FHA Loans - 3/8 - Arizona Mortgage Team

640 Is The New 580

November 27, 2009 1 Comment

For many years, if you wanted to get an FHA loan, you didn’t actually have to have a “minimum” credit score – but about 2 years ago, that changed when lenders started requiring a minimum credit score. When lenders first started requiring minimum credit scores, the first minimum credit score they used (or most of them used anyway) was 580.

Then over time it moved to 620.

And now I am seeing many lenders move their minimum credit score requirement to 640 for FHA loans.

Which means that your mid credit score needs to be above 640 for many lenders to be able to help you get an FHA loan. Not all lenders are requiring a 640 yet – but if history is any indication, they will all soon be requiring a 640 mid credit score before they will loan you money.

Yes, guidelines are still getting tighter – and I don’t see the tightening trend reversing direction anytime in the near future.

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FHA Mortgages: Changes Coming?

November 22, 2009 1 Comment

We are in uncharted waters when it comes to FHA financing – and in my experience, uncharted waters means anything can happen.

But you may have heard that recently the FHA insurance fund has dropped below the Congressionally mandated 2% and there is a lot of discussion about whether or not FHA is going to need a bailout.

Will FHA need a bailout?

I don’t have enough information to know for sure – so I won’t even take the time to speculate. The only thing that is really clear to me is that there are probably quite a few people who work at HUD burning the midnight oil trying to come up with some possible solutions to the problem of FHA being under-capitalized.

Which means I suspect more changes are coming to the FHA financing programs – and I will give you a hint — I suspect that none of them will make it any easier to get an FHA loan.

The LA Times did a nice job of outlining just a few possibilities:

* Higher down payments. FHA’s current minimum cash down payment is 3.5%. On a $200,000 house, a buyer can bring just $7,000 to the table, aside from closing costs.

* Higher mortgage insurance premiums. FHA charges an upfront mortgage insurance premium of 1.75% of the loan amount. Most borrowers roll that into their loan and finance it. The FHA also charges an annual premium, paid in monthly installments, of either 0.5% or 0.55%, depending on the down payment. To rebuild reserves, FHA could tweak one or both premiums to yield higher revenue. It could raise the upfront premium as high as the statutory maximum of 2.25%. It could also raise the annual fee, but the total premium could not exceed 3% under current congressional limits.

* Cutting home-seller “concessions” to borrowers’ loan costs. One of the big attractions of FHA financing has been the agency’s liberal allowance for seller contributions to borrowers to offset settlement and loan-related fees. The current FHA limit is 6% of the house price, which critics believe to be excessive. They say the policy allows financially marginal borrowers to buy houses they shouldn’t, raising FHA’s exposure to losses. Pinto wants Congress to order FHA to reduce maximum concessions to 2%.

* Toughening credit standards. In the mortgage market, FHA is by far the most lenient and flexible player when it comes to evaluating applicants’ creditworthiness. It does not have a minimum credit score, though it permits lenders to impose their own FICO score minimums. FHA also has been far more tolerant of credit history peccadilloes than Fannie Mae or Freddie Mac.

Is the day coming where you will need to have a 10% down payment in order to qualify for an FHA mortgage?

I don’t know.

We are in uncharted waters.

Which means anything is possible.

For example: did you know that many lenders now require a mid-credit score of 640 for an FHA loan?

Stay tuned, more changes coming.

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Filed Under: FHA Loans Tagged With: FHA Guidelines, FHA Loans, FHA Mortgages

Tempe Town Place Condos – Tempe AZ Condos For Sale

September 25, 2009 Leave a Comment

Are you searching for Tempe AZ Condos For Sale? If so, you should talk to Dean Ouellette. Dean is a RE/MAX agent who specializes in Tempe Town Place Condos and other Tempe AZ based condominiums for sale in Tempe and Phoenix Arizona locations.

See all Tempe Town Place Condos For Sale

Dean suggests, the Tempe Luxury condo market and Phoenix luxury condo market over the last few years have been hit especially hard. Both condo markets have been slower to recover than the single family residential market. The primary reason for the slow recovery time is due in most part from the fact that most of the sellers owe more on their mortgage than the condos are worth. This means that most Tempe and Phoenix condos for sale must be sold through a short sale process. To protect yourself in this market it is imperative to work with an agent who specializes in short sale and foreclosure transactions.

Dean Ouellette spends a tremendous amount of time studying and working in the Tempe and Phoenix condo markets. He has the knowledge to help you buy or sell your condo in this challenging market. If you are looking to sell your Tempe condo and need someone who has successfully dealt with condo short sales or you are looking to purchase a condo foreclosure Dean can help.

Want to be featured like this? Contact us.

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Filed Under: FHA Loans, Miscellaneous Fun, Tempe Mortgage Rates Tagged With: Tempe AZ Condos For Sale, Tempe Town Place Condos

FHA 203k Streamline: How Much Money Can You Get?

