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FHA Condo Rules Modified | More condos to be approved for FHA loans

FHA Condo Rules Modified | More condos to be approved for FHA loans

Over the holidays FHA Condo rules were modified! Changes were made to condo policies making it easier for condos to be approved for FHA loans.

The main FHA condo rules modified are:

•Redefining “owner occupied,” streamlining the recertification process for Condo developments. Properties that aren’t strictly investor properties, such as second homes, will now be included in the percentage of units that are owner-occupied. FHA requires that 50 percent of the units in condo buildings be owner occupied in order to qualify for FHA certification. This means more complexes will qualify for FHA financing!

•A streamlined recertification process internally for HUD ( FHA) to approve condo complexes.

•Allowing more insurance options. An expansion of the types of insurance considered acceptable coverage according to FHA rules, including state-run programs and co-insurance, among others.New FHA Condo Rules

 

FHA is committed to making financing available for more first time homebuyers and changes to condo policies are welcomed as many first time buyers are perfectly suited to buy condos as their first home. The lower price points of condos vs. single family homes is more attractive and policies that focus on making more condos eligible for FHA financing are welcomed by first time homebuyers.

Jesse Madison is a real estate broker in Orange County, CA who is very experienced in all types of FHA loans. To get FHA Condo Rulesqualified for an FHA loan and purchase a home in Orange County, CA call Jesse at 949-306-8416 or email Jesse@JesseMadison.com.

These FHA Condo rules will benefit first time homebuyers and lower income buyers immensely as they looking to purchase Orange County condos. FHA offers options for traditional FHA mortgages and Rehabilitation loans including FHA 203k loans. The rehab loans allow buyers to do thousands of dollars worth of repairs to the home and finance all the costs of the repairs in the home loan with just a  3.5% down payment on the home. Call Jesse or check www.hud.gov for more details!

 

NEW FHA GUIDELINES | See the major changes that can affect your purchase loan

NEW FHA GUIDELINES | See the major changes that can affect your purchase loan

New FHA Guidelines

On September 14 FHA issued a new handbook for FHA mortgages. You can download the new guidelines here.

Some of the major changes are listed here below:

Tax Liens ( Improvement): 

Tax liens may remain unpaid if the borrower has entered into a valid repayment agreement and has made at least 3 months of timely payments (formerly it was 6).

Payments may not be “pre-paid” and the tax authority must agree to subordinate the lien to the 1st TD.

Commissions Income ( Improvement):

Commissions can be used to qualify with just a 1 year history (formerly 2 years).

Voluntary Alimony or Child Support Payments (Good News):

They can now be counted if there is a 6-12 month history of receipts.

Multiple FHA loans:

Borrower may now ONLY obtain second FHA loan for new principal residence when relocating for employment and their current residence is more than 100 miles from new residence area.

Mixed Use Condos (Improvement):

Formerly: No more than 25% of the total floor space could be devoted to commercial use, now 51% can be commercial.

Satisfactory Credit -this has been more clearly defined to include:

  • No 90 day  late payments for revolving, installment debt payments accounts in the last 12 months.
  • The borrower has made all housing payments on time for the previous 12 months – no 30 day late payments.
  • no more than (2) 30 day mortgage late in the last 24 months

New FHA Guidelines

 

Looking to buy real estate in Orange County, CA? email Jesse Madison now and get started!

 

 

NEW FHA Guideline Changes by category:

FHA Changes affecting credit:

  • IRS Tax Liens- tax liens are allowed to remain open with repayment plan, three months payments and subordination agreement are required. MORE RESTRICTIVE
  • judgments are allowed to remain open with repayment plan and three-month payments. MORE RESTRICTIVE
  • Deferred debt must be included in debt ratio MORE RESTRICTIVE
  • Authorized user accounts must always be included in debt ratios. MORE RESTRICTIVE
  • For all revolving accounts and deferred installment loans, including student loans when no payment exists on the credit report, we will use the greater of $10 or 2% on student loans; greater of $10 or 5% on all other debt. IMPROVEMENT
  • When an installment loan in repayment, including student loans in repayment, shows no monthly payment on the credit report, a statement is required. MORE RESTRICTIVE
  • On re-established credit, we will allow one collection account with a maximum of $500. Account must be dated more than 12 months prior to application. IMPROVEMENT
  • When an account is paid by a business, we must show the business related debt on the tax return. Now, we must also show that the debt was considered in the cash flow analysis of the borrower’s business. MORE RESTRICTIVE
  • Cumulative outstanding collection account balances of $2,000 or greater must be paid off at or prior to settlement or verify borrower has made payment arrangements and hit the DTI, or, use 5% of the balance in the DTI. MORE RESTRICTIVE
    • See Hud handbook for additional guidance if borrower’s reside in a community property state.
  • For a short sale borrower if they were current at the time of the short sale, we can finance before 3 years if the loan is manually downgraded with no mortgage or installment lates in the 12 months prior to short sale date AND 12 months prior to application date. MORE RESTRICTIVE
  • 30 day accounts must now have 0x30 in the past 12 months AND must document they have funds to pay the account in full. If the credit report reflects any late payments in the last 12 months, the Mortgagee must utilize 5% of the outstanding balance as the Borrower’s monthly debt to be included in the DTI. In addition to the 5% the borrower must have the assets to cover the outstanding balance. MORE RESTRICTIVE

