Brand New NEWS-3/6/2008

They have just released the new updated FHA loan limits.  For Minneapolis -St Paul and the majority of the Twin Cities area the loan limit for single family homes has just been increased to $365K for single family homes.  Mpls-St Paul are considered hight cost areas-not everywhere in our state are we considered high cost.  This means that going forward, you will be able to finance more homes using FHA financing.  FHA financing is important to borrowers who want to be able to take advantage of some of the unique features of FHA mortgage loans.  More borrowers and buyers will be able to benefit from this great government program.

For example, you can do a cash out refinance up to 95% loan to value. 

If you had an ARM that had a teaser rate, and you were current with payments during the 2 or 3 year period before it adjusted, you may be eligible to refinance into a FHA Secure mortgage.

You can do a rehab loan combined with an initial purchase loan under the FHA 203K

The FHA ARM has 1/5 caps with annual adjusters of 1%.  Most conventioanl ARMS are 5/2/5 or 6/2/6 caps with an annual 2% adjuster and a higher margin.

You get a flat .5% MI (mortgage insurance) factor on FHA loans.  Conventional loans vary by down payment and credit score. 

You can do temporary and permanent buydowns off of the interest rate.

There are product changes on FHA reverse mortgage coming too.  They just aren't here quite yet.

These are some of the major differences between a conventional and FHA Loan-there are more.  Call us for more information at 952-285-4319 or visit our Minnesota mortgage website

This outline provides you an idea of how FHA Secure loan programs work.  Things are always subject to change, so call me with any questions you might have.

Offered by the Federal Housing Administration (FHA) in Mortgagee Letter 2007-11, this program allows clients to help eligible borrowers refinance specific types of ARM loans into a new FHA 30-year fixed-rate loan.

Eligible for refinance with FHASecure: All conventional non-FHA ARM loans including ARM loans with an Interest-Only payment feature are eligible.

Not eligible for refinance with FHASecure: Fixed-rate products (including fixed-rate loans with an Interest-Only payment feature), Option ARMs, VA loans and other FHA loans are not eligible.

Eligible borrowers must:

• Be delinquent on a non-FHA conventional ARM after an interest rate reset.
• Have a six-month history of on-time mortgage payments before their non-FHA ARM loan reset and they became delinquent on their mortgage payments because of the reset.
• Provide a letter of explanation regarding the late payments.
• Provide evidence that the loan being repaid is a non-FHA ARM with a reset (copy of Note, Mortgage Rider, etc.)
• Qualify for the terms of a new FHA 30-year fixed-rate loan.
• Qualify for the standard 203(B) guidelines including, but not limited to, upfront and monthly mortgage insurance premiums.

Maximum loan amount, LTV and CLTV

• FHA Rate and Term Refinance guidelines apply for calculating the maximum mortgage amount; however, the new loan may also include missed mortgage payments and late charges from the previous loan.
• Standard maximum LTV ratios apply, based on property state and appraised value.
• There are no CLTV limits.
• Standard FHA statutory limits apply for LTV.

Notes

• Regular FHA loans (not FHASecure) that use the increase in CLTV announced in the Mortgagee Letter are not eligible for purchase by Wells Fargo Wholesale Lending at this time. Standard FHA LTV/CLTV rules must be applied on loans purchased by Wells Fargo Wholesale Lending.
• All FHASecure 1003 applications must have an application dated on or after Sept. 5, 2007, through Dec. 31, 2008.

Example:    Customer purchased a $200,000 home with zero down using 95 LTV sub-prime 2/28 first mortgage with an interest-only payment of $1,267, start rate of 8%, and a margin of 5% over LIBOR at reset. They have made all of their payments on time, improving their credit, but three months ago their rate reset 10.375% and the interest only period ended so their payment jumped by $472.00, and they have fallen behind.  This program allows them to escape foreclosure by refinancing into a fixed rate FHA loan at 6.75% with a fully amortizing payment of $1,351 including monthly MI.  The new loan amount rolled in closing costs, two missed payments, and UFMIP.  The appraised value needed to support the total loan amount per FHA standard guidelines.