of residence.
If you’ve been renting during the last 2 years, we will need the name, address and telephone number of the landlord.
We need copies of bank statements for the last 2 months. If you are changing banks, remember that we will need to verify the money going out of one account and into another! (PLEASE try not to have any NSFs!) We will need ALL pages of the bank statements.
If you are receiving a gift for the your down payment – we will provide you with a gift letter to have completed. We will also need to verify that the person giving you the gift has the money in their account. In the event that you, or the donor, do not keep money in a bank – we do have other options, so you will need to speak with us directly about that situation.
In the event that you do not have sufficient “lines” of credit, we can look at “alternative lines.” This means that if you have only 1 credit card, and no other credit, we will likely need to use your cell phone, and your insurance (for instance) to establish that you pay your bills on time. If you think you might be in this situation, please have the last statement available for us.

In every single loan file, there are other items that we might also request… it’s difficult for me to anticipate every different situation… for instance, if you sold a car before moving, and deposited $5000 from that sale – we are going to ask for evidence of the sale… but for the most part… this should be a VERY complete list.

Congratulations on your move, and your new opportunities! I know this is an exciting time!

If you are considering a home purchase in Garner, or your buying a home in Cary, please call Steve and Eleanor Thorne, Corporate Investors Mortgage Group, 919-649-5058