California FHA Streamline Refinance guidelines received a boost recently, a boost in the right direction for most borrowers. Turns out for the past 7 months, since November 17, 2009 the majority of FHA lenders have misinterpreted their investors’ needs for proper documentation.

Since November, Streamline FHA refinances have had traditional guidelines – prove income, provide tax returns, make sure the debt ratios are in line amongst others. As of June 9, 2010, many investors have informed their lenders that those guidelines have eased and frankly have been eased all along.

What does this mean to you and why is it important?

With most lenders, income documentation for wage earners and self employed borrowers is no longer required. Tax returns are no longer necessary. Debt ratios are a non-factor. You must still be employed as it will be verified.

Income documentation for those other than wage earners and the self employed include the following:

FHA Streamline Refinance Income Documentation Requirements

Standard FHA Streamline Criteria

The following items are necessary to refinance:

• Seasoning – At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
• Mortgage Payment History Requirements. The following requirements must be met without exception:
  • Loans with a 12 month payment history: 0×30 lates in the previous 12 months.
  • Mortgages with less than 12 months payment history: the borrower must have made all payments within the month payment is due.
• Net Tangible Benefit (NTB) Requirements: A net tangible benefit for the borrower must apply defined as one of the following:
  • Reduction in the total mortgage payment (PITIA) AND ALL SUBORDINATE LIENS = The new total mortgage payment must be 5% lower
    than the current total mortgage payment on the loan being refinanced. This requirement is only applicable when refinancing from a Fixed
    Rate to Fixed Rate, a GPM to Fixed Rate, a 203k to 203b and a 235 to 203b.
  • Refinancing from an ARM to a fixed rate mortgage =
    • The interest rate on the new fixed must not be greater than 2 percentage points above the current rate on a 1-year ARM.
    • For hybrid ARMs, the total mortgage payment on the new fixed rate mortgage may not increase by more than 20%

With the recent downturn in Mortgage Rates for California, the majority of FHA borrowers are seeing obtainable rates at or below the 5% level. This is a huge help for those that are in need of refinancing, want a quick alternative, require less documentation, less headache and want to take advantage of the lowest rates ever!

Who do you know right now that is in need of refinancing a FHA loan? Call for a free mortgage analysis.

The FHA Mortgage Insurance Premium is an important part of every FHA loan.

There are actually two types of Mortgage Insurance Premiums associated with FHA loans:

1.  Up Front Mortgage Insurance Premium (UFMIP) – financed into the total loan amount at the initial time of funding

2.  Monthly Mortgage Insurance Premium – paid monthly along with Principal, Interest, Taxes and Insurance

Conventional loans that are higher than 80% Loan-to-Value also require mortgage insurance, but at a relatively higher rate than FHA Mortgage Insurance Premiums.

Mortgage Insurance is a very important part of every FHA loan since a loan that only requires a 3.5% down payment is generally viewed by lenders as a risky proposition.

Without FHA around to insure the lender against a loss if a default occurs, high LTV loan programs such as FHA would not exist.

Calculating FHA Mortgage Insurance Premiums:

Up Front Mortgage Insurance Premium (UFMIP)

UFMIP varies based on the term of the loan and Loan-to-Value.

For most FHA loans, the UFMIP is equal to 2.25%  of the Base FHA Loan amount (effective April 5, 2010).

For Example:

>> If John purchases a home for $100,000 with 3.5% down, his base FHA loan amount would be $96,500

>> The UFMIP of 2.25% is multiplied by $96,500, equaling $2,171

>> This amount is added to the base loan, for a total FHA loan of $98,671

Monthly Mortgage Insurance (MMI):

• Equal to .55% of the loan amount divided by 12 – when the Loan-to-Value is greater than 95% and the term is greater than 15 years

• Equal to .50% of the loan amount divided by 12 – when the Loan-to-Value is less than or equal to 95%, and the term is greater than 15 years

• Equal to .25% of the loan amount divided by 12 – when the Loan-to-Value is between 80% – 90%, and the term is greater than 15 years

• No MMI when the loan to value is less than 90% on a 15 year term

The Monthly Mortgage Insurance Premium is not a permanent part of the loan, and it will drop off over time.

For mortgages with terms greater than 15 years, the MMI will be canceled when the Loan-to-Value reaches 78%, as long as the borrower has been making payments for at least 5 years.

