Presentation by:
Ashley Brint
Patrick Axford
Date: August 22, 2012
©2012 Regions Bank. Member FDIC.
Regions is a registered service mark of Regions Asset Company and is used under license.
FHA Financing - All You Need to Know
2 Hour Continuing Education Course
Topics of Discussion
•
Introduction to FHA
•
Borrower Eligibility
•
Homebuyer Loan Process
•
Loan Limitations
•
Property Eligibility
•
Borrower Qualification
•
Helpful Resources
Introduction to FHA Lending
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Historical Information
•
FHA was created by Congress
in 1934
•
Provides Mortgage Insurance
•
Currently no cost to taxpayers
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
FHA Lending is Exploding
•
Now represents >30% of home loans
•
Geared for:
•
First time buyers
•
Borrowers with little to no money
•
Buyers with less than perfect credit
FHA Loan Programs
•
Single Family Home
- Standard FHA 203(b) loan.
•
203K - FHA major home improvement, rehab loan.
•
Cash-Out Refinance Loans - Up to 85% of properties
value cash-out refinance.
•
HUD Homes - Properties for Sale and Financed by FHA
•
FHA adjustable rate mortgages (ARM) - Standard
FHA ARM, Adjustable Rate Mortgage
•
FHA Buydown Loans - FHA 1/1 or 2/1 buy down loan.
•
Reverse Mortgages - HUD reverse mortgage for
seniors over 62
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
FHA Guidelines
Eligible Borrowers
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Who is Eligible?
•
Individuals Only
•
Permanent Resident Aliens permitted.
•
Non-Permanent Resident Aliens permitted with proper
ID. (Be able to prove who you are)
•
Borrower(s) must have a valid SSN.
•
There is no maximum age limit requirement, but the
minimum age is 18.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Occupancy
•
Primary Residence Only
•
Occupying Co-Borrowers:
•
The co-borrower will be qualified the same as the primary
borrower.
•
The co-borrower cannot be a person who is a third party to
the purchase transaction: seller, realtor, builder, or appraiser.
•
Non-occupant Co-Borrowers:
•
Maximum financing is permitted when borrowers are related
by blood, marriage or law.
Maximum FHA Insured Properties
•
A borrower cannot own more than one
HUD-insured property
unless
:
•
Relocation
•
Increase in family size
•
Splitting jointly-owned property
•
Non-occupying co-borrower
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Criteria for Quoting Rates:
Loan Size
LTV
CLTV
Credit Score
Credit History
Escrow
Preference
Closing Date
Loan Type
Property Type
Occupancy
Type
Residency
Available Assets
Seasoning
Asset
Co-borrowers
Debt Ratio
Housing Ratio
Improvements
Needed
Employment
Type
Documentation
Available
Relocation
Seller
Contributions
Cash-out
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Homebuyer Loan Process
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
What is a Pre-Qualification & Pre-Approval
•
Pre-Qualification: Credit report only - “Non
Verified” information from the borrower.
•
Pre-Approval: Credit approval - income &
asset documents are verified & reviewed by
underwriter.
•
Average Closing Turn Time – 30 days without
Required Documents for Pre-Approval
•
Pay stubs (1 month)
•
Tax returns & W-2 forms (2 years)
•
Two most recent bank statements
•
Copy of valid driver’s license
•
Two year history of residence for all borrowers
•
Name, address and telephone number of all landlords (past 2
years)
•
Employer’s name and address (last 2 years)
•
Pension and/or Social Security Awards Letter (if retired or
receiving other non-earned income)
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
FHA Homebuyer Loan Process
Who Does What???
Mortgage Loan Originator
•
Assists you in completing the loan application
•
Discusses qualifying, monthly payments and cash needed for closing
•
Explains various loan programs available and quotes interest rates
•
Communicates documentation requirements
•
Answers any questions you may have throughout the process
•
Attends closing whenever possible
Processor
•
Communicates with you on items necessary for your loan closing
•
Pre-underwrites and prepares loan for approval
•
Works with all parties involved with the loan process
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
FHA Homebuyer Loan Process
Who Does What???
Continued…
Underwriter
•
Renders final decision on your loan
•
Works directly with Loan Originator and Processor to approve your loan
Closer
•
Sets or verifies closing date after loan has been approved
•
Assembles package for your closing day
•
Sends package to the title company
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Maximum Mortgage Amount
•
Max Loan Amount = $271,050
•
3.5% required down payment
•
Down payment can come from
gift of family member (funds not
required to come from borrower)
•
Down Payment Assistance
allowed
•
Seller contributions up to 6%
towards closing & pre-paids costs
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Gift Funds
Who May Provide a Gift
•
Family member
•
Borrower’s employer or labor union
•
Charitable organization
•
Non-profit agency that has a program providing home
ownership assistance to low- and moderate-income families,
or first-time homebuyers.