August 25, 2009 1 Comment

The FHA 203k streamline program was designed for people who are interested in buying a home that is in need of a few repairs that are not “structural” and would require major work. The FHA 203k program is designed for homes in need of major work, the FHA 203k Streamline is just designed for work like carpet, paint, kitchen, gutters, etc.

Here are the most common FHA 203k Streamline repairs.

So how much money can you get for repairs with the FHA 203k Streamline program? A total of $35,000.

Total.

Now, at first glance, that might seem like you can spend $35,000 on contractor labor and supplies – but that isn’t so. That $35,000 includes bank fees.

FHA 203k Rehab Cost Must Include ALL Of The Following AND Can’t Exceed $35,000:

Cost of the construction supplies
Cost of the labor of the contractor
10% contingency fee
$100 final inspection fee
Up to 1.5% supplemental origination fee

If you add all of these together, you will get a number that says that the total cost of materials and labor can’t exceed $31,257.

So make sure that when you budget for the FHA 203k Streamline program, you know that $35,000 isn’t really $35,000 – it is really $31,257 after you subtract all of the fees.

Which is kind of the way everything seems to be. A fee here, a fee there… yeah, we have a fee for that.

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Filed Under: FHA Loans Tagged With: FHA 203k, FHA 203k loan, fha 203k rehab, fha 203k streamline

FHA 203k Streamline: Are Interest Rates For The FHA 203k Streamline Higher?

August 24, 2009 Leave a Comment

Question:

Are FHA 203k Streamline interest rates higher than “normal” FHA interest rates?

Answer:

It depends.

The truth is that it mostly depends on the lender. One of the biggest lenders in the US who did quite a few FHA 203k Streamline loans was Taylor Bean and Whitaker, and when they went under a few weeks ago, now the number of lenders who offer the FHA 203k streamline mortgage is fairly fragmented.

Some of the lenders do charge a slightly higher rate for the FHA 203k streamline loan, but some do not, it is different by lender. And although the most common loan program choice is the FHA fixed rate program, there are lenders who will also offer a FHA adjustable rate with their FHA 203k loan.

One thing that is also somewhat unknown about the FHA 20k3 streamline program with regards to interest rates – because it is a FHA loan program, you can use a 2/1 buydown program do “buy down” the interest rate which will lower your payment for the first 2 years of your mortgage.

FHA 203k Streamline Fees:

The FHA 203k streamline fees also somewhat vary by lender, but generally speaking, you can expect the “normal” FHA fees and something called a “Supplemental Origination Fee” or a “Rehab Admin Fee” which is usually about $350 up to 1.5% of the repair/rehab fee (or a max of about $500). In plain English, this fee is because the FHA 203k streamline loan requires the lender to do more work, so they charge more.

No matter how you add up the fees for the FHA 203k Streamline, it is difficult to say that they are too much different than a “regular” FHA loan – and certainly with the flexibility of getting money for rehab needed on a home, the slight increased fee of the supplemental fee is usually the last thing people worry about with the FHA 203k Streamline program.

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Filed Under: FHA Loans Tagged With: FHA 203k Streamline Fees, FHA 203k Streamline Interest Rates

Manufactured Home Loans With FHA: Still Available

August 19, 2009 3 Comments

With the downfall of Taylor, Bean and Whitaker recently, many loan officers have been scrambling for lenders who will underwrite FHA loans on manufactured homes.

Manufactured Home Loans With FHA: Still Available %spacebasename

The good news is that there are still lenders underwriting these loans, so if you are in a manufactured home and need to refinance or purchase a home, there are still FHA loan programs available that lenders will lend money on.

There aren’t many lenders still lending money on manufactured homes, but there are a few… and lucky for all of us, we have more than one that is still lending money for FHA loans on manufactured home properties.

Of course, the same FHA guidelines still apply and just as a reminder, here are the general FHA rules for manufactured homes to be considered eligible for FHA financing:

have a floor area of not less than 400 square feet;
be constructed after June 15, 1976, in conformance with the Federal manufactured home construction and safety standards, as evidenced by an affixed certification label in accordance with 24 CFR Section 3280.8; (manufactured homes produced prior to that date are ineligible for insured financing);
be classified and subject to taxation as real estate;
the mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins;
built and remains on a permanent chassis;
designed to be used as a dwelling with a permanent foundation built to FHA criteria; and
the finished grade elevation beneath the manufactured home or, if a basement is used, the lowest finished exterior grade adjacent to the perimeter enclosure, shall be at or above the 100-year return frequency flood elevation.

Will manufactured home loans that are insured by FHA go away completely?

Maybe.

But they are still available as of today.

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Filed Under: FHA Loans Tagged With: FHA Manufactured Home Loan, FHA Manufactured Mortgage, FHA Mortgage Manufactured Home

FHA 203k Streamline: How Do Payments Work?

August 19, 2009 1 Comment

When getting an Arizona FHA 203k streamline loan one of the more popular questions I am asked is “how does the payment process work?” and when outlined, it isn’t all that complicated (or at least it doesn’t seem like it…)

With the FHA 203k streamline program the repair funds are held in escrow by the lender – and the borrower has 3 months from their closing date to complete all of the work on the project. There can be no more than 2 payments (called the First payment and Final payment) and the must be paid directly to the contractor who performed the work. The first payment (sometimes called a draw) is limited to a maximum of 50% of the total repair cost.

