FHA

							FHA




      FHA

      Michael VaVerka
      951-BANK-4U-6
      951-226-5486
      mvaverka@afncorp.com
FHA Overview

• FHA loan allows for the refinance or purchase of a home with
  a low down payment. These loans are great for the first-time
  homebuyer.
Advantages and Benefits
• True High Loan To Value currently 96.5% Purchase money loan
  product
• First time homebuyers should explore FHA loan options
  because it’s easier to qualify for an FHA home mortgage
• Your loan is guaranteed by the government, making your
  application more attractive to lenders
• Costs less and is more forgiving of youthful indiscretions with
  credit and payments
• Requires a low 3.5% down payment, and that money can come
  from a variety of sources including Gifts, HUD Approved down
  payment assistance grants or community 2nd Trust Deed
• Typical closing costs are around 2% or 3% of the total mortgage
• Terms may allow you to build in closing costs into your
  mortgage.
• Can help people get out of toxic debt situations caused by sub-
  prime mortgages with interest rates that have spiraled out of
  control.
Advantages and Benefits Cont.


• FHA refinancing can help homeowners who want to keep their
  homes and prevent damage to their credit ratings
• Provides cash-out refinancing for those who need financing for
  things such as college or major home improvements.
• An FHA cash-out refinancing mortgage may offer lower interest
  rates than traditional home equity financing loans
• FHA cash-out refinancing mortgage may offer lower interest
  rates than traditional home equity financing loans
• You may qualify for one of two FHA mortgage plans which offer
  cash-out plans
First Steps to Getting an FHA Loan



• Call an AFN Loan Officer
• Do an analysis of the debt
  to income ratio
• Get pre-approved for a
  home loan
FHA Loan Checklist


• Address to place of residence (past two years)
• Social Security numbers
• Name and location of employers (past two years)
• Gross monthly salary at current job
• Pertinent information for all checking and savings
  accounts
• Pertinent information for all open loans
• Complete information for all other real estate
  owned
FHA Loan Checklist Cont.



• Current check stubs and your W-2 forms
  (past two years)
• Personal tax returns (past two years),
  current income statement and business
  balance sheet for self-employed individuals
* In addition, a credit report and appraisal of
  the property will need to be paid for
FHA Loan Types

•  FHA Loan: Adjustable Rate
•  FHA Loan: Fixed Rate
•  Energy Efficient Mortgage
•  Graduated Payment
   Mortgage
• FHA Loans for
   Condominium Units
• 203k Home Improvements
* Please see www.fha.com
   for specifics on each loan
 Closing Costs



• Deposit verification fees
• The appraisal fee and
  any inspection fees
• Lender's origination fee
• Cost of title insurance
  and title examination
Closing Cost Cont.



•   Document preparation (by a third party)
•   Credit reports (actual costs)
•   Recording fees, and taxes
•   Test and certification fees
*   Allowed in an FHA refinance loan are wire
    transfer fees, courier fees, recording fees
FHA Debt Ratios



• FHA guidelines have been set in place
  requiring borrowers to qualify according to
  set debt to income ratios. These ratios are
  used to calculate if a potential borrower is in
  a financial position that would allow them to
  meet the demands that are often included in
  owning a home. The two ratios are covered
  on the next four pages:
Mortgage Payment Expense To Effective
Income

• Add up the total mortgage
  payment (principal and
  interest, escrow deposits
  for taxes, hazard
  insurance, mortgage
  insurance premium,
  homeowners' dues, etc.).
  Then, take that amount and
  divide it by the gross
  monthly income. The
  maximum ratio to qualify is
  29%. See the following
  slide for examples:
Mortgage Payment Expense To Effective
Income Example

• Total amount of new house
  payment: $750
• Borrower's gross monthly
  income (including spouse, if
  married): $2,850
• Divide total house payment
  by gross monthly income:
  $750/$2,850
• Debt to income ratio:
  26.32%
Total Fixed Payment To Effective Income


• Add up the total mortgage payment (principal and
  interest, escrow deposits for taxes, hazard
  insurance, mortgage insurance premium,
  homeowners' dues, etc.) and all recurring monthly
  revolving and installment debt (car loans, personal
  loans, student loans, credit cards, etc.). Then, take
  that amount and divide it by the gross monthly
  income. The maximum ratio to qualify is 41%. See
  the following slide for an example:
Total Fixed Payment To Effective Income
Example

•   Total amount of new house payment: $750
•   Total amount of monthly recurring debt: $400
•   Total amount of monthly debt: $1,150
•   Borrower's gross monthly income (including spouse, if
    married):$2,850
•   Divide total monthly debt by gross monthly income:
    $1,150/$2,850
•   Debt to income ratio: 40.35%
•   Please note that the these indicators do not exclusively
    determine whether or not a candidate will qualify for an
    FHA loan. Other factors will be considered, including
    credit history and job stability.
•   Compensating Factors may allow for higher debt ratios.
Items Concerning the Borrower's Credit

•   No credit history
•   Chapter 13 bankruptcy
•   Chapter 7 bankruptcy
•   Late payments
•   Foreclosure
•   Collections, Judgments and
    Federal Debts
FHA Mortgage Insurance



• Protects lenders against losses that result from
  defaults on home mortgages.
• FHA loans require insurance primarily for
  borrowers making a down payment of less than 20
  percent.
• Charged to the homeowner each month at the rate
  of .55 percent per year of the total loan amount.
  FHA also charges an upfront mortgage insurance
  premium of 1.75 percent.
FHA Mortgage Insurance Termination
Conditions


•   For mortgages with terms 15 years and less and with Loan to Value
    ratios 90 percent and greater, annual premiums will be canceled
    when the Loan to Value ratio reaches 78 percent regardless of the
    amount of time the mortgagor has paid the premiums.
•   For mortgages with terms more than 15 years, the annual
    mortgage insurance premiums will be canceled when the Loan to
    Value ratio reaches 78 percent, provided the mortgagor has paid
    the annual premium for at least 5 years
•   Mortgages with terms 15 years and less and with loan to value
    ratios of 89.99 percent and less will not be charged annual
    mortgage premiums.
  Local County Loan Limits


County   Single      Duplex     Tri-plex   Four-plex
         Family
Riverside $500,000   $640,100   $773,700 $961,550

Orange   $729,750    $934,200   $1,129,250 $1,403,400
FHA

Michael VaVerka
951-BANK-4U-6
951-226-5486
mvaverka@afncorp.com