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FHA power point

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Information about FHA power point
Business-Finance

Published on June 11, 2008

Author: nelsonk

Source: authorstream.com

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FHA:  FHA BENEFITS of FHA:  BENEFITS of FHA Non-Occupant Co-Borrower allowed 100% gift funds allowed Non-Traditional Credit (i.e. Pg&e, cable, cell phone, must be paid on a monthly basis) Leniency on Credit & Employment History 2 years on BK Discharge (must have re-established credit) 1 year into Chapter 13 Pay Out (must have re-established credit) LTV up to 97.15% (97% if closing cost paid by lender/seller) Down Payment Assistance Available OCCUPANCY:  OCCUPANCY Owner Occupied Kiddie Condo – Parents purchasing for child in college (proof of college attendance/enrollment required) Non-Occupant Co-borrower OK but must be related to occupying borrower (i.e. parent/sibling/grandparent) NO NON-OWNER LOANS BORROWER ELIGIBILITY:  BORROWER ELIGIBILITY U.S. Citizen Permanent Resident Aliens Non-Permanent Resident Aliens are eligible for FHA insured mortgages provided the property will be the borrower’s principal residence The borrower must have a valid S.S# (check with SSI) and the right to work in the US as evidenced by various documents, i.e.; work visa or employment authorization documents Property Eligibility:  Property Eligibility Termite & VC sheet no longer required Cosmetic repairs NOT required. Required repairs will be limited to Health and Safety, and Structural Integrity issues Condos must have FHA Project approval - log onto FHA Connection for current list (No spot approvals) TDS (Transfer Disclosure Statement must be reviewed by Appraiser and copy in file). Anti-Flipping Regulations:  Anti-Flipping Regulations 90 Day flipping policy applies on all properties except: Properties acquired through inheritance Properties acquired and sold by Federal Agencies New Construction FHA Programs:  FHA Programs 15, 20 & 30 Year Fixed 1Year ARM Caps: 1% & 5% lifetime Index: 1 year US Treasury Margin: Set by Lender Qualify: 1% above start rate, if LTV is 95% + FHA Loan Limits:  FHA Loan Limits FHA Loan Limits are set by HUD (website) Loan limits are by County and the number of units. Contra Costa, Alameda, San Joaquin Counties are $362,790 for 1 unit. Complete list of loan limits are included in this handout. FHA Purchases:  FHA Purchases LTV up to 97.15% Minimum cash investment 3% - cash to close can come from: > Seasoned funds > Gift from family > Down- payment assistance (FHA approved) > Cash on hand > Loan against 401K ( payment not include in DTI) > Sales of asset ( paper trail required ) > Seller contributions for closing costs and pre-paids ,max 6%. >Premium pricing ( closing costs only ) FHA Refinances:  FHA Refinances Types of Refinances are: Rate & Term to 97.15% LTV, max cash back $200.0 Cash Out to 95% LTV 12 month property seasoning required 1 – 2 units No non-occupant co-borrowers Subordination of existing 2nd may exceed 100% CLTV under certain circumstances. Credit:  Credit Credit Scores: Typically 580 is the lowest Land/Home will go however scores below that will be considered on a case by case Generally more lenient than conventional conforming loans Most recent 12 months is scrutinized more closely than older credit issues Payment history on borrowers housing obligation is very important Judgments must be paid prior to close, collections case by case Credit Continued:  Credit Continued BK’s chapter 7 discharge minimum 2 years with no lates and re-established credit, chapter 13 acceptable with minimum 12 payments with approval from Trustee and NO lates. Foreclosure/Short Sale/Deed in Lieu requires min. 3 yrs since Foreclosure/Sale. CCC – 1 year payments made with no lates to Credit Counselor or any accounts outside of CCC. Non-traditional credit may be used but not to offset bad credit Credit Continued:  Credit Continued Non-occupant co-borrower does NOT offset bad credit for occupying borrowers. Student loans that come due within 12 months of closing must be counted Non-purchasing Spouse: Must pull credit Any debts must be considered in the ratios Collections are not necessarily required to be paid off Derogatory credit rating is not held against the borrower. Credit Continued:  Credit Continued CAIVR’s All borrowers must be checked through HUD’s CAIVR’s system The system checks for delinquent federal debt and prior claims paid by the government (i.e.; foreclosures and bad student loans) If any issues are present you will not get clearance. Some issues can be resolved, some can not. In all cases you must have a clear CAIVR’s in order to get an FHA loan Employment :  Employment Must have 2 year work history Hourly employees income is averaged Salary employees are qualified on monthly salary (processor to check and verify income is consistent with YTD figure and prior years earning) OT / Bonus averaged over the past 2 years and employer must verify likely to continue (VOE is required to show breakout of income and the likelihood to continue) 2nd job must show 2 year history in addition to primary job Self-employment averaged 23 months, 1040’s required Employment Continued:  Employment Continued Passive income needs to be documented 3 years forward and 1 year back (i.e.; child support, alimony) Non-taxable income may be grossed up 25% as a general rule (i.e.; child support and SS) Seasonal jobs & unemployment may be averaged with 24 month history of both Debt Ratio:  Debt Ratio Typically, Max ratio 45% Automated approval may approve higher ratios, (usually max of 55% on strong file) Compensating factors may justify higher ratios on manual underwrites Remember – Buy-downs must qualify at note rate. Compensating Factors:  Compensating Factors Included but are not limited to: No or minimal payment shock Large down payment Savings ability / conservative use of credit Compensation or income not used in qualifying ratios but can be proven or documented Mortgage Insurance Premium - MIP:  Mortgage Insurance Premium - MIP Upfront premium – Is collected at close of escrow, either in the form of cash or financed into the loan. 100% of the upfront MIP may be financed. The cost is 1.5% of the loan amount. This is collected on all property types (now includes condos). Annual renewal premium is collected with the monthly mortgage payment and is .50% of the loan amount regardless of LTV. MIP Continued:  MIP Continued The loan limits do not restrict financing of MIP. Loan terms greater than 15 yrs requires upfront premium of 1.5% and .50% monthly regardless of LTV / CLTV. Loan terms 15 yrs and less requires upfront MIP of 1.5% and monthly of .25%. LTV’s 89.99% and under have no monthly MIP. MIP Continued:  MIP Continued Monthly renewal premiums may not be cancelled for a min. of 5 yrs. In order to cancel after 5 yrs, loan must amortize to 78% based on original value. Upfront Premium is NON-refundable. FHA Allowable Closing Costs:  FHA Allowable Closing Costs The only fee borrower can not pay is the Tax Service Fee. Origination fee can not exceed 1% (calculated on base loan amount). FHA Websites & Contact Info.:  FHA Websites & Contact Info. www.hud.gov For common questions regarding FHA log onto http://answers.hud.gov HUD Resource Center For all FHA questions, 1-800-225-5342

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