Changes to FHA Mortgages effective September 14, 2015

Loan Clip ArtThe FHA Mortgage program has some new and important changes that will certainly impact borrowers. Check out some of the major changes:

1. FHA will no longer allow student loans to be deferred. Lenders have to include a 2% payment in the debt-to-income calculation.

2. Only recorded land contracts can be done as a refinance – if they are not recorded, they must be done as a new purchase.

3. Water tests will be required if a house is on a private well.

4. Streamline refinances can ONLY be done without an appraisal.

5. New net tangible benefit for reduction in term.

6. Secured borrowed funds can only be secured by financial assets or other real estate owned – in other words, you can no longer take out a loan against a car, etc.

7. Sourcing donor’s ability to give gift funds is now an FHA requirement.

8. Only borrowers on the loan can be on the purchase contract and those will be the only parties allowed on title.  A non borrowing spouse may be added to title, but only at the title company’s discretion.

9. Appraisal updates to expired appraisals must be done before the appraisal actually expires to extend the expiration date of the appraisal.

10. Non occupant co-borrowers must be US citizens or have a principal residence in the US.

11. Business disclosure relationship statements must be submitted by Sellers, Realtors, Borrowers, Loan Officers, Processors, Underwriters, Appraisers.

12. Flood insurance must be the lesser of the appraiser’s replacement cost (less land value,) the loan amount, or the flood program’s maximum amount allowed.

 

 

Percentage of Distressed Sales in Miami and Broward Counties

For my friend John who asked me about how many homes in our marketplace are either short sales or foreclosures.   Our market is different than what’s happening nationwide, however our news is not all bad.   The percentage of distressed sales is still decreasing even here in Broward and Miami-Dade counties..

Nationally, distressed property sales represent 11% of sales

August2014-54

 

Here in Miami and Broward Counties (this graph represents Single Family Homes only. The figures for condo’s are similar.)

Distressed Miami Dade 2Q 2014

 

 

 

Mattress Money

Mattress Money and other funds used to purchase a home

With vigilant focus on the source of funds for closing mortgage loans, its important to know what’s acceptable.  Here’s what you need to know and what you will need to provide:

Mattress Money

Or any “cash on hand” is not acceptable.   All funds must be “seasoned,” which means your money needs to be in an institutional bank account (bank, credit union, brokerage, etc.)  You will need to provide all pages of up to three months of bank statements for proof that these funds are yours.

Gift Funds

Are okay with a signed “gift letter” (a form your lender should provide) and evidence of the donor’s ability (a statement showing sufficient funds.)  Later, your lender will need copies of the check, deposit slip, and account statement to show the transfer into your account.

Assets Being Sold

Such as a car, boat, collectible, or anything of value you are selling, require proof of ownership (such as registration or title) and evidence of value (blue book value or appraisal.)   After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds into your account.

Other Examples

Include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings.   Be prepared to show the source of funds, evidence of transfer into your account, and any supporting documentation of value, terms, service provided, etc.

TIP

If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months before you anticipate closing on your new house.  Save any and all evidence of the transfer and deposits, and keep activity to a minimum.

 

Top 4 Derogatory Credit Events and the waiting periods before you can buy a new home

Have you ever wondered how long you might have to wait after Bankruptcy, Foreclosure, or Short Sale before you can purchase your new home?

Check out the chart and see how long a lender will require you to wait before you can borrow again.

Link to the PDF here:  https://sunshineguru.com/wp-content/uploads/2013/11/Derog-Credit-Chart-Fisher-Darrow.pdf

Interestingly, I recently had a client that was able to purchase a new home just two short years after his short sale.    A wonderful confluence of events allowed him to use his VA eligibility to purchase with nearly zero money down.

He was also able to begin the mortgage process several weeks BEFORE the two-year anniversary date of his short-sale closing, so that he was able to close in a matter of days after the anniversary date passed.

Derogatory Credit Chart