Keep Your Current House and Apply for a FHA Loan to Buy a New Residence is a post from: FHA,VA and Conventional Home Loans in all 50 States

This post is going to discuss details for home owners who want to keep their current primary residence and apply for a FHA Loan to buy a new primary residence.  Because of the price drops in the real estate markets over the last few years, home loan lenders have tightened their lending guidelines for buyers who want to keep their primary residence and rent it out and buy a new house.  Some buyers have been doing something called, “buy and bail”, where they obtain a home loan and close on a new primary residence at today’s reduced prices, and then they stop making payments ”walk away” from their old house because it is “upside down”.  Upside down meaning the loan balance is higher than the property value. 

Lenders (both FHA and conventional) caught on to this “buy and bail” practice about 18 months ago and created a guideline where you must have 30% equity in your current residence if you want to count rental income from that residence to count towards buying a new residence.  If you don’t have 30% equity, even if you have a lease set up for your old residence, you must qualify for the new loan with both housing payments.   So let’s say your current housing payment is $2,500/mo including mortgage, taxes, insurance, etc…  And then your new housing payment will be $1,500/mo.  You will have to qualify with both these payments ($3,700) plus of course your other debt obligations such as car payments, student loans, credit card payments.  So as you can see, qualifying with both payments will require you to have a very large income. 

Now if you do have 30% equity in your current property, you can find a tenant to lease it and count the income from the lease.  This would be a huge help of course.  Say in the above example you were able to lease your house for $2,500.  You could count 90% of that $2,500 in rent ($2,250) towards your qualifying income to buy the next home.  As you can see this would be a huge help towards qualifying for a FHA or conventional loan.

Maybe people in the situation where there current property is upside down want to do a short sale or let their house go to foreclosure and then buy a new one.  Keep in mind that in most cases if you do a short sale or your old house, you will have to wait two years from the date the short sale closes until you can obtain a FHA Loan or a conventional loan.  There are exceptions to this waiting period of course due to many factors such as how your prior lien holder reports the short sale to the credit bureaus.  With a foreclosure you will have to wait three years from the date of the foreclosure to qualify for an FHA Loan and five years to qualify for a conventional loan.  And keep in mind that if you stop making payments, it can take 1+ year for the property to be fully foreclosed.  So this means four years from the date you stop making payments until you can obtain a FHA Loan and six years for a conventional loan.

Keep in mind the benefits of FHA Loans:

• Only 3.5% down payment required and that can be a gift from a relative
• Non-occupying co-signers allowed to help you qualify
• You don’t need perfect credit
• Historic low 30 year fixed interest rates
• Only 3.5% down required on 2-4 unit owner occupied properties as well

I hope this article helps you in your future plans.   Please email me or call if you have further questions, 858-922-7899 and rob@affinity-financial.com.

Warm Regards,

Rob Chomentowski (Sr. Loan Officer and FHA specialist)

858-922-7899

rob@affinity-financial.com

Importance of Getting a Pre-Approval Before House Shopping is a post from: FHA,VA and Conventional Home Loans in all 50 States

The very first thing you should do when in the market for home is the get a full  loan pre-approval.  This is true regarding FHA, VA or conventional home loans.  This is very important because your don’t want to waste a lot of time searching for a property until you know for sure if you can get approved and what the maximum amount you can approved for is.  This can be accomplished in a matter of minutes and then you will have the peace of mind that if you make and offer on a home and it gets accepted you will have no problem closing.

Below is a list of what we will do to fully approved your for your loan:

1. We will go through a loan application (most often over the phone).  It is best for me to talk to you and go through the application vs. having you fill one out as this way we get it right the first time and save a lot of time.
2. We will do a credit check
3. I will ask you to send me your last 1 months paystub copies, last 2 years w-2′s and bank statements documenting where you will be getting the down payment.  If you are self-employed we will need your last 2 years of federal tax returns all pages.

After those simple steps I can issue you a pre-approval letter.  In the call we will also discuss the maximum loan amount that you qualify for and what the total payment will be (mortgage + property taxes + home insurance).

If you have any questions or would like to get a fast pre-approval give us a call or email.

Warm Regards,

Rob Chomentowski

Sr. Loan Officer

rob@affinity-financial.com

858-922-7899

FHA Loans is a post from: FHA,VA and Conventional Home Loans in all 50 States

FHA has changed into a popular choice of many first time home purchasers. It insures loans, manufactured by licensed FHA banks, they don’t lend without delay to borrowers.

FHA provides banks with insurance, in case a borrower defaults on his loan.

But before buying your dream house in America, you have to do an in depth research per US home mortgages. This can familiarise you with the terms and policies of FHA loans and the standard loans.

While purchases are the most typical use, FHA loans are also available for rate and term refinance loans, as well as Money Out refinances. On the other hand, the term Standard Loan includes all loans under this Fannie Mae and Freddie Mac lending limits. A few of these could be called Conforming, A paper, sub prime, Alt A, A Minus, BC ( blemished credit ) and other industry names. The FHA loan will probably have the least amount needed to shut and the lower payment. FHA loans permit the borrower who has had some "credit problems" or those without a credit score to purchase a home. Most particularly, condoning the borrowers, surrounding a bankruptcy that was discharged two years back. They can be authorized for max financing.

While , Standard A Paper financing will require four years to have passed to be suitable for consideration. If your score is below the minimum standard, you won’t qualify or you may be placed in a higher rate Sub prime, Alt An or A minus loan product. If a borrower does have past credit problems, an FHA loan might be seriously less expensive than an alternative loan like sub prime, ALT A, or A minus. Lots of the choice loan products have Pre Payment penalties unlike FHA loans. In fact FHA loans can be simply refinanced under the Streamline program. This permits house purchasers without the essential money to get a home today. However, FHA charges an once a year renewal mortgage insurance premium of 0.5% to 0.55% of the loan amount. But this fee is usually half, charged by low down-payment Conforming A Paper typical mortgages, Sub prime, Alt An and A minus. A standard low down ( three percent ) standard mortgage with a renewal premium of 0.78% would charge $65.00 each month. However, typical financing does not need an upfront mortgage insurance premium when a borrower closes on the loan. With FHA financing, that fee for a thirty year loan is 1.75% of the loan amount the borrower can wrap into the mortgage.

On a $100,000 for thirty years at 8%, that is a further $11.51 that the borrower must pay every month. That is nearly an extra $132, the borrower must pay every year.

Now any body can get a home, thanks to FHA loans. The mortgage, you get with an FHA loan is insured by an executive agency. Therefore , many expenses related to a house loan, may be dropped or dropped out fully. A new program launched in 2007, known as FHA-Secure, may also be of help to first time home purchasers.

So we see that FHA loans have an higher hand over typical loans. That is the reason why FHA loans are in larger demand in the States. Even if you think you have not saved enough to be granted a mortgage loan, still you can avail the FHA loan simply.