[Loan Doctor]

FHA Announced new loan limits which is having a wonderful impact-they will enable more people to qualify. To check your local loan limit go to:
https://entp.hud.gov/idapp/html/hicostlook.cfm

This is currently set up as temporary, expiring 12/08, but I don't think that the housing crisis will be over by then so will probably be extended.

For borrowers that qualify for conventional/conforming loans, FHA is still second best as the costs are higher (FHA is possible because of an "UpFrontMortgageInsurancePremium"-currently 1.5% of the loan amount) - and the guidelines* limit the DebtToIncome ratios. Still probably 80% of the loans that I originate are FHA.

Charles

* Guidelines state that DTI is to be 41%, but have seen approvals for over 50%.

[Hedwig]

Good information. I have had an FHA loan in the past, when I had my credit problems. While it wouldn't be my first choice (my last three loans on refi have been conforming loans), it certainly is a good program, and is great for those who need a little help getting there.

Many times, if you keep your credit clean and make all payments on time for several years, you can refi out of the FHA. But before you do, make sure you're really getting a deal that is better enough to pay for the refi.

[trst]

FHA loans are nice too because they allow you to buy more house than you could qualify for conventionally (due to low income) + the buyer needs no down payment, seller pays closing costs, etc. It's a great program, although FHA standards-as far as conditional issues are concerned-are much more strict and involve a lot of hoop jumping. I'm not sure where things stand now, but our banker had told us that the "down payment assistance" programs were supposed to be going away at the end of Feb. Does anyone know what's going on with that?

[Loan Doctor]

The courts stayed the implementation of the order by FHA to stop allowing the DPA's (DownPaymentAssisstance programs) for most of the legitimate programs. So Nehemiah, AmeriDream, GAP to name a few are still available.

I like the fact that the history of the program indicates that the foreclosure rate equals a dollar amount that is a total of 1.5% of the amount of loans done through FHA. So there is an UpFrontMortgageInsurancePremium (UFMIP) charge that is 1.5% of the loan amount. So the program breaks even. For Reverse Mortgages the loss ratio is a bit higher, so the UFMIP is 2%. People pay for what they are getting. Very different from the sub-prime market where pricing was goofy.

The premise of the loan approval is that if for the last 12 months you have paid your bills on time, you are probably qualified for a home loan. In most cases you have to take care of old bills, but not every time. The quality of the home has to be a bit better than for a conventional loan, but in logical ways. The roof has to be in good shape, the plumbing/electrical/HVAC should be working etc.

The loans are for the most part fixed rate and the rates are a good deal for those with less than stellar credit.

Charles

[Hedwig]

Originally Posted by Loan Doctor

The quality of the home has to be a bit better than for a conventional loan, but in logical ways. The roof has to be in good shape, the plumbing/electrical/HVAC should be working etc.

Not always in logical ways, to me, but I understand that they don't want the house to be in bad shape.

The one thing that seemed nuts to me was the requirement to paint concrete. My house is a split foyer. Around the bottom in the front, part of it is concrete. Someone had painted it the color of the siding, but the paint was starting to peel.

FHA made us have it repainted. They said if it had never been painted the bare concrete would have been OK, but since it had been painted it needed to be repainted.

I wanted to just remove the paint but they said no!

Other than that, their requirements seemed reasonable.

[surekha]

House is the largest asset you may ever own. Likewise, your mortgage payment may be the largest expense you'll have in your monthly budget. The FHA loan allows borrowers who qualify for the program to put less money down, have less money as reserves to qualify, and even provides a small credit towards closing costs. Strides are underway to increase the max loan amounts and loosen the requirement to fit borrowers who are in mortgage trouble into the FHA loan. Many troubled borrowers who are unable to refinance with the current lending restrictions and limited loan options will be able to turn to FHA for help. Wouldn't it be great to use this asset to reduce your monthly payment and put extra cash in your pocket? When you refinance your mortgage, you can take advantage of the home equity in your home and enable this to take place. Refinancing is when you apply for a secured loan in order to pay off another different loan secured against the same assets, property etc.

The Federal Housing Administration (FHA) has announced new mortgage loan limits for high cost areas like California, New York, New Jersey…… and other states, the FHA new loan amounts have been raised to as high as:

$729,750 for a single family home.
$934,200 for a 2-family home
$1,129,250 for a 3-family home
$1,1403,400 for a 4-family home

These new loan limits will have a very positive effect on homeowners seeking a lower, fixed interest rate.

This new FHA policy change should help many homeowners who need to refinance but normally would not qualify for a conventional mortgage. This also allows people that have more expensive homes and have fallen behind on their mortgage payments to use the new FHA secure program.

~surekha

[jlynn]

You must do a great job if you have to mooch rather than paying to advertise somewhere.

[Loan Doctor]

For FHA loans where the loan is over 417K, there is a maximum loan to value of 94.99. This 5% downpayment can not be from a Down Payment Assisstance program. Still a great program, just now has to have a down payment. FHA loans for purchases under 417K can still be done with no money down.

Charles