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Mark's Introduction - NMLS# 267431

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Mark Moyes

FHA loans have no prepayment penalties or income limits, allow up to 6% seller contributions, and make refinancing easy. Mortgage insurance premiums are now a flat 1.75% upfront for purchases and refinances. Down payments can be as low as 3% from various sources like gifts or cash-out refinances. Credit requirements allow for bankruptcies over 2 years old and foreclosures over 3 years old. Appraisals and inspections focus on health and safety issues only rather than cosmetic problems.

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

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Mark's Introduction - NMLS# 267431

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