Get FHA Loan After Doing a Short Sale On Your Current Home is a post from: FHA,VA and Conventional Home Loans in all 50 States

The Department of Housing and Urban Development which puts out the guidelines for borrowers to qualify for a FHA loan has just released some new rules for borrowers selling their current house as a short sale and then getting a new FHA loan to purchase a new house.

Basically the main points of the new FHA short sale guidelines are if a borrower has been current on their mortgage and other installment debts (such as auto loans, student loans, etc…) for the last 12 months prior to the short sale, they may be eligible for a new FHA loan immediately on a new primary residence they want to buy after their current house is sold on a short sale. 

However is a borrower has been in default on their mortgage or other installment debts in the 12 months leading up to the short sale, they will have to wait three years from the date the short sale closes before they will be eligible for a new FHA loan.

So if you are thinking of doing a short sale on your current primary residence and you want to buy a house again without waiting three years, the key point is you can’t have any late payments on your mortgage or other loans for 12 months leading up to the short sale.   Of course the challenging aspect here is that many lien holders will not consider doing a short sale for borrowers unless they are in default.  But if you want to buy another home in the next three years and get a mortgage on it, you may want to speak to your lender and see if they will consider a short sale even if you are not late on the mortgage.

Of course these rules are the guidelines that came out of the Dept of Housing and Urban Development.  The lenders that actually fund the FHA loans can create their own “overlays” to these guidelines.  So it is ultimately up to how the lenders will interpret these new rules.

Here are some general highlights of FHA loans:

• Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
• Maximum FHA loan up to $729,750 in many counties of California and other expensive states
• FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
• Seller can credit up to 6% of the purchase price for FHA loan closing costs
• FHA streamline refinance to lower rate options available once you have an FHA loan

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

Related posts:

1. Short Sale? Foreclosure? Bankruptcy? Impact On Your Credit Score and Getting an FHA Loan
2. Keep Your Current House and Apply for a FHA Loan to Buy a New Residence
3. Renting Out Your Current House and Buying a New House With a FHA Loan

Brand New Rules For Getting a FHA Loan on Condo’s and Townhomes is a post from: FHA,VA and Conventional Home Loans in all 50 States

FHA has gone back and forth for months on implementing new guidelines for lenders that are making FHA loans on condos and townhomes.  These rules have very powerful implications for the entire U.S. condo market, as FHA is becoming the #1 source of financing for home buyers in the U.S.

The latest rules from FHA are temporary for through the next year as a response to the current housing situation in the U.S.  Here is a summary of some of the changes they have made.  These changes will help more condo projects qualify for FHA loans:

1.  Condo “spot approvals” are still available through February 2010 

This is a very important extension.  Condo projects that are not already on the FHA approved condo list need to either get on the list or get a “spot approval” for the single unit a borrower is trying to buy.  This extension allows FHA buyers to get a condo they want to buy approved even if not on the FHA approved condo list.  Getting the project on the FHA approved condo list is a more involved process than just getting a “spot approval” Please call or email if you have questions about spot approvals.

2. FHA will now allow 50% of all the condo units to have FHA loans on them, in some cases 100% 

Previously FHA was only allowing 30% of all units to have FHA loans.

3.  New condo developments only 50% of *pre-sold* condo need to be owner-occupied or intended to be owner occupied 

FHA still has a rule where 50% or more of the units have to be owner occupied.  With new condo developments where the entire projects have not sold out yet, only 50% of the units sold so far have to be owner occupied or intended to be owner occupied.

4.  REO/Bank Owned properties that are vacant or tenant-occupied are not counted in the owner-occupancy figures 

This is important because as stated above, the #1 rule the prevents FHA from financing condo units is that less than 50% of the condo units in a project are owner occupied.  This exception will not count REO/bank owned units in these figures and will thus help condo projects with a lot of bank owned properties pass the occupancy % test.

So there you have it, so very recent changes from FHA regarding condo loans.   These changes will help more buyers get into condo’s using FHA loans.  There is a lot more to FHA condo approvals as they can be very complicated.

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

Related posts:

1. You Don’t Have to Be a U.S. Citizen To Apply For a FHA Loan
2. Today’s Realities on Getting a FHA Loan on a Condo or Townhome

Renting Out Your Current House and Buying a New House With a FHA Loan is a post from: FHA,VA and Conventional Home Loans in all 50 States

Many people would like to take advantage of the current low real estate prices and interest rates and rent out their current primary residence and buy a new primary residence.   Especially with the $8,000 home buyer tax credit expected to be expanded Friday to include move up buyers.   However the lenders have created some rules around allowing this that I will outline below.   These rules apply to both FHA and conventional loans.

Basically, when you apply for a FHA loan or conventional loan and you want to rent out your current residence and buy a new primary residence, you must be able to qualify with both housing payments included in your debt-to-income ratio.   There are two exceptions below that would allow you to count the rent if you are able to rent your current primary residence before you buy a new one:

1. Job relocations.  If you are being relocated with a new employer or being transferred to a new employer you can use the rent from the house you are vacating to help qualify.  But you must have a one year lease in place and evidence that a security deposit was paid to you.

