First Time Homebuyers and FHA

As a mortgage broker in Palm Beach County, I have recently been getting more calls from first time homebuyers who are considering purchasing now that home prices are dropping. They do not have much money for a downpayment, however.

An FHA loan is a great option in this situation. Almost every loan I do these days is a FHA loan. Now that traditional lenders have gotten so strict, FHA remains the best option for most borrowers. And here is why:

• You do not need a "certain" credit score to qualify.
• Down payment requirements are minimal, less than 3%, and those funds may come from a "gift".
• Seller contribution of up to 6% is allowed.
• If you have no credit, non traditional sources can be used, such as utility bills or car insurance.
• Non occupant co-borrower may be used if you do not qualify income-wise. The co-borrower cannot already have an FHA loan, and they must be a relative or demonstrated close friend.
• You can qualify for and FHA loan 2 years after a Chapter 7 bankruptcy, provided you have a good explanation and have re-established credit, or if you have not incurred any new credit, then non-traditional sources may be used.
• If you are currently in a Chapter 13, you may qualify as long as you have made on time payments for a year and you have permission from ther trustee to obtain a mortgage.

FHA underwriting is done from a common sense standpoint. You will still need to demonstrate that you have the ability to pay, and some sort of decent track record credit wise. If you had a period of financial difficulty in the past and have since straightened it out, you are probably a good candidate. However, if your credit is dinged from recent issues, you would likely not be approved.

Finally, you must be able to prove your income. This means you will need to show paystubs, W2's and tax returns. No such thing as a stated income loan with FHA.

Also, FHA loans are for primary residences only. An exception would be for the so called "kiddie condo", where parents cosign for a loan for a college student who will be living in the property while they are going to school.

------------------------------------------------------------------------------------------------

Information provided by the South Florida Mortgage Lady, a mortgage broker in Boca Raton, Florida. Feel free to contact me with any questions : 954-675-9531

Is Now the Time to Buy in Florida?

This question was recently asked by a couple who are wondering if they should buy now:

"I want to buy a house with acreage and good schools. House prices are down and rates are down. Is now the time to buy?"

No one really has a crystal ball to determine when it's the best time to buy. Timing the housing market is like trying to time the stock market. Very few people can do it at the right time. However, real estate has been proven historically to be a solid investment. There have been bubbles and downturns before, and the market always corrects itself. If you are looking buy and stay in the property for a least 5 years, you should be in good shape, in my opinion.

It is definitely a buyer's market here in Florida. Sellers are more willing to make price concessions and are likely to contribute toward closing costs. Since closing costs can be several thousand dollars, this is money that you can keep in your bank account for an emergency fund, or for decorating your new home.

A local realtor can help you locate some properties that will fit your criteria. They will be able to give you detailed information on specific communities.

However, before you begin looking for a home, make sure you consult with a mortgage professional so you will know what type of mortgage you qualify for and what monthly payment you would feel comfortable with. Then you can narrow down a price range and work with a realtor. See my post How Much Home Can You Afford

Even though it's a buyers market, sellers still want a contract with a qualified buyer, and most realtors will want to see that you can qualify for a loan so that they know they are showing you appropriate properties.

Keep in mind if you are looking to put little or no money down, the mortgage loan guidelines have become stricter. However, there are still many options available.

-------------------------------------------------------------------------------------------------
Information provided by the South Florida Mortgage Lady, a mortgage broker in Boca Raton, Florida. Feel free to contact me with any questions : 954-675-9531

Florida Mortgage News...Update

Countrywide has recently announced that they will be tightening up guidelines for mortage loans made in declining markets. Basically, this means that larger down payments will be required for mortgages made in counties where property values are declining.



For example, Countywide currently allows maximum financing of up to 95% on a property meeting conforming guidelines. However, if the property is in a declining market, the maximum financing would be 90%. On a $250,000 mortgage, this means a down payment of $25,000 vs. $12,500. That's a big chunk of change.



Unfortunately, this policy affects almost the entire state of Florida. Soft Market Counties



FHA/VA, Rural Housing and Bond programs will not be affected by this policy.



Below are some excerpts from the announcement:



Dear Valued Business Partner: As you are well aware, 2008 is forecasted to be a challenging year for the mortgage industry, characterized by a declining Housing Price Index in a wide variety of metropolitan markets.

In the context of the prominent threat to our industry of collateral values falling below outstanding loan balances, mortgage professionals must strive to ensure that borrowers do not take on loans that they do not have the ability or economic interest to repay. Because of these market conditions, as well as policies implemented by Government Sponsored Enterprises and Mortgage Insurance agencies, Countrywide®, America's Wholesale Lender® is adopting new Soft Market policies designed to help serve qualified borrowers in markets which are either declining or projected to decline in 2008.

Impacted markets across the nation have been categorized, with Category 5 being the highest risk for declining market value and Category 1 markets currently demonstrating more stable market values. Those counties in a higher risk category are subject to additional guideline restrictions as described below.


The following Soft Market policy became effective January 18, 2008:
Conforming, Non-Conforming, Expanded Approval (EA), and Conventional Bond loans:
Soft Market Category 4-5 loans
Maximum financing will be reduced by 5%Example: Maximum financing per Countrywide's Loan Program Guide allows for 95% LTV. Loans in Category 4-5 will be limited to a new max LTV of 90%.


