FHA understands that nobody is perfect and realizes that filing for Bankruptcy does not mean your not applicable for credit. FHA reviews all credit applicants based on your repaying profile and background. Even though you may have had hiccups in the past as long as you are able to re-establish a track history of paid on time agreements or even document an isolated time frame that resulted in excruciating circumstance.
With that being said what can you do with borrowers who filed for Bankruptcy? Take a look below…
Chapter 13 Bankruptcy 411
Must have paid on time with the Bankruptcy for 12 complete months.
Must obtain permission for the courts to refinance or purchase a home. Must have trustee sign off and finally the Judge to sign off final approval. Typically the Trustee charges $500 added to the HUD statement at closing to deliver this permission for the courts.
Must establish 2-4 paid as agreed tradelines other than the bankruptcy.
Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.
Chapter 7 Bankruptcy 411
24 months must pass from the time of Discharge Date of the borrower/spouse in order to apply for a FHA loan.
Must establish 2-4 paid as agreed trade lines other than the bankruptcy.
Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.
If you have any questions or comments please feel free to respond!
How to cancel FHA Annual Mortgage Insurance Premiums after January 1st, 2001.
15-30 Year Term Mortgage: Homeowner reaches 78% Loan to value on house and has paid a minimum of 5 years.
0-15 Year Term Mortgage with loan to value 90% or more: Homeowner reaches 78% Loan to value on house with NO minimum paid annual mortgage premiums.
0-15 Year Term Mortgage with loan to value 89.9% or less: will be cancelled
FHA will determine when a borrower has reached the 78% loan to value ratio based on the lower of the sales price or appraised value at the time of the sale. New appraised values will not be considered.
When the homeowner has made additional principal payments, the borrower may request cancellation of his/her mortgage insurance if the loan to value ratio has reached 78%, has paid mortgage insurance for at least 5 years and has not been delinquent for more than 30 days at anytime
within the prior 12 months.
Hopefully these quick tips and guidelines can help determine to cancel the mortgage insurance premiums with FHA. Keep in mind these guidelines don’t apply to conventional PMI guidelines that will be explained in my next post.
FHA is still a great loan being used still because of the government backing pretty much guaranteeing you a refinance in the future via the Streamline product unlike conventional loans nowadays which have resulted in losses due to not being able to refinance out.
What Stated Programs are left?: Many times most clients believe that Stated Programs are gone but thats not true, we are still doing 80% LTV Stated Loans with a minimum fico score of 720. This product is called the Mortgage Express.
What If I need more than 80% LTV?: This question gets asked alot. If you need more than 80% LTV then prove your income on your tax returns, this will allow you to revert back to full documentation type of loan which is fine.
The reason why most self employed borrowers want to do Stated Loans is because their tax returns either show a negative loss or not enough income claimed.
Well heres the thing, Claim your income, If you need to do a Tax Amendment then do it. If you need to weigh out your options what is more important buying a house or claiming more on your taxes, you do the math. I have had most clients who got a free amendment check and most of the time got out scotch free without paying any more and BAM they got a full doc loan, something to think about I say.
Your other option is using Bank Statements using 25% of all income deposited each month, if you have enough income to support then go with this option.
Most people in Virginia Beach have asked me many times if I were a Broker or a Direct Lender?
I usually reply both! Then I get a mixed reaction asking how I can be both?
First lets break down the 3 categories of lenders.
Mortgage Brokers - Act as the middleman and shops around for loans for the clients, not associated with a bank.
Loan Officers - Works for direct lenders like Countrywide, Bank of America and Wells Fargo.
Mortgage Bankers – Works for Banks as Loan Officers but has the ability to broker out loans if needed.
So In essence I work as a Hybrid Lender. My mortgage company Prosperity Mortgage directly writes loans for our affiliated company Wells Fargo 90% of the time. Just in case we need to find a certain loan elsewhere that we don’t carry, as a Mortgage Banker we can broker out loans if needed to without the expense of typical normal broker fees.
Now even though there are certain lender types, I always say it doesn’t matter really about the company it boils down to the individual that represents the loan transaction.
The Home Improvement Loan is designed to help Home Owners and potential future Home Owners get a loan based on future improvements of the house.
If the house needs some work done then typically a normal loan like a Conventional loan will not finance the loan due to home improvements over $2,500. This type of financing will call for a Home Improvement, Rennovation, Rehab, Full 203k and 203k Streamline loans.