Who May Not Provide a Gift
•
The donor may
not
be a person or entity with an interest in
the sale of the property, such as seller, realtor or builder.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Mortgage Insurance Requirements
What is Mortgage Insurance:
Mortgage insurance is a policy that protects lenders
against losses that result from defaults on home
mortgages. FHA loans have two tiers of mortgage
insurance (annual & up-front).
Upfront MIP - can be added to closing costs, or
borrowers can finance it by adding it to the loan
amount.
Annual MIP - is paid monthly.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Mortgage Insurance Requirements
Annual Premium
Upfront Premium
(30 Years)
≤ 95%
> 95%
1.20%
1.25%
1.75%
(15 Years)
≤ 90%
> 90%
.35%
.60%
1.75%
How does an FHA loan compare to a
Conventional loan with mortgage insurance?
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-862-3407
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-862-3407
www.RegionsMortgage.com
Payment Comparison
30 YR FRM/$100,000
Loan Amount/95% LTV
Conventional FRM
FHA FRM
Estimated Rate
4.00%
4.00%
Est. Up Front Mortgage
Insurance
NA
$1,750.00
Est. Monthly Mortgage
Insurance
$79.35
$103.33
Estimated P&I
$477.42
$485.78
Est. Monthly Principal
Payment with MI
$556.77
$589.11
Property Eligibility
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Eligibility Properties
Property
Types:
•
Single Family Detached & Attached
•
2-4 Unit Properties
•
Modular Homes
•
HUD-Approved Warrantable
Condominiums & PUDs
•
Leaseholds (with restrictions)
•
New Construction
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
FHA Appraisal Requirements
•
FHA approved appraiser.
•
Property must be secure, safe &
structurally sound.
•
Case number required.
•
Appraisal can be no older than 120 days
Your Listing As Seen by
You…..
How
you
see your
new listing.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Your Listing As Seen by the homebuyer….
How the
homebuyer
sees your
new listing.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Your Listing As Seen by the lender…..
How the
lender
sees your
new listing.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Your Listing As Seen by the appraiser…..
Your Listing As Seen by the Tax Assessor!!
How the
tax assessor
sees your
new listing.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Sales Contract Guidelines
•
Required Forms:
•
Amendatory Clause
•
FHA Real Estate Certification
•
Omit allowances from Sales Contract.
•
Allowances would include moving expenses, decorating
allowance, personal property, etc.
•
Could cause additional cash out of pocket
•
Dollar-for-dollar reduction in the sales price means the
borrower must qualify with more liquid assets
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
FHA Amendatory Clause
Borrower Qualification
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Credit Guidelines
•
Minimum Credit Score – 580
•
Three repository merged credit report or (RMCR)
with at least two FICO scores
•
Non Traditional Credit is acceptable if borrower has
no credit score
•
A credit report is required for a non-borrowing
spouse if community property state
•
Credit documents expire 90 days from loan
approval.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Credit Guidelines
•
Borrowers in active Chapter 13 allowed
•
one year of the pay-out period under the bankruptcy has
elapsed
•
the borrower's payment performance has been
satisfactory
•
the borrower has received written permission from
bankruptcy trustee.
•
2 years from discharge date for Chapter 7
•
3 years from short sale or foreclosure
•
Court-ordered judgments must be paid off in full.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008 www.RegionsMortgage.com
Credit Scoring
35%
35% Payment History
30% Amounts Owed
15% Length of Credit History
10% New Credit
10%
10%
15%
30%
Credit Tips
•
Keep balances low on credit cards.
•
Pay off debt rather than moving it around.
•
Don’t close unused credit cards as a
short-term strategy to raise your score.
•
Don’t open a number of new credit cards
just to increase your available credit.
•
If you have been managing credit for a
short time, don’t open several new accounts
too rapidly.
–
New accounts will lower your average account age, which will
have a larger effect on your score if you don’t have a lot of
other credit information.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Checking Your Credit Score
•
Under federal law, you have the right to obtain a free
copy of your credit report from each of the consumer
reporting agencies (Equifax, Experian and Trans Union)
once a year.
