FHA Mortgage Loans

FHA Appraisal NC Changes Effective1/1/2010

September 25, 2009 by Leave a Comment

FHA Announced this week that it will make some “proceedural” changes to the appraisal process at the beginning of the year.  They hope that the changes will, in some cases,

“help to expedite loan closing when a borrower decides to transfer their application to another lender during the transaction process.  The changes also ensure that lenders are not obtaining second appraisals solely for the purpose of getting a higher value or eliminating required repairs.”

When a borrower (who is in process) moves their FHA loan from one lender to another, the original lender is required to move the FHA Case number to the new lender.  At that time, most lenders will require a NEW appraisal.  FHA wants to discourage this, and says you can only order a 2nd appraisal under limited circumstances.

These circumstances include:

  • The DE Underwriter for the second lender found material defects with the original appraisal. 
  • The original appraiser is on the second lender’s exclusionary list. 
  •  The first lender failed to provide a copy of the appraisal in a timely
    manner, which causes potential harm to the borrower for events outside of the borrower’s control. These events include rate lock expiration, purchase contract deadlines and foreclosure proceedings.
  • In all cases the lender must document the loan file regarding the reason for the second appraisal and both copies of the appraisal reports must be retained in the case binder.

In addition to THESE changes – FHA also announced that they will be changing procedures for ordering FHA appraisals, which move them firmly closer to the HVCC ruling that Fannie and Freddie adopted earlier this year. 

 FHA will prohibit appraisals ordered by mortgage brokers or borrowers, in addition to the current restriction of real estate agents’ involvement in the appraisal order process.  Does this mean that a Broker can not order an appraisal?  No.  It simply means that they can not SPEAK to the appraiser, and it will be ordered on a rotation basis, OR ASSIGNED by the LENDER.  This process has worked POORLY for the consumer (IMHO) and I’m sad that FHA took this position.  But – these are the rules, and we will work with them!

If you are looking for a FHA Mortgage in Cary, considering a purchase in Raleigh, or refinance in Johnston County, call Steve and Eleanor Thorne!  We know all of the mortgage program details, and we have the LOWEST Mortgage Rates in NC!!

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FHA Streamline FHA Maximum Loan Amount details…

August 10, 2009 by Leave a Comment

The DEVIL is in the details! 

On an FHA Streamline Refinance (we’re doing a ton of these right now!) we found some new (to us) information:

Note: Headquarter Decision allows Streamline Transactions at the 2008 Economic Stimulus Loan Limits for streamline refinances without an appraisal. FHA will permit loans originated under the 2008 loan limits to be refinanced at mortgage amounts that exceed the current 2009 (and future) geographic loan limits. For streamlines with appraisals or full refinances, the mortgage amount may exceed the current geographic limit so long as:

  • The new loan amount (without MIP) does not exceed the prior case loan amount and
  • The new appraised value supports the loan amount and the LTV is not greater that 97.95%

 If you are considering an FHA Streamline Refinance in Raleigh or CaryNC, and you need to see if your qualify – Call Steve and Eleanor Thorne, 919-649-5058.  We have the Lowest Mortgage Rates!

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FHA To Allow Tax Credit To Work As Downpayment

May 12, 2009 by 1 Comment

FHA announced during a summit in Washington that they will shortly be allowing the Tax Credit for First Time Homebuyers to be used as downpayment!

 THIS IS HUGE!

There are few details available about how they will execute this, but here’s a link to the information I was able to find:

http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument

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Follow FHA / HUD News on Twitter!

March 24, 2009 by Leave a Comment

Earlier this week HUD started sending out Tweets with updates about FHA Programs!  Isn’t that COOL?

You can subscribe to the RSS Feed and get updates whenever anything is posted!

http://twitter.com/HUDFHA

TRIPPIN’! Wow!  When the Obama Administration said they were going to be transparent – I guess they meant it!

If you are thinking of buying a home, or refinancing a mortgage - you might want to follow this feed!

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Basics to Qualifying for a FHA Mortgage Loan

February 5, 2009 by 1 Comment

Buy Baby A New Home!FHA mortgage loans offers some of the most flexible financing available for today’s home buyers!  With FHA, you can purchase a property that’s located almost anywhere, (unlike USDA that has a “footprint” of where you can purchase) and you don’t have to be a Veteran (a requirement for VA home loans ).  AND you can use a GIFT for your downpayment!  