FHA Changes for Income Requirements:Via-Cartama-opt

  • Balance sheet is not required for schedule C self- employed borrowers .IMPROVEMENT
  • If the borrower has more than 3 jobs in 12 months, we need to show required schooling or consistent increase in pay to qualify.MORE RESTRICTIVE

-transcripts of training and education demonstration qualification for a new position; or

-employment documentation evidencing continual increases in income and/or benefits.

  • In addition to a copy of the VA Award Letter, a copy of VA Form 26-8937 (Verification of VA Benefits) is required to prove income. MORE RESTRICTIVE
  • Capital gains or losses generally occur only one time, and should not be considered when determining Effective Income. However if a consistent gain or loss, 3 years tax returns are required to evaluate. CLARIFICATION
  • Future income no longer requires a paystub. The loan can close with an offer letter, provided that employment begins prior to close. IMPROVEMENT
  • Non-taxable income gross-up rate is capped at 15% instead of 25%. MORE RESTRICTIVE
  • When qualifying a borrower receiving commission income, a 1-year history receiving commission with the same employer is required. IMPROVEMENT
  • For borrowers serving in our military, the active duty expiration date on their LES must be at least 12 months out, OR we must have a LOX from the borrower stating their intention to re-enlist. CLARIFICATION
  • When a rental property is not listed on the Schedule E, we must obtain a 12 month lease agreement, verify 25% equity in the property, and date of acquisition. MORE RESTRICTIVE
  • We must obtain documentation from the private disability insurance provider showing the amount of the assistance with the expiration date of the benefits, if any, and the Federal tax return OR the most recent bank statement to evidence receipt of income . MORE RESTRICTIVE
  • Expected income from a family-owned business is not allowed. CLARIFICATION

FHA Changes regarding Assets:

  • Large deposits are defined as 1% of adjusted purchase price or appraised value. MORE RESTRICTIVE
  • For borrowers using joint bank statements; all non- Borrower parties (even spouses) on the account must provide a written statement that the Borrower has full access to use of the funds. CLARIFICATION
  • A salary advance cannot be used for funds to close. CLARIFICATION

FHA Changes regarding Property

  • Max age of appraisal is 240 days with an update (update extends appraisal, instead of update good for 120). IMPROVEMENT
  • Veterans on active duty are allowed to finance their home as a primary residence, provided we can document the home is occupied by the Veteran’s spouse . IMPROVEMENT
  • There are a number of site considerations. Refer to FHA 4000.1 handbook for guidance. CLARIFICATION
  • All common areas/common elements for condominium properties are to be included. This included, but are not limited to lobby/foyer, hallways, laundry facilities, storage areas, recreation facilities. CLARIFICATION
  • Comparable photos taken by the appraiser are to be shot at an angle, such that one of the sides is available . CLARIFICATION

FHA Changes regarding Purchase specific Changes:

  • Letter from homeowner is required if borrower is living rent free. CLARIFICATION
  • When a borrower is relocating, the new home must be at least 100 miles away from their current residence. MORE RESTRICTIVE
  • If a borrower is converting their primary residence to an investment property, it must be 100 miles away, they must have a security deposit, one year lease, AND 25% equity in the converted property. MORE RESTRICTIVE
  • There are no more HOC vacancy factors – 25% vacancy rate across the board. MORE RESTRICTIVE
  • Any EMD greater than 1% of the value of the home must be documented . MORE RESTRICTIVE
  • Any gift funds used toward an EMD must be documented, even if it is less than 1% of the value of the home.  CLARIFICATION
  • Gifts of equity always require a gift letter. Purchase Agreement is not acceptable . MORE RESTRICTIVE
  • On a Purchase transaction, a second lien from a HUD-approved nonprofit cannot cover a borrower’s minimum required investment . MORE RESTRICTIVE

Juan and Gloria smallMiscellaneous Changes:

  • If subordinate financing exists, the total of both mortgages may not exceed the national mortgage limit. IMPROVEMENT
  • For a non-permanent resident alien, an Employment Authorization Document (EAD) is required. MORE RESTRICTIVE

 

For more information on purchasing Orange County Real Estate with just 3.5% dow using new FHA guidelines please call Jesse Madison at 949-306-8416

Congratulations Ali on your new Laguna Hills Home!

