Did You Know This About FHA?

• FHA rates are about 1/2% less than 100% financing rates. On a $200,000 purchase, the payment is less by almost $70 per month.
• FHA mortgage Insurance is less than 100% financing. FHA has a factor of .50% while 100% financing's factor is 1.08%
• 3% of the sales price must come from the buyer's own funds as either in savings or gift.
• If the 3% needed to close is coming from a savings account, it must be in that account for at least 60 days. If less than 60 days it must be sourced.
• The 3% needed to close may come from a gift from the family or domestic partner. The gift may also come from non-profit organization such as Ameridream with funds donated by the seller.
• Seller contributions in an FHA loan can be up to 6% as long as the 3% rule of buyer's own funds is followed.
• FHA does not require reserves where conventional typically requires three months.
• Some of the credit issues that are different are: a score under 600 will be considered; a bankruptcy/foreclosure borrower can apply after 2 years; some collections may be left open and unpaid; student loans that are deferred at least one year and 401K loans are not counted in the ratios.
• Allows non-occupying co-borrowers but it must be a family member and a single family residence.
• Call the loan officer before writing the offer to structure the contingency correctly and get a good faith estimate.
• The FHA 203k allows the borrower to finance in the cost of rehab/renovations and if it is under $15,000, no FHA consultant is needed.

Required Documentation in a Short Sale

A short sale is the sale of a property for less than the total amount necessary to satisfy the mortgage obligation resulting in a shortfall. Lender requirements for agreeing to a short sale may differ from institution to institution but the following may be required:

• The original completed Form 1126, Borrower Financial Statement
• The original signed borrower's letter of explanation and documentation of involuntary inability to pay.
• A copy of the borrower's two most recent paystubs or vouchers indicating year-to-date earnings
• A copy of the borrower's signed federal income tax return for the previous year, with all schedules
• A copy of the listing agreement
• A copy of the fully executed sales contract with addenda stating that the property is being purchased in "as-is-condition and conditional upon lender approval
• A breakdown of the seller's estimated closing costs

ELAINE RICHER - TRAINER & CONSULTANT