Soft Market Category 1-3 loans
Maximum financing will be reduced by 5%, only if the appraisal or appraisal review indicates any of the following:
Declining Market
Oversupply
Marketing time over 6 months. For the above categories, if the loan is already 5% below the maximum allowable financing, no further reduction is required.

If you are a homebuyer seeking 100% financing, options are still available. Make sure you consult with a knowledgeable mortgage professional.

-------------------------------------------------------------------------------------------------

Infomation brought to you by the South Florida Mortgage Lady, a license mortgage broker in Boca Raton, Florida.

What to do if You Can't Pay Your Mortgage- Part 2

I have posted on this topic before, but since this question has been coming up a lot, I've decided to expand on it a bit more. This is in response to a comment from Alex regarding my post Borrowers Don't Wait for the Well to Run Dry. This post discusses some changes in mortgage underwriting guidelines and how it is getting more difficult for borrowers to qualify for a mortgage.

"Well it is sure the trends show that it is going to harder for the consumers to cover the requirements but what happens with those who didn't make their payments. Those who failed at a certain point. They loose their home?"

Alex,

You are correct about the trends. Lenders are being much more cautious.
You've asked an excellent question that I am sure is on the mind of many homeowners these days. Based on what I am seeing and hearing, lenders are willing to try to work something out with those who have become delinquent...a foreclosure is very costly for the lender. AND bad for everyone all the way around. The lender prefers to avoid this option. As long as the borrower can demonstrate an ability to repay, the lender may do one of the following:

-Reduce the interest rate for a few years
-Allow the borrower to "skip" a few months of payments to get caught up (the "missed" payments are added to the balance of the loan, effectively extending the mortgage term a few months)
-Extend the term of the mortgage from 30 to 40 years
-Freeze the rate on an adjustable mortgage when the rate has increased to the point that the borrower cannot afford the payment.
-The FHA Secure loan is another option..borrowers who have fallen behind due to an adjustable rate increase may qualify to refinance into a lower fixed rate program to reduce their monthly payment. If you have a 2nd mortgage or HELOC, and owe more than the property is worth, you may still be able to refinance. FHA will allow for subordination of the 2nd lien.

There is also some proposed legislation that may provide some relief in the form of reduced interest rates to make monthly payments more manageable.

Options are there. It is very important for a borrower who has gotten behind to contact their lender to see what can be done. They should also contact a mortgage professional to see if they qualify for a refinance to reduce the monthly payments. Folks are giving up before they explore their options.

If you would like a free consultation regarding your options for working with your lender, please contact me at 954-675-9531. Visit Florida Foreclosure Help for more information.

Working With Cheryl

The purchase or refinance of a home is one of the biggest decisions you will have to make. It can be a scary time for many people. I do my best to make you feel comfortable.You will benefit from my years of experience and my knowledge of available loan programs.

You will also benefit from my network of business relationships with lenders, appraisers, realtors, real estate attorneys and others. Before I start throwing out numbers, I want to know you and your situation. I"ll need to ask you a lot of questions and gather information. We will spend at least 30 minutes on the phone or in person to determine what you’re looking to accomplish. I do not charge a fee for this consultation.

We'll then put together a plan of action. In the case of a refinance, I will break down exactly where you are financially and then put together a loan analysis consisting of the right program to meet your needs and goals. You will find it very easy to understand and it will explain to you how we will accomplish your goals.

The end result is that you will walk away having been informed of your options and satisfied with your choice. Once we begin the process I am always available and will keep you informed throughout the entire loan process.

I hope you consider The South Florida Mortgage Lady as your first choice. Find out why my clients are happy and stay with me a long time.I look forward to serving you.


Cheryl

Manufactured/Mobile Home Loans and Financing

Here in Florida we have an large concentration of mobile/manufactured homes. As a mortgage broker in Boca Raton, Florida I often get asked about financing these properties. Consumers are under the impression that it is difficult to get financing on manufactured/mobile homes.

Many traditional lenders no longer offer financing on manufactured homes. However, FHA approved lenders are able to finance manufactured homes at very competitive rates.

For a purchase, 97.75% of the appraised value may be financed. On a $100,000 property, $97,750 would be financed.

In the case of a refinance, up to 85% of the property value may be financed.

HUD has certain requirements when financing a manufactured/mobile home with FHA financing. Requirements for Manufactured Home Financing

For information on Manufactured/Mobile home financing, contact The South Florida Mortgage Lady at 954-675-9531. Or use the email button on the left side of this blog to contact me by email.

Top 10 Ways to Mess up Your Mortgage Loan

OK, so your loan is in process and is approved. You're feeling great. Just remember that you're not home free until your loan is closed.

Doing any of the following before your loan is closed can cause your loan to be delayed or even worse, denied. Why? Because lenders will often repull your credit and verify your employment on the day of closing.


1. Make a new purchase on your credit card
2. Buy a new car
3. Quit your job
4. Don't provide your mortgage professional with documentation/information they request in a timely manner
5. Skip your mortgage or rent payment
6. Take money out of your savings account
7. Change jobs
8. Co-sign a loan for someone
9. Apply for a new credit card
10. Pay your bills late