A Complete Guide to FHA Purchase Loan Options Thank You for Attending We Will Begin in a Moment Class will begin at 7:00pm Presented By: Broadview Mortgage Corporation Presenter: Scott Schang Contact Information: Phone: 866-667- 6724 [email protected]
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A Complete Guide to FHA Purchase Loan Options
Thank You for Attending
We Will Begin in a MomentClass will begin at 7:00pm
• Educate you about the FHA loan options available to purchase a home with minimum down payment
• Empower you with the ability to make educated decisions about your home financing options
• Encourage you to ask questions and get informed about the home buying process
A Complete Guide to FHA Purchase Loan Options
Topics We Will Cover In This Class
• What’s new in 2009 with FHA financing
• A Complete Guide to FHA purchase loans
• “Red Flags” – What to watch out for
• Qualifying for the $7,500 Federal Tax Credit
• Wrap Up and Take Aways
A Complete Guide to FHA Purchase Loan Options
Ask Questions throughout presentation
– You may type questions in at any time during the presentation – Questions box on your screen
– FHA loan specialists are standing by to answer your questions during the presentation
– This is an interactive learning environment. You will get the most value by having your specific questions answered
– The only dumb question is the one you don’t ask
Write number down now in case you get disconnected
1-866-667-6724
A Complete Guide to FHA Purchase Loan Options
What’s New in 2009
• 2009 FHA Loan Limits– Based on MSA –up to $625,500– “FHA Jumbo” is anything above $417,000
• Results in slightly higher interest rates
• Down Payment Requirement– Increased from 3% to 3.5%
• Private Mortgage Insurance - PMI– Upfront PMI increased from 1.5% to 1.75%– Monthly PMI increased from .50% to .55%
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Credit Score Requirements– 580 Minimum Credit Score as a guideline– Can go lower on exception basis– 620 Minimum Credit Score – “FHA Jumbo”
• Loan amount over $417,000
• Non traditional credit lines temporarily suspended as of 4th quarter 2008– Lack of credit score or depth of credit
supplemented by alternative sources• Phone bills, utility bills, auto insurance…etc.
• Investors not accepting – Market Conditions
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Employment Requirements– Must have 2 year history of employment
• If in school or military provide transcripts or discharge papers
– Self Employed must have minimum 2 year history• Business license and tax returns
– Gaps in employment must be explained• Must be at new job for at least 6 months
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Income Qualifying Guidelines– TOTAL Scorecard automated approve/eligible
• Debt to income ratios approved
– FHA Manual Underwriting• Much more restrictive debt to income ratios
– Non Occupying Co-Mortgagors • Can use income of Co-Signer to help qualify• Income / Assets added to borrower’s
– All FHA Loans require full income documentation• Tax returns, W2’s, Pay Stubs
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Income Qualifying Guidelines– Converting Existing Homes into Rentals
• Bad Apples - Effective September 19th, 2008• Temporary exclusion of rental income from
vacated property– Must qualify for full PITI payments on both
homes.• Exception – Relocation with new employer or
transferred by the current employer– Must have executed 1 year lease – Copy of deposit check
• 75% Equity – Appraisal or balance vs. price
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility Highlights
• Do not have to be first time home buyer
• No income limitations
• Flexible qualifying criteria
• Can own other properties
• Can use non occupying co-mortgagers to qualify
A Complete Guide to FHA Purchase Loan Options
Property Eligibility
• 1-4 Units ok – Owner occupied only
• Loan limits increased for 2,3,4 units– Limits determined by MSA – See site for link
• No asset requirements for 1-2 unit homes– 3 months PITI required for 3-4 units
• Can buy any eligible property including short sales and foreclosures– Typically must be owned minimum of 90 days– Foreclosures are the exception
A Complete Guide to FHA Purchase Loan Options
Property Eligibility
• Appraisal requirements are much more strict than conventional lender guidelines– Inspection is significantly more thorough– Property must be in “livable condition”
• Earlier discussions of reinstatement – Higher mortgage insurance premiums
A Complete Guide to FHA Purchase Loan Options
Down Payment and Closing Costs
• May receive up to 6% of purchase price from seller– Can be used to cover closing costs– Can be used to “buy down” interest rate– Can not be used for down payment
• Buying down the interest rate– Ability to pay upfront fees to permanently reduce
interest rate– Significant long term savings
• May have challenges asking for max in competitive offer environments
• Interest rate is the most abused loss leader in the mortgage industry!
A Complete Guide to FHA Purchase Loan Options
• The Dangers of Shopping for Interest Rate
• The most common “excuse” that brokers, lenders and loan officers have for a change in rate is……………
– “Well, the interest rates change on a daily basis and that was the rate at the time, on that particular day”
• How can you argue with that, right?
You can now!
$7,500 Federal Tax Credit
• No-interest loan paid back over 15 years
• Must purchase on or before July 1st, 2009– Between April 8th, 2008 and July 1st , 2009
• Must be first time home buyer– Can not have owned in past 3 years
• 10% of purchase price up $7,500
• $7,500 - Married filing joint or Single taxpayer
• Married filing separate $3,750
$7,500 Federal Tax Credit
• Home bought in 2008 can be claimed on 2008 returns
• Home bought in 2009 can be claimed on 2008 (or amended 2008) return
• Income limit is $150,000 for married couple– Phase out maximum is $170,000
• Income limit is $75,000 for single taxpayer– Phase out maximum is $95,000
• Loan is paid back in 15 equal installments– $7,500 credit – payment is $500 a year– Taken from tax refund or added to tax due
$7,500 Federal Tax Credit
• You would be ineligible for Tax Credit if:– Your income exceed the phase-out range– You buy your home from a close relative. This
includes your spouse, parent, grandparent, child or grandchild
– You stop using your home as your main home– You sell your home before the end of the year– You are a nonresident alien– Your home financing comes from tax-exempt
mortgage revenue bonds - CalHFA– You owned another main at any time during the
three years prior to the date of purchase
A Complete Guide to FHA Purchase Loan Options
Wrap up and Take Aways
– We are a direct Lender that specializes in FHA Refinance, Streamline and Purchase loans.
– We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, VA, Conventional and Jumbo Loans
– We are more than happy to be your “second opinion” if you are already working with someone
– We are committed to educating and empowering homeowners - Join us for future classes
A Complete Guide to FHA Purchase Loan Options
Wrap up and Take Aways
– You will receive a “Thank you” email with links to the information we’ve talked about here today
• Copy of power point presentation• Link to search HUD approved lenders• Link to search MSA Loan Limits• Dream Home Finder request• Secure on-line FHA loan application• Links to tools and resources we talk about in
all of our classes• A schedule of all upcoming classes
Upcoming Home Buyer Classes
• A Complete Guide to Buying Foreclosures and Short Sales
• A Complete Guide to Closing Costs and the Good Faith Estimate
• A Complete Guide to the CalSTRS 80/17 Home Purchase Program
• A First Time Home buyer’s Complete Guide to Credit and Qualifying
• A Complete Guide to the CalPERS Home Loan Program – No down option
• A First Time Home Buyer’s Complete Guide to Hiring a Real Estate Agent and Finding the Best Deals