Instead of paying out of pocket or financing the costs with a credit card, we can do a 1 stop shop for your financing needs with home improvements rolled into the loan.
Don’t worry about the appraised value if the house is in bad shape, the loan is based on the after improved value of your improvements.
Typically these loans can close in 30-45 days, with contract work started within 30 days of closing.
Below are some guidelines explaining 203ks
Less fees vs a Full Renovation – cheaper
No Reserves – Full 203k requires reserves
Restricted to $35,000 in repairs – *no major structural repairs* Over 35k is Full 203k.
NO HUD CONSULTANT - this is the biggest distinction here compared to full renovation. Saves time and delays.
Owner Occupied / 1-4 family
No Inspections – over 15k in repairs just needs to verify work is done.
No Contingency Added
Repairs must be completed in 6 months – no extensions, after 6 months must be kicked to full renovation.
Rennovation Specialist
Renovation programs are great for 1st time home buyers providing solutions for needs and wishes into reality.
With Foreclosures and short-sales on the rise, many homes on the market need a lot of T.L.C and most of the time the previous owner had not taken complete care with the home, this is repair the 203k loan can shine for you.
Remember, not all Mortgage Professionals offer 203k Loans. Consult with a Renovation Specialist who can guide you through the decision in Streamline vs Full Renovation. By the way…I offer both
Here locally in Virginia the Navy owns 36,000 acres and more than 6,750 buildings in the area. There are some 108,000 Navy and Marine Corps personnel stationed in the area, and the Navy employs more than 41,000 civilians.
There are more than 23,000 retired Navy men and women living in Hampton Roads, and approximately 118,300 dependents of active duty, and civilian personnel. The total Hampton Roads Navy community numbers some 318,000 people. The military brings in over $11 billion into the local economy annually.
Va Mortgage ? What is it ? Who Qualifies
The Department of Veterans Affairs (VA) guarantees loans to help qualified veterans, reservists, and active-duty service members to finance their homes by Refinance and Purchase.
The VA loan allows veterans 100% financing without private mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA and is allowed to be financed.
You can apply for a Certificate of Eligibility by filling out a governmental form called the VA Form 26-1880, Request For a Certificate of Eligibility For Home Loan Benefits.
Check with your lender if you don’t know if you cant find your certificate, they can quickly process your request and find out if you are eligible for a VA mortgage through a system called ACE
VA Mortgage Highlights
Many lenders are restricting LTVs and LOAN amounts right now with FHA and VA loans. Check with your local lenderSupport Our Troops to see what their guidelines are.
VA is Still the #1 first choice if you are eligible to qualify in the mortgage world.
* No Minimum Credit Score still for VA Mortgage (Check with your lender, my company still validates this)
* 100% Financing
* 100% JUMBO FINANCING still (We are the only lender in this area still has this!!!)
* NO PMI
* Flexible income, debt and credit requirements to help borrowers qualify
* Down payment and closing costs that may be funded by a gift, grant or secured loan
* Rates are almost always 1% cheaper and lower than standard conventional loans
So I always ask my customers if they are VA eligible first, because VA is still alive and kicking and pretty much the only true 100% program out there still.
Don’t forget just because FHA might be hot right now, VA Mortgages should not be overlooked.
09-07-2008 The government takes control of Fannie Mae and Freddie Mac two of the largest Loan Guarantee Companies claiming to be the biggest federal bailout ever. [Source]
The Real Estate market has been a slow and bumpy ride over the past 2 years and its news like this that helps pushes the economy in the right direction, keeps us moving forward instead of standing still or going backwards.
There has been mixed press lately on the views of this takeover ranging from outbursts oh having to pay for the takeover with our hard earned taxes to investors losing out on money with the takeover.
Bottom line is this takeover is crucial for us to improve in the right direction. One benefit factor that impacted right away was low interest rates.
Almost immediately our Nation has seen a drop in the interest rates back to the 5% Range. Fannie and Freddie had trouble selling the mortgage-backed paper and now banks feel more secure and confident in these loans and instead of selling to the secondary market, most banks can have the confidence in keeping some of their portfolio.
Rate of Foreclosure will come down as the forecast of the final bottom of the market in the 3rd quarter of 2009. More money is being flowed back in the economy with this surge of confidence in conventional loans.
House Depreciation will improve too as well. Most foreclosures and defaults were due to conventional loans preventing clients from re-financing or finding alternative options. Now that the government has stepped in with the convention loans, there will be more room for the government to help homeowners keep their homes.