2. Equity in property being vacated.  If you have 25% or more equity in the residence you plan to vacate (determined by an appraisal or comparing the current loan balance to the original purchase price), again you can count the rental income towards qualifying for a FHA Loan or conventional loan on a new primary residence.   But once again you need to have a one year lease in place and have collected a security deposit.

Now you might, ask what if you don’t fall into one of the above categories and you want to keep your current house as a rental and buy a new primary?  Well, if you are able to move out into a rental property and get your current house rented for a number of months and have those rents show up on schedule E of your tax return, you have a good chance of being able to use the rents to qualify.   But generally the rents have to show up on your returns. 

Many times there are exceptions and further details around these rules as they are not set in stone.  So please give me a call if you have questions about your particular scenario at 858-922-7899 or don’t hesitate to email me at homeloan8@gmail.com.

Warm Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

Related posts:

1. Keep Your Current House and Apply for a FHA Loan to Buy a New Residence
2. Big Tax Advantages to Buying vs. Renting
3. Buying a Duplex With a FHA Loan – Rent From 2nd Unit Allows You to Qualify For More

When You Apply For a FHA Loan, Watch Out For Unreimbursed Employee Business Expenses On Your Tax Returns is a post from: FHA,VA and Conventional Home Loans in all 50 States

Applying for a mortgage loan today (FHA Home Loans included) can be especially challenging of you are self-employed, commissioned or claim un-reimbursed business.  I have other posts related to self-employed income on the site that go into more detail about that, but here I’m just going to talk about unreimbursed employee business expenses.

In a general sense, when your income is calculated for approval, the unreimbursed employee business expenses (UEBE) from the 2106 form on your federal tax returns will come right off the top of your gross income.  So if you make $70,000 a year gross income, and you have $20,000 UEBE, your gross income for qualification will fall to $50,000 per year.   If you were applying for a FHA Loan today, the underwriter would average the UEBE from 2007 and 2008, and subtract them from your current YTD income from your latest paystubs.   There are variations in this that are up to the individual underwriter.  Such as if you have no UEBE in 2007 but a lot in 2008, they may just take 2008 and subtract it or ask for an explanation.

There are some items that can be added back into your income.  But this is not a given and often up to the underwriter so I would not rely on this.  

So just be very mindful when getting pre-approved for a FHA loan and keep in mind that UEBE will be deducted from your gross income.  All of the lenders now pull IRS transcripts as part of the FHA Loan process so, UEBE will come up.  And also plan in advance to maximize your income if you feel you will applying for a home loan in the future.

Please let me know if you have any questions or if I can assist in approving you for a FHA Loan, 858-922-7899, homeloan8@gmail.com

Warm Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

Related posts:

1. Non-Permanent U.S. Resident OK for 3.5% Down FHA Loans
2. FHA Loans Are For Everyone – Anyone Can Apply For An FHA Loan
3. The Importance of Debt-To-Income Ratio When You Apply For a FHA Loan

Recent Changes to Appraisals and Effects on FHA Loans is a post from: FHA,VA and Conventional Home Loans in all 50 States

There have been recent changes to home appraisals that don’t directly affect FHA Loans and changes to the general scrutiny of underwriting guidelines that directly affect FHA loans.  There has been a big recent change in how appraisals are ordered for conventional loans called HVCC.  They are now ordered directly through the bank and assigned by someone other than the bank.  For years prior all appraisals were ordered by the loan officer handling the loan.   With this new system of appraisals, the loan officer has no contact with the appraiser.   Through early feedback on this system, many are seeing appraisals come in very low for various reasons.  At this tme FHA loans can still be ordered by the loan officer, but this may change soon.

FHA appraisals are affected more from the general lender tightening of underwriting guidelines that has happened over the last 2 years.  Lenders are now being much more careful with appraisal values and they are doing internal appraisal reviews.   This affects you when you use a FHA loan to buy a house because the FHA appraiser may appraise the property for the price you are purchasing it for, but then 2 weeks later in the loan process the lender may review the appraisal and cut the value.  This means that you would either come in with cash for the difference, or renegotiate with the seller to lower the price to meet the lenders appraisal review in order to close on the house.

Comparable sales are the foundation of home appraisals.  The appraiser looks for 3-6 recent home sales that are comparable to your home in size, location and age.  They then use the sales prices of these recent homes to support the value they are giving your home with their appraisal.  Lenders are now requiring the appraisers to provide much more recent comparable sales.  Sales within 6 months used to be acceptable.  Now lenders are looking for sales within 3 months and even current listings and houses pending sale.  Also when lenders do their internal review appraisals, they generally do not go out and look at the property.  The do what is called a “AVM” or desk appraisal.  So if a house has been really upgraded or renovated, they are not giving a lot of value (if any) for that.  They may use a comparable that is a fixer but they don’t know that because they are not going out to the property physically to look at it.

So as a FHA buyer it is best to work with a excellent buyers real estate agent that can help you properly value the property before you make an offer.  That buyers agent should be looking at recent sales similar to the house you are making an offer on to make sure it is a realistic price that you will offer.

Warm Regards,

Rob Chomentowski (FHA loan specialist)

rob@affinity-financial.com

858-922-7899

Related posts:

1. FHA Loans and Termite Work