Here are the Basic Guidelines:

  • You can Own property somewhere else…. meaning if you move to NC from Ohio (for instance) and you own a property there, you can still qualify for a FHA mortgage loan in NC! (but there are some details you need to remember about using rental income so click here to learn more!)
  • You can get a Gift for the Downpayment!
  • We can use income from a Second Job if you’ve had that job for at least 18 months, and/or you have a history of working 2 jobs!
  • Minimum Credit Scores are more difficult to pin down.  In GENERAL – you need at least 12 months of “clean credit,” and no collections or judgements in the last 12 months.  I you are new to the credit “game” it’s going to be tough to get a loan, but we do have some investors that will help with “non-tradtional credit.”
  • Debt To Income Ratios are “loosly” 33/43.  This means that based upon your GROSS income, you can have 33% of your monthly income going to your housing expense (which includes Principal and Interest, Taxes, Insurances and HomeOwner Dues, if you have them!).  Then you take your Gross Monthly Income and only 43% of your income can be gong to TOTAL debt – which includes the Housing expense above, but it also includes the items which report to the credit report (car payments, credit cards, etc.)
  • Downpayment is 3.5%!
  • You do not have to count child care payments!  (WHEW!)
  • You can use a non-occupying co-borrower.  This means that if your parents want to help you by being on the mortgage loan, you can use their income and assets to qualify.  BIG, BIG, B-U-T here… you can not have sorry credit, and overcome that with a co-borrower. 
  • The maximum loan amount for Wake County and Johnston County in NC is $271,050.  The maximum loan amount in Orange and Durham Counties is over $330,000!
  • You can STREAMLINE refinance to a lower rate FHA Mortgage with minimal costs!

If you are considering a purchase or refinance and have questions about FHA mortgage financing – please call us!

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Fix Up A Foreclosed Property – $100 Downpayment?

December 11, 2008 by 1 Comment

I wrote recently (click here) that we could not do $100 downpayment with the 203k loan program… well, now I have a lender who claims he can do it.

HUD has long had a program that encourages folks who want to purchase a HUD Foreclosure, allowing them to purchase the property with $100 downpayment.  Problem is, non of the lenders wanted to offer the program.

In addition, if you COULD find a lender who would take the $100 downpayment program, you couldn’t find anyone who would ALSO lend you the money on a 203k program so that you could fix the house up!

I’ve heard of houses where the homeowner was so sad, or mad, or crazy that they tore out the heating and air conditioner units, took out all of the appliances (which I can understand that) AND THEN poured motor oil all over the carpets??  No why would you do that???

Anyway, if you are considering a purchase of one of these homes, you would need at least 3.5% out of your pocket… up until this “new guy” says (swears!) his company will do them!  I hate being the first guy in my office to try a new program – but we need to get these houses off the market…

Sooooo, if you’re considering a purchase, and you want to buy a foreclosed property – give me a call.  I might have just the program for you!

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Found Money Refinancing from Subprime to FHA

December 11, 2008 by 2 Comments

Found Money for the HolidaysIn the South we have a “saying” that I love.

FOUND MONEY!

Do you know what that means?  It refers to that $20 you “found” in your bluejeans that you had forgotten about!  It’s about the extra money you make when you do the laundry, or the refund check for $17.81 that we recently got back from an overpayment to the IRS!  Money you hadn’t “earmarked” for anything else. My Grandmother use to call it “Hallelujah” money!

I talked to a really sweet girl tonight who has an Interest Only 80% first mortgage at 6.5% with a second mortgage that’s adjusted to 10.325%.  She’d been turned down by 2 other lenders when she called me… but by the end of the call she was CRYING (seriously) with JOY!REFINANCE NIGHTMARES!

So… here’s what happened.  She can refinance today and save over $200 a month.  She will be paying down her balance and creating real equity in her home!!  (which is the REAL goal!)!

Why did she get turned down?  She had over 700 credit scores, and I had her ratios of income to debt at less than 40%!  Because of the way she presented information to the mortgage lender, and the way THEY didn’t ask more questions!

She said, “my husband has two jobs.  His income is $31,055.”  I asked her if it was commissioned, bonused or did that include Overtime?  “No,” she said, “but he has only had one since June.  He worked there before, but they were sold.”  I went on to ask her if they were past due on any of their debt, had they been past due this year or last, her answers were firmly no.  I asked about her debt, and her goals for refinancing.

Two things happened… when she was talking to the other companies, and the folks wanted to know about her payments, she was telling them what she was paying – not the actual payment on the credit card… they other loan officers also didn’t ask more questions about her husbands job that changed in June, and they were not counting that income.

As it turns out, her husband works 30 hours a week as a landscaper, and has done this for 7 years with the same group of people.  The company was SOLD in June, so he now works, doing the same thing, with the same guys, making the same money – only the name of the company changed.  That income is fully allowable, she completely qualifies for this refinance!

If you’ve been told that mortgage lending has changed, and you can’t qualify… it’s true, you might be beat… but there’s a chance that you are just talking to a loan officer who is not asking the right questions.  No matter where you are, I’ll be glad to talk to you (call me!), and I’ll ask questions, and I’ll give you honest feedback – and maybe we’ll find some “Hallelujah” money!!