For mortgages with terms 15 years or less and a Loan -to-Value loan to value ratios 90% or greater, the MMI will be canceled when the loan to value reaches 78%.  *There is not a 5 year requirement like there is for longer term loans.

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Related Articles – Mortgage Approval Process:

• Basic Mortgage Terms
• How Much Can I Afford?
• Common Documents Required For A Mortgage Pre-Approval
• Top 8 Questions To Ask Your Lender During Application Process
• What’s The Difference Between An Investment Property, Second Home and Primary Residence?
• Seven Items Real Estate Agents Need To Know About Your Mortgage Approval

The VA Funding Fee is an essential component of the VA home loan program, and is a requirement of any Veteran taking advantage of this zero down payment government loan program.

This fee ranges from 1.25% to 3.3% of the loan amount, depending upon the circumstances.

On a $150,000 loan that’s an additional $1,875 to almost $5,000 in cost just for the benefit of using the VA home loan.

The good news is that the VA allows borrowers to finance this cost into the home loan without having to include it as part of the closing costs.

For buyers using their VA loan guarantee for the first time on a zero down loan, the Funding Fee would be 2.15%.

For example, on a $15,000 loan amount, the VA Funding Fee would total $3,225, which would increase the monthly mortgage payment by $18 if it were financed into the new loan.

So basically, the incremental increase to a monthly payment is not very much if you choose to finance the Funding Fee.

Historical Trivia:

Under VA’s founding law in 1944 there was no Funding Fee; the guaranty VA offered lenders was limited to 50 percent of the loan, not to exceed $2,000; loans were limited to a maximum 20 years, and the interest rate was capped at 4 percent.

The VA loan was originally designed to be readjustment aid to returning veterans from WWII and they had 2 years from the war’s official end before their eligibility expired. The program was meant to help them catch up for the lost years they sacrificed.

However, the program has obviously evolved to a long term housing benefit for veterans.

The first Funding Fee was ½% and was enacted in 1966 for the sole purpose of building a reserve fund for defaults. This remained in place only until 1970. The Funding Fee of ½% was re-instituted in 1982 and has been in place ever since.

The Amount Of Funding Fee A Borrower Pays Depends On:

• The type of transaction (refinance versus purchase)
• Amount of equity
• Whether this is the first use or subsequent use of the borrower’s VA loan benefit
• Whether you are/were regular military or Reserve or National Guard

*Disabled veterans are exempt from paying a Funding Fee

The table of Funding Fees can be accessed via VA’s website – CLICK HERE

The main reason for a Veteran to select the VA home loan instead of another program is due to the zero down payment feature.

However, if the Veteran plans on making a 20% or more down payment, the VA loan might not be the best choice because a conventional loan would have a similar interest rate, but without the Funding Fee expense.

The best way to view the VA Funding Fee is that it is a small cost to pay for the benefit of not needing to part with thousands of dollars in down payment.

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Related Articles – Mortgage Approval Process:

• Basic Mortgage Terms
• How Much Can I Afford?
• Common Documents Required For A Mortgage Pre-Approval
• Top 8 Questions To Ask Your Lender During Application Process
• What’s The Difference Between An Investment Property, Second Home and Primary Residence?
• Seven Items Real Estate Agents Need To Know About Your Mortgage Approval

California USDA Home Loans are in high demand in Riverside County especially in the cities of Menifee, Temecula, Murrieta and Sun City, just to name a few. For a home buyer USDA Home Loans has everything you’d ever want in a loan program.

USDA Home Loan Highlights

• 100% Financing
• No Down Payment
• No Mortgage Insurance
• No Cash Reserve Requirements
• No Seller Contribution Limitations
• Finance up to 102% of appraised value
• 100% Gifted Closing Cost permitted
• 30 year fixed rate loan with No Prepayment Penalty

Video Highlights

• Income limitations – definitely check with me on this
• Property Eligibility – USDA property search – surprising to see what homes are eligible
• Approval – Full Conditional Approvals is the answer to today’s market

Buyers, Sellers, Real Estate Agents – a buyer with a Full Conditional Approval from a USDA lender is as good as gold. Time line restrictions are foregone, ordering the appraisal immediately upon acceptance of contract is available, shorter turn times are inevitable.

When making an offer or receiving one, look for a buyer with these credentials. You will be pleasantly surprised.

