fha loans “back to the future”
DESCRIPTION
FHA Loans “Back to the Future”. Note: Virtually all single family FHA mortgage lending is done through Direct Endorsement, which enables an FHA-insured mortgage to be processed as rapidly as other mortgages. What FHA Loans Offer. New Purchase Financing Adjustable Rate Mortgages - PowerPoint PPT PresentationTRANSCRIPT
FHA Loans“Back to the Future”
Note: Virtually all single family FHA mortgage lending is done through Direct Endorsement, which enables an FHA-insured mortgage to be processed as rapidly as other mortgages.
What FHA Loans Offer
New Purchase Financing– Adjustable Rate Mortgages– Fixed Rate Mortgages– Buy-downs
Refinances– Streamline Refi’s– Cash-out Refi’s
FHA Loan Limits by AZ County
MSA Name MSA code County 1-Family 2-Family 3-Family 4-Family
Flagstaff 22380 Coconino $332,500 $374,500 $455,000 $525,000
Lake Havasu City-Kingman 29420 Mohave 244,600 275,500 334,750 386,250
Nogales 35700 Santa Cruz 200,160 256,248 309,744 384,936
Non-Metro 99999 Apache 200,160 256,248 309,744 384,936
Non-Metro 99999 La Paz 200,160 256,248 309,744 384,936
Non-Metro 99999 Navajo 201,400 256,248 309,744 384,936
Payson 37740 Gila 223,250 256,248 309,744 384,936
Phoenix-Mesa-Scts 38060 Maricopa 263,150 296,390 360,100 415,500
Phoenix-Mesa-Scts 38060 Pinal 263,150 296,390 360,100 415,500
Prescott 39140 Yavapai 285,000 321,000 390,000 450,000
Safford 40940 Graham 200,160 256,248 309,744 384,936
Safford 40940 Greenlee 200,160 256,248 309,744 384,936
Sierra Vista-Douglas 43420 Cochise 200,160 256,248 309,744 384,936
Tucson 46060 Pima 239,850 270,150 328,250 384,936
Yuma 49740 Yuma 200,160 256,248 309,744 384,936
Listing of FHA single family mortgage limits. Limits are updated constantly.
FHA-Loan Officer Facts
Must get 1003 AND addendum to URLA signed at initial application
Must obtain evidence/proof of social (Picture ID)
Must use FHA Approved Appraiser
Must obtain an FHA case # through FHA Connection (https://entp.hud.gov/clas/index.cfm)
Real Estate certification must be signed by buyer, seller, and selling real estate agent
The amendatory clause of the sales contract must be executed
AVOID the brain damage of FHA new construction loans
FHA-Processor Facts
Loan Package must contain a completed Mortgage Credit Analysis Worksheet (MCAW)
Must check CAVIRS (FHA connection)
Must obtain an FHA case # (FHA connection)
Must obtain Termite Report
Run through DU/LP on web
Must check LDP/GSA list for all parties involved in transaction
Other Fun Facts
FHA does not publish a rate sheet the investor determines the rate
Full Doc Only (no stated programs) Qualifying ratios are 31/43 ARMs qualify at 1% over the start rate, buy downs at note rate Debts of non-purchasing spouse must be included in
borrower’s qualifying ratios (separate credit reports) Can do 95% cash out with 12 month seasoning and no lates Only one FHA insured mortgage per borrower at a time Can be underwritten manually or automated
More Fun Facts
Does not have a minimum credit score but most lenders do
Traditional credit not required-can develop acceptable non-traditional credit sources
Max 6% seller contribution Borrowers may not pay a tax service fee or
Loan Origination Fee > 1%
FHA-Good Neighbor Next Door
Law enforcement officers, pre-K through 12th grade teachers, firefighters, and EMTs can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program
HUD offers incentives in the form of a discount of 50% from the list price of the home. In return you must commit to live in property for 3 years as your sole residence.
How the Program WorksEligible single family homes located in revitalization areas are listed exclusively for sale through the Good Neighbor Next Door Sales Program. Properties are available for purchase through the program for FIVE days.
www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm
Upfront & Annual MIP
For mortgages with terms more than 15 years
UPFRONT LTV Ratio Premium Years1.5% All LTV’s .50% Until 78%
LTV
For mortgages with terms 15 years or less
UPFRONT LTV Ratio Premium Years1.5% 89.99 & under None N/A
1.5% 90.00 & over .25% Until 78% LTV
FHA Appraisals
Search for & order appraisals through FHA connection
Lender can select from appraiser list FHA no longer requires minor property deficiencies
to be corrected Termite reports REQUIRED in AZ Value/Conditions not final until appraisal issued by
U/Whttps://entp.hud.gov/idapp/html/apprlook.cfm
FHA New Purchase Loans
Easier to Qualify FHA insures your mortgage so lenders are more willing to give loans with lower qualifying requirements
Less than Perfect Credit Credit problems are easier to qualify for on an FHA loan, BK is allowed after 2 years with re-established credit
Low Down Payment As low as 3% down payment. 100% gift permitted for down payment/closing costs/PP
Costs Less Competitive interest rates because the loans are insured by the Federal Government
FHA Streamline Refinance
FHA “streamline” refers only to the amount of documentation and u/w that needs to be performed by lender and does not mean there are no costs involved in the transaction. The basic requirements of a streamline refi are:
1. Mortgage to be refi’d must already be FHA insured2. Mortgage to be refi’d must be current3. The refi is to result in lowering of borrower’s monthly PITI
payments4. No cash may be taken out on mortgages refi’d using
streamline process
FHA Streamline Refinance (Cont’d)
Lenders offer streamline refi’s in several ways:1. Some offer “no-cost” refinances by charging higher interest rate.
From this premium, lender pays any closing costs incurred on the transaction
2. May include the closing costs in the new mortgage amount only if there is sufficient equity in the property, as determined by an appraisal
3. May be done w/o an appraisal but new loan cannot exceed original loan amount. Only investment properties may be refinanced w/o an appraisal.
FHA Streamline Refinance (cont’d)
Must be an FHA insured loan with same borrowers & same property
Cash to close does not need to be verified Do not need to check CAVIRS but MUST check LDP/GSA Can shorten term of loan as long as payment does not increase
more than 20% Can go from ARM to fixed as long as payment does not
increase more than 20% Individuals can be added to title w/o credit review Subordinate financing may remain in place regardless of total
indebtedness of property If appraisal value is such that borrower would be better advised
as if no appraisal has been made then appraisal may be ignored
Order FHA Refi Authorization (FHA Connection) MIP REFUND
FHA Cash-out Refinance
Borrower must have history of making payments on time
Any subordinate financing may remain in place as long as it is subordinated on title
Borrower cannot be late or in default of any federal debt
Max 95% LTV Property must have been occupied by borrower as
primary residence for at least 12 months Must have an appraisal and must credit qualify
Summary & Other Options
FHA Loans Max Loan $263,150 Still paying 3-4% YSP Old School Documentation
– Source Large deposits– GAP Letters– Credit Letters– BK Discharge & Schedule– VOE & Pay stub– W2’s
Note: FHA is also looking at doing:
• True 100%• Risk based MIP• Max Loan Amount to
equal Fannie / Freddie
• **Another option is our My Community