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FHA Downpayment Alternatives

November 8, 2008 by 6 Comments

Punctual Payment Plan

Unless the next Congress makes a major change, Downpayment Assistance Programs are a thing of the past.  We have been looking for Alternatives, and found this program that started in May of 2006 by the Rainy Day Foundation.

How does the Punctual Payment Program work?

The program is designed to help strengthen “Loan Borrowing Potential,” the website says they are providing a “Worry Free Loan.”

FHA loans now require a 3% down payment, at the beginning of 2009, it goes to 3.5%.  If the client does not have the funds for a down payment, FHA allows a gift from “Family or Friends.” 

With the recent economic downturn, Family and Friends might not be willing (or able frankly) to just “Gift” the downpayment for a home.

The Punctual Payment Program allows you to enroll in their re-imbursement program, for a fee of $499, and it will repay your ”Giftor” back in 4-6 months.

How the Program Works

  • The Borrower is rewarded for On Time Payments. 
  • The Seller can contribute up to 3%.
  • The seller’s contribution to be reimbursed will go into an Escrow account maintained by the Rainy Day Foundation.
  • Seller or borrower can pay for the $499 fee (just like Down Payment Assistance Programs of the past)
     

The Advantages of the program

  • 1 yr job loss coverage (benefit of $499 fee) – Event of loss job, coverage will be up to $1,800 per month for up to 6 months.
  • Pre-Purchase counseling
  • Post-Purchase Counseling
  • Missed Payment Protection – For as long as the borrower is enrolled the program will pay the loan servicer ANY MISSED payments.
  • The SELLER can contribute up to 3%!

One of the reasons Down Payment Assistance Programs “went away,” was because HUD said the borrowers were going into default at an alarming rate.  With this program, there have been ZERO payment defaults in the first 12 months of ownership - ever!

If you are interested in this program, please call us!

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What is a 2-1 Buydown?

November 7, 2008 by 1 Comment

Many lenders are shouting about “Fixed Rate Mortgages starting at 4.5%”

I’ve even gotten calls from Real Estate Agents asking how they are doing this! Some of these offers are NOT good deals.  For more information about MISLEADING Ads involving this program click here.

However, in the right situation, it’s a good loan.  So let’s do some math – and I’ll try to make this as simple as possible.

The 2-1 Buydown is usually used with a FHA loan, although you can also do this with other loan types.  Fixed rate FHA loans, today are around 6.5%  So let’s work on that number… A fixed rate mortgage for 30 years with an interest rate of 6.5%.

If you have a FHA loan of $250,000 (for instance) then your principal and interest payment at 6.5% is $1,580.17 – and that payment, along with your taxes and insurance (and mortgage insurance) will be used when we are qualifying you for a mortgage.

So where did the 4.5% come in?

Well, in an effort to help folks feel more comfortable with homeownership, lenders are offering a FIRST year rate of 4.5% on the loan and a SECOND year rate of 5.5% – and then for the rest of the life of the loan, the payments will be made at 6.5%… this is why it’s called a 2-1 buydown.  The interest rate is “bought down” 2% (from 6.5 to 4.5) the first year, and 1% the next year (from 6.5 to 5.5).

So the next question might be what does “Bought Down” mean – and this is where you might need a calculator.

In basic terms, the difference between the 6.5 rate on the the mortgage – and the payment rate of 4.5 for the first 12 months is put into an escrow account.

So the $250,000 loan at 6.5% has a P&I (Principal and Interest) payment of $1,580.17.  For that same $250,000 loan, the P&I at 4.5% is $1,266.71.  The difference in the payment is $313.46.

On the $250,000 loan at 5.5%, the P&I is $1,419.47.  The difference between the 6.5% payment and the 5.5% payment is $160.70.

To establish the escrow account (and make this program work) a seller must contribute an amount equal to 12 months of $313.46 (or $3,761.52) and 12 months of $160.70 (or $1928.40) – a total of $5,689.92.

Then, when you make your payment for the first year at $1,266.71, and your mortgage is accruing interest at a payment rate of $1580.17, the bank is pulling out $313.46 every month from the escrow account and applying it to the mortgage!

See??  That wasn’t so hard to understand!  My husband and I purchased our house under this program – only we had a 3-2-1 buydown!

And here’s the BEST part… folks who have not owned a home in the last 3 years are already eligable for a $7500 tax credit from Uncle Sam… with this program (I’m not a tax accountant so please check with your professional), as I understand it, even though the Seller is paying this money on your behalf…. you can still WRITE OFF $5689.92 (the amount of the escrow) on your taxes in your first year???  HOW COOL IS THAT!?!

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