To learn more about the Guaranteed USDA Home Loan Program, to apply for a loan or to work with Jonas Kruckeberg as a Referral Partner please Email me or call 951-506-4663.

Fannie Mae is offering a 3.5% incentive* for California home buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on this site that are closed within this period may receive up to 3.5% of the final sales price for:

• Closing costs;
• The purchase of new Whirlpool® appliances by Fannie Mae; or
• A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.

To be eligible for this incentive:

• Offers must be accepted on or after January 28, 2010
• Property sales must close before May 1, 2010
• Buyers must be owner-occupants, investors are excluded

*Lenders may impose their own limitations on the use of the 3.5% incentive, so please consult Jonas Kruckeberg for guidance.

Search for properties now.

About Fannie Mae Homes

Why does Fannie Mae have properties for sale?

Fannie Mae works with all of its partners to help homeowners prevent and avoid foreclosure; however, sometimes it is unavoidable. When foreclosures occur on mortgages in which Fannie Mae is the investor, their goal is to sell properties in a timely manner in order to minimize the impact on the community.

What kinds of properties are available in the Fannie Mae HomePath database?

Fannie Mae’s HomePath database includes only properties that are owned by Fannie Mae. There is a wide selection of homes, including single-family homes, condominiums, and town houses—located in a variety of neighborhoods. The number, types and the sales prices of the homes that are offered for sale may vary substantially. Many of these homes are relatively new; however, older homes are offered in some areas. Some homes may require repairs.

How is buying a home owned or managed by Fannie Mae different from other home purchases?

Usually, when you buy a home, you deal with a seller who lives in the home. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.

When buying a Fannie Mae-owned home, you should know the condition of the property, as explained in more detail below, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement.

Has Fannie Mae fixed everything in the house?

Fannie Mae may make some repairs to properties to increase their marketability; however, the buyer should be aware that other repairs may be needed. Fannie Mae sells each property “as is,” which means that the buyer accepts the property “as is.” Fannie Mae is not responsible for fixing any problems after settlement.

Even if the house has fresh paint, brand new carpet, new appliances, perhaps even a new roof or siding, it doesn’t mean everything in the house is new, or even works.

Fannie Mae does not warrant or guarantee any work that may have been done on the property, whether as part of its efforts to sell the home or pursuant to conditions in the purchase contract. Where a home warranty is available, you may wish to buy it at your own expense.

You should also consider hiring a qualified professional to inspect the property, whether it has been repaired or not. Hiring a home inspector is a recommended practice, no matter what type of home you buy.

What can you tell me about this house?

If Fannie Mae knows of any hazards on properties they own or market, they disclose this information through their real estate listing agents. However, they may not have been informed by the previous owner of all hazards. They encourage you to have the property inspected by a professional before you buy.

What type of sales contract does Fannie Mae use?

Fannie Mae uses a state-specific real estate purchase contract and a real estate purchase addendum for their properties. If there is anything in the document you don’t understand or aren’t comfortable with, you may want to contact a real estate attorney, the real estate sales professional who has listed the property, or any real estate professional of your choice to review these documents with you.

Do I have to use Fannie Mae’s selected title, settlement, or escrow companies?

No. You may designate the title, settlement, or escrow company of your choice, subject to the terms of the contract.

Will Fannie Mae accept an offer contingent on the sale of my house?

No, Fannie Mae will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.

Why does Fannie Mae require a lender’s pre-qualification statement before negotiating a home purchase offer?

Fannie Mae wants to be sure that prospective buyers will be able to complete the sales transaction, including obtaining financing when needed. Pre-qualification allows you to see how much house you can afford and the mortgage amount you may be able to qualify for before you make an offer on a home. It also helps you focus on homes in an affordable price range.

A loan pre-qualification doesn’t mean your loan is approved. You must apply for a loan separately, after you are pre-qualified and your purchase offer is accepted.  Some of my lenders allow a TBD (To Be Determined) Address approvals.  Therefore, you may not need a home in contract before you can apply.

Does Fannie Mae provide special financing?

Special financing is available on many properties through HomePath® Mortgage and HomePath® Renovation Mortgage.   Email me for more information.

Can I buy a house directly from Fannie Mae without going through a real estate sales professional?

No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through their real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.

What happens if Fannie Mae gets more than one offer?

All interested parties may be asked to submit their best offer in writing though the listing agent no later than a specified date and time. Fannie Mae may accept or provide a counteroffer that they determine to be in their best interest. Fannie Mae is not obligated to accept any offer submitted.