Congratulations Ali on your new Laguna Hills Home!

Thank you for your trust Ali! It was a pleasure assisting you with your purchase of your new Laguna Hills home!

Another Successful Closing!

Enjoy your new home!

GORGEOUS ASPEN CREEK LAGUNA HILLS HOME FEATURES 3 BED 2 BATH 2 CAR GARAGE WITH GATED ENTRY AND COURT YARD OPEN FLOOR PLAN,VAULTED CEILING AND COZY FIRE PLACE, GRANITE COUNTER TOP, RECESSED LIGHTING, GARDEN KITCHEN WINDOW, PATIO WARPS AROUND CUSTOM WOOD DECK, WITH LOTS OF FRUIT TREES AND NICE VIEW.

Laguna Hills Home
Laguna Hills Home

 

Looking to buy or sell in Orange County? Call Jesse at 949-306-8416 Get Results!

 

 

3% Down Mortgages from Freddie Mac Announced!

3% Down Mortgages from Freddie Mac Announced!

3% Down Mortgages from Freddie Mac have been announced!

From Freddie Mac Blog

December 8, 2014

3% Down Mortgages
3% Down Mortgages

Today Freddie Mac launched Home Possible AdvantageSM, a new affordable mortgage with a down payment option as low as 3%. Here are the answers to your top questions:

Who is this mortgage for?
The Home Possible Advantage mortgage is for low and moderate-income borrowers with limited savings, including first-time homebuyers.

What do I need to qualify for it?
Generally, you need to meet minimum credit requirements, earn no more than 100% of your area median income and have the funds to meet the down payment requirements and closing costs. First-time homebuyers must participate in an acceptable borrower education program, like Freddie Mac’s CreditSmart.

Can I use gift funds as my down payment?
Yes, the 3% down payment can come from a number of sources, including personal funds, gift funds, grantsand affordable second mortgages.

Will I have to pay private mortgage insurance (PMI) on Home Possible Advantage mortgage? How much will this add to my payment? 
Yes, like all conventional, conforming mortgages backed by Freddie Mac, loans without at least a 20% down payment require some form of credit enhancement or insurance, usually in the form of PMI. This serves as an added insurance policy that protects the lender/investor if you are unable to pay your mortgage.

The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $40 and $80 per month for every $100,000 borrowed.  And, once you’ve built equity of at least 20% in your home, making the amount you owe on your mortgage 80% or less of its value, you can cancel your PMI and remove that added expense from your monthly payment.

Can I use it to refinance my current mortgage?
Yes, Home Possible Advantage mortgages can be used for a “no cash out” refinance of an existing mortgage. It’s available in 15-, 20-, and 30-year fixed-rate terms.

Why is Home Possible Advantage different than the low down payment mortgages of the past?
The keys to responsible lending are responsible underwriting and product design, and we designed Home Possible Advantage with the appropriate credit underwriting requirements for today’s market. Home Possible Advantage has tougher credit standards than low down payment mortgages of the past, including lower DTI ratios, fixed-rate terms and requires full documentation, owner-occupation and housing counseling.

Where can I get more information on Home Possible Advantage?
Visit freddiemac.com or talk to a lender or a housing counselor about your options.

What other options are available to me if I don’t qualify for a Home Possible Advantage mortgage?
You have a number of choices even if you don’t have a 20% down payment – a growing number of today’s buyers are putting down between 5 and 10%. Sure, you’ll have to pay PMI, but it means you’ll be able to take advantage of today’s historically low mortgage rates and affordable home prices in many parts of the country. Talk to a lender today.

What advice do you have for homebuyers in today’s market?
Do your homework. Understand how much you can afford and what to expect during the mortgage process.

See the Original blog link for 3% Mortgages from Freddie Mac here.

10 Mistakes Buyers Make When Buying A Home

10 Mistakes Buyers Make When Buying A Home

10 Mistakes Buyers Make When Buying A Home

 

Buying and selling real estate are major events.  When buying a home emotions can run high and it’s important to hire a professional to guide you and point out the pitfalls. These are 10 of the biggest mistakes people make when buying real estate.

Mistakes buyers make when buying a home:

  1. Be  pre-qualified for your loan prior to viewing homes.
  2. Be sure to order the appraisal early.
  3. Be sure to read all disclosures thoroughly
  4. Make sure you read all of the terms of the contract.
  5. Look up the property taxes on a home prior to purchasing.
  6. Run the comps on a home before making an offer.
  7. Make sure you choose the right agent.
  8. Order a home inspection.
  9. Do not forget to conduct a final walk-through.
  10. Request a termite report in your offer.

