The New FHA Reverse Mortgage For Purchase – January 2009

Reverse Mortgage For Purchase

January 2009 HUD instituted a new program for Seniors (Age 62 or older) to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing.

The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc

A Reverse Mortgage main concept is to have NO MORTGAGE PAYMENT.  Now HUD is saying that Senior Citizens can buy homes or downgrade to a smaller home without ever making another mortgage payment as long as they live.

The Benefits

• The Housing and Economic Recovery Act of 2008 gives Unprecedented Consumer Safeguards With No Credit or Income Qualifications.
• Lower Fees than before
• Never Give Up Title to Home!
• Never Owe More than Home’s Value!
• Never Have to Move
• Never Make a Payment aslong as you live or sell/move the house!

An Example

Senior has $125,000 in equity but wishes to move.  REALTOR lists and sells departure home.  REALTOR writes contract on new $350,000 home by combining $125,000 down payment with $225,000 reverse mortgage purchase money:

SENIOR HAS NO MONTHLY PAYMENT!!!

Reverse Mortgages are now becoming more and more suitable for Seniors and with the New Reverse Mortgage for Purchase, A Senior Citizen doesn’t ever have to worry about losing the house or making another mortgage payment.

Guideline Change – FHA Refinances Cashout Require Two Appraisals now in 2009 over 85% LTV

FHA Refinances Cashout Require Two Appraisals now in 2009 over 85% LTV

Starting January 1st 2009 , Loans with FHA case numbers assigned on or after will require a Second Appraisal to be done for cash-out refinances greater than 85% LTV.

If you are refinancing two mortgages into one then its considered a Cash-out.  The only exception is when the 2nd mortgage was used as a purchase and not as a cash out or HELOC.

Reverse Mortgages are the only exception to this guideline change.

Below are highlights to the changes.

• A 2nd appraisal is required regardless of loan amount or property location.
• The 2nd appraisal must be still be completed by a FHA approved appraiser.
• If 2nd appraisal is lower than 5% of 1st appraisal, the maximum mortgage amount will be based on the lowest appraisal.
• This does not change the current requirement for two appraisals on loans greater than $417,000 and LTV greater than 95%.

Please consult with a mortgage expert regarding these changes.

Update to 2009 FHA Refinance Guidelines

 

Update to 2009 FHA Refinance Guidelines

 

 

Mortgagee Letter 08-40 communicates changes to FHA refinance transactions and are effective January 1st, 2009. Although this update includes guidelines that have not changed, I have listed the unchanged ones anyway as a review for those of you already familiar with FHA guides.

Here are the 10 things you need to know about these changes:

1.  The maximum Loan To Value for rate & term refinances (including streamlines WITH an appraisal) is 97.75%*

2. The maximum Loan To Value for cash-out refinances is 95%* for loan amounts less than the conforming limit and 85%* for loan amounts at or above the conforming limit. (Must have 12 months seasoning and no 30 day late payments)

3. Two appraisals will be required for all cash-out refinances with an LTV above 85%.

4. The mortgage must be current for the month due.

5. New or current 2nd mortgages are eligible with no maximum CLTV.

6. Loan amount for streamline refinances WITHOUT an appraisal cannot exceed the original loan amount.

7. UFMIP rates: 1.75% for all rate & term and cash-out refinances AND 1.5% for all streamline refinances.

8. The FHA Secure refinance will be terminated.

9. Refi loan amount CAN include: Closing costs, discount points, current interest, prepayment penalties, prepaids, late charges, and escrow shortages.

10. Cash back on rate & term and streamline refinances CANNOT exceed $500.

*All LTVs are before adding the UFMIP