FHA 203k Streamline: How Do Payments Work? %spacebasename

For the First Payment at Closing:

When requesting the first payment at closing to be disbursed, the following will be required:

Initial disbursement forms
203k maximum mortgage worksheet
All bids and estimates for the project
The name of the contractor to be paid and the exact amount of each check to be disbursed at closing. The underwriter will review and approve this.
All signed homeowner/contractor agreements (or a self help agreement if the borrower is doing the work)

Once you have all of this information provided, typically the closing/construction department will require at least 24 hours to review the request — which means leave a little leeway on your closing date, it can be somewhat fluid.

For the Final Payment

All loans require a final inspection regardless of how much repair money was allocated.
Before the final release, the borrower must sign a completion and affidavit for disbursement form.
Final payment is disbursed upon completion of all work – can’t disburse if work is still “in progress”

So with the FHA 203k streamline loan, there are two payments — the first and the final.

Easy enough, right?

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Filed Under: Arizona Home Financing Options, FHA Loans Tagged With: Arizona FHA 203k Streamline, AZ FHA 203k Streamline, fha 203k streamline, FHA 203k streamline payments

FHA 203k Streamline: Contractor Requirements

August 19, 2009 2 Comments

When using the Arizona FHA 203k streamline to finance your home, you will usually need to get a contractor to perform the work. The general process of finding a contractor and working with the lender and contractor looks like this:

Lender reviews the contractors license, bonding, insurance and credentials
Contractor estimates and provides the lender estimates that clearly state the nature and type of repair cost for labor and completion of the work.
Lender reviews the estimates. The lender may call the borrower, loan officer and/or contractor to discuss the estimate and ask any additional questions they may have.
Lender then can accept the estimate or ask for more estimates.

FHA 203k Streamline: Contractor Requirements %spacebasename

While it may seem like a long process – it really isn’t all that bad. Most lenders require that you use contractors to complete the rehab work unless the borrower can provide proof that they can perform the work (for example, if they are a general contractor, that is always a good sign they are capable…) but when the borrower is the one who completes the work the following apply:

Borrower must provide documented proof of expertise required to complete the work
Borrower ensures that the work will be completed within a “timely manner” (generally no longer than 3 months)
Borrower must execute a “self help” agreement
Borrower provides written estimates of supplies required to complete the work and must include labor in cost estimate in case a contractor is hired to complete the work.
Borrower may not be compensated for his/her labor. No “sweat equity” is allowed.

Is it possible for a borrower who is capable of doing the work be allowed to do the work?

Yes.

And now you know the rules of what will be required by the lender!

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Filed Under: Arizona Home Financing Options, Buying a New Home in Arizona, FHA Loans Tagged With: Arizona FHA 203k Streamline, FHA 203k, fha 203k streamline

FHA 203k Streamline: Why Choose The FHA 203k Streamline?

August 19, 2009 1 Comment

As more and more bank owned properties are bought here in Arizona, many people are starting to become aware of the various loan programs designed for homes that are in need of repair. The most popular ones are the FHA 203k Streamline, the FHA 203k loan and the Fannie Mae HomePath loan programs.

FHA 203k Streamline: Why Choose The FHA 203k Streamline? %spacebasename

When it comes to the two FHA loan options, many people ask me “why would someone want an FHA 203k Streamline loan vs. a FHA 203k “regular” loan? And the simple answer that I give is this: if the cost of repairs is anywhere close to the $35,000 allowed by FHA for the FHA 203k streamline program, go with the streamline.

If it is much, much more than that – you will need to pick the “regular” FHA 203k loan program.

But the answer is really slightly more in-depth than that — and here are just a few other reasons people choose the FHA 203k streamline loan program:

Architectural exhibits are not required with the FHA 203k streamline
The lender is responsible for making sure the cost to repair is reasonable
General contractors and/or consultants are not required
Some lenders don’t require that you get at least $5,000 in repairs (some do)

Now there are certain situations where it is clear that you are going to need far more than $35,000 to rehab a house – but I have found that in most cases, the $35,000 for repairs is more than enough – which makes choosing the FHA 203k streamline an easy choice.

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Filed Under: Buying a New Home in Arizona, FHA Loans Tagged With: FHA 203k, FHA 203k loan, FHA 203k mortgage, fha 203k streamline

640 Is The New 580

FHA Mortgages: Changes Coming?

Tempe Town Place Condos – Tempe AZ Condos For Sale

FHA 203k Streamline: How Much Money Can You Get?

FHA 203k Streamline: Are Interest Rates For The FHA 203k Streamline Higher?

Manufactured Home Loans With FHA: Still Available

FHA 203k Streamline: How Do Payments Work?

FHA 203k Streamline: Contractor Requirements

FHA 203k Streamline: Why Choose The FHA 203k Streamline?

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