10 mistakes buyers make when buying a homeThere are many other mistakes buyers can make when buying a home. But these are among the most common and an experienced agent can help guide you through this process and avoid potential pitfalls. Emotions run very high when buying or selling a home.    many buyers work full-time jobs and do not have the time to focus on every detail of their real estate transaction. Real estate professionals are accustomed to dealing with contracts disclosures, contingency timelines, home inspection reports, appraisals, natural hazards on disclosure reports, termite reports, lender pre qualification letters, property taxes and more. We look at these forms every day and we are very familiar with them.  We are better prepared to point out errors or  potential pitfalls a buyer may face.  This is why it is crucial to hire an experienced agent and work with someone who will help you avoid these mistakes. Please watch our video and call Jesse Madison at 949-306-8416 to help you achieve your real estate goals in Orange County, CA.

 

 

Video: How to Search HUD Homes |Tips & Tricks

Video: How to Search HUD Homes |Tips & Tricks

How to search HUD homes using www.HUDHomeStore.com.

Watch our video to see  a step-by-step tutorial on how to search HUD homes while using www.HUDHomeStore.com.

First, visit the website and go to the top right corner to register as a public user. This will allow you to save your favorite properties and return to continue your search. It’s like an MLS for HUD properties.

Then, scroll down to the search bar labeled  search properties. Select your state, county, city and proper buyer type to search homes in your area.

Once you have selected a property be sure to check which buyer types are eligible to make bids and also take note of the bidding deadline. The cutoff to submit bids will be at 10:00 PM on the date of the bidding deadline. Below you will see additional property information. For example, bedroom count, square footage, year built, HOA Fees,  and price.

How to Search HUD HomesAlso be sure to view the property information in the addendum’s section. You will be able to click on the property condition report and also repair disclosure form. This form will give you a line by line list of all repairs required in order to obtain FHA financing on the property.

Important: buyers cannot submit offers on HUD owned properties on their own. A buyer must find a broker to submit their offer on any HUD owned home. You can find a broker on the website by clicking on the find a broker tab in the middle of the top bar right from the home page. Only brokers registered with HUD may submit offers for buyers.

If you have additional questions on how to search HUD homes using www.HUDHOMESTORE.com please call 949 – 306 – 8416.  we hope that this step-by-step video on how to search had homes will help you get started. Jesse Madison is a local listing broker  in Orange County, California. We would love to help you find your next home.HUD website tutorial

Join Us March 10th at Pomona Home and Garden Show | HUD Homebuyer Education

Join Us March 10th at Pomona Home and Garden Show | HUD Homebuyer Education

HUD Homebuyer Education
HUD Homebuyer Education

 

Join us! Our next HUD Homebuyer Education Event will be at:

Pomona Home and Garden Show -Booth 282

1101 W McKinley Ave,
Pomona, CA 91769

March 10, 3:30-6pm

PLEASE VISIT US! We will be at the booth speaking to attendees about HUD Home-buying opportunities!

We offer “HUD Homebuyer Education” for buyers interested on puchasing HUD Homes. Please attend one of our workshops to learn how to buy a HUD-owned property in California.

HUD Homebuyer Education presents an amazing opportunity for those looking to  SAVE MONEY when buying a home in Southern California.  Below are just few of the benefits of buying a HUD home:

  • Appraisals are completed on HUD homes before they are listed for sale.  Often times, the homes are listed for sale at or below the appraised value!
  • If you utilize FHA financing, you can use the appraisal completed by HUD saving you hundreds of dollars!
  • Termite reports are provided and section 1 repairs are completed by the seller when using FHA loans.
  • Property Condition Reports (which are similar to a home inspection) are provided to you by HUD at no cost saving you hundreds of dollars!
  • HUD will pay up to $4000 towards lead based paint remediation when the buyer uses FHA financing!
  • Only owner occupants can make offers on HUD owned homes for the first 30 days the home is listed!

Please join us to learn more about the process and benefits of buying a HUD home.  This event is completely free of charge.

Learn How to save Thousands and Enjoy the Benefits of owning a HUD home at our HUD Homebuyer Education events.

You may qualify for:

  • FREE Appraisals
  • FREE Termite Reports
  • FREE Lead Based Paint remediation
  • FREE 15 day Escrow Extensions if needed

LEARN how Owner Occupants get priority!

 

 

We will provide you with information on How to By HUD Homes and what incentives are available for FHA buyers!

Call Jesse Madison for more information at 949-306-8416

 

For more information, please call Jesse at (949) 306-8416

Please contact me at JMadison.Realtor@gmail.com to register for one of our “HUD Homebuyer Education Workshops” near you.

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