When the Government poops on us, turn it into fertilizer, right?

FHA announced yesterday, January 20, 2010 some additional policies:

WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.

I applaud them for doing what they have to do to survive. 50% of all transactions in Riverside County in 2009 were FHA loans. I expect that number to be duplicated if not surpassed in 2010. So, do what you got to do Mr. Stevens to make it work.

Here are the highlights to the policy changes:

• Increase the Mortgage Insurance Premium from 1.75% to 2.25%
• Update the combination of credit scores and down payments for new borrowers
• Reduce seller credits to 3% from 6%
• Implement a series of measures to increase lender enforcement

I have placed a rating score for the severity of these new policies by the use of a common street light. Red=Not so great for the consumer; Yellow=neutral; Green=good for all humanity.

1. Increasing the MIP to 2.25% will not hurt the bottom line to a borrower, this will not increase out of pocket expense at closing, however FHA will most likely adjust monthly premiums come late Spring/Summer – I will keep you updated.
2. Scores below 580 will be required to put 10% down – only 2 lenders that I know of are currently accepting scores under 580. I call them Cheese Grater loans. You’ll feel like you’ve been through a cheese grater by the time you get to docs. No big surprise here. More money for less than stellar credit borrowers, okay, it levels the playing field I guess.
3. Reducing seller concessions from 6% to 3% – okay, the last time I saw 6% credit given to a buyer was due to the buyer overbidding for the home to use the additional credit to pay for closing costs, thus inflating the value of the home artificially. Normally, a 3% credit is the maximum in Riverside County. This reduction is in line with other loan programs outside of FHA, so again, no surprise.
4. The only people cringing at stricter enforcement are those that produce bad loans.

Aside from the possibility of monthly mortgage premiums going up later this year, it’s going to be fine. So take a deep breath and know that FHA’s got your back. We want FHA to stick around. Don’t you?

Please give us your thoughts/feedback down below.

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First Priority Financial
3700 Hilborn Rd #700
Fairfield CA 94534
951-506-4663 | Email

>> Fast Application —————- >> Rate Tracker

Just when you thought there was no where to turn – Home Buyers, Home Sellers, Home Investors – HUD just gave a nice boost for California FHA insured mortgages.   The 90 Day Flip Rule that hindered FHA buyers and certain home sellers from going into contract together has been temporarily waived for 1 year.

Starting February 1, 2010, a home purchased by a LLC, Trust or by owner within the last 90 days will be available to purchase for a FHA buyer. Until recently, FHA buyers had limited purchase power – now there are no limitations as to what property a buyer can go after.  And a seller doesn’t have to bypass that strong FHA buyer any longer.

Of course all things from the Government must have conditions:

1. All transactions must be at Arm’s Length meaning no interest between buyer and seller, and the lender will ensure there’s no funny business.
2. Limited to Forward Mortgages and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase – so no Reverse Mortgages
3. In cases where the price on a home goes up 20% from the previous sale within 90 days, there better be some serious justification for that increase in price.

• a drab house with a fresh coat of paint may not be enough
• supporting documentation will be needed to show the word done that helped increase value (i.e. receipts, work orders)
• a Property Inspection will be imminent
• a 2nd appraisal may be required to validate the first appraisal and uphold the increase in value (and yes, the buyer would be responsible for the 2nd appraisal)

For the Home Investor this is a big win – you are no longer limited to conventional or cash buyers.

To the FHA buyer, it’s obvious, there are very few limitations.

To all others out there – the foreclosure crisis is immense. This temporary relaxation in the rules gives an opportunity to get rid of more properties including private sales.

This will help create market conditions that will help homes sell quickly.

This will help stabilize real estate prices.

This will help stabilize neighborhoods and communities.

Read the Full FHA Waiver.

Top 5 California Mortgage Links / Articles / Questions

1. California First-Time Home Buyer Frequently Asked Questions
2. California Mortgage – How Much Can I Borrow?
3. What Are The Current Mortgage Interest Rates?
4. Applying For A California Mortgage – What Documentation Do I Need?
5. How Does The Mortgage Approval and Funding Process Work?

First Priority Financial
3700 Hilborn Rd #700
Fairfield CA 94534
951-506-4663 | Email

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>> Fast Application —————- >> Rate Tracker
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