•
To order your free credit report:
By telephone: (877) 322-8228
On the web: www.annualcreditreport.com
•
Credit Bureau Phone #’s:
•
Equifax (800) 997-2493 or www. Equifax.com
•
Experian (888) 397-3742 or www.experian.com
•
Trans Union (800) 916-8800 or www.tuc.com
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
Credit Solutions
Solutions for Low Score:
Equifax CreditXpert
•
Assists borrowers in
maximizing credit scores
•
Analyzes credit and cash
available
•
Issues customized feedback
•
Provides approximate credit
score increase
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Credit Debt Monitoring
Employment History
•
Employment History - FHA does not require a
minimum length of employment. However, the
lender must verify the borrower's employment for
the most recent two full years, and the borrower
must:
•
explain any gaps in employment that span one
or more months, and
•
indicate if he/she was in school or the military
during the most recent two full years, providing
evidence supporting this claim, such as college
transcripts or discharge papers.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Income Guidelines
•
Self Employed - 25% or greater ownership interest in a business.
•
Must have at least two years of employment in the line of work in which
he/she is self employed.
•
Projected Income for a New Job - scheduled to start a new job within 60
days of loan closing.
•
Overtime, Commission or Bonus Income - An average of the most recent 2
years (per W-2’s) and current YTD gross income must be averaged. The income
amount to be used must be the lesser of current YTD or the 2-year average.
•
Part Time Income From a 2nd Job - A 2nd job may be used for income if the
Borrower shows a 2-year (or more) history of holding down the extra job. An
average over the 2 years plus YTD gross must be used to qualify.
•
VA or Social Security Income - The government agency providing the income
must provide written verification of the payment. Proof of a 3-year continuance
must be documented.
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
How much can you afford?
•
Front end ratio = can’t exceed 31%
•
Total debt ratio = can’t exceed 43%
•
Debt payments include:
•Minimum payments on credit cards
•Car payments
•Student loans
•Installment loans
•
Debt payment do not include:
•Utilities
•Insurance
•Child care
•Rent (if not renting anymore)
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Qualifying Debt to Income Ratio
Total amount of new
house payment:
$750
Total amount of
monthly recurring debt:
$400
Total amount of
monthly debt:
$1,150
Borrower's gross
monthly income
$2,850
Divide total monthly
debt by gross monthly
income:
$1,150/$2,850
Total amount of new
house payment:
$750
Total Gross Monthly
Income
$ 2,850
Divide total house
payment by gross
monthly income:
$750/$2,850
Debt to income ratio:
26.32%
The front end maximum ratio
•
U.S. Department of Housing and Urban Development (HUD)
202-708-1112 or www.hud.gov
HUD Hotline 1-800-697-6967
•
HUD’s Office of RESPA
202-708-0502 or www.hud.gov/respa
•
HUD Housing Counselors
1-800-569-42877
www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
•
Buying a HUD Home
www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm
•
FHA Resource Center
1-800-CALL FHA (800-225-5342)
www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm
Helpful Resources
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
HUD Approved Housing Counseling
Agencies in Shreveport-Bossier City, LA
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-862-3407
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-862-3407
www.RegionsMortgage.com
Agency Name
Contact Info.
MONEY MANAGEMENT INTERNATIONAL
8575 Business Park Dr
Shreveport, Louisiana 71105
Phone: 866-232-9080
E-mail:
counselinginfo@moneymanagement.org
Website:
www.moneymanagement.org
VOLUNTEERS OF AMERICA
520 Olive St. Ste. B-200
Shreveport, Louisiana 71104
Phone: 318-221-8404
E-mail:
bbyrd@voanorthla.org
Website:
https://voanorthla.org
CADDO COMMUNITY ACTION AGENCY
4055 Saint Vincent Ave
Shreveport, Louisiana 71108
Phone: 318-861-4808
E-mail:
matti@shreve.net
LEGAL SERVICES OF NORTH LA
720 Travis Street
Shreveport, Louisiana 71101
Questions??
If you would like
additional information, please call one of our
Mortgage Loan Officers:
Ashley Brint – 318.795.2621 Ashley.Brint@regions.com
Patrick Axford – 318.795.2623 Patrick.Axford@regions.com
Denice Prothro – 318.795.2624 Denice.Prothro@regions.com
Cathy Galjour – 318.795.2626 Cathy.Galjour@regions.com
Colin Webb – 318.741.8008 Colin.Webb@regions.com
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008
www.RegionsMortgage.com
Notes Page
7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622
www.RegionsMortgage.com
2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008