Boise Mortgages

Despite all the talk about the down payment assistance program disappearing October 1^st 2008 Idaho mortgage rates are still holding steady. The national average is at 6.25% for a 30 year fixed rate.

Idaho mortgage brokers and Idaho Lenders are holding their breath to see if congress will pass a bill to support H.R. 6694 to Reform and Save DPA!

Should this loan program cease 50,000 hard-working, credit-worthy families will be denied the American dream of homeownership in October alone. The loss would further damage an ailing economy and fatally grieve an already crippled housing market—a housing market in which 40% of all current FHA Federal Housing Authority loans depend on DPA.

Idaho mortgage companies used the folks at AmeriDream and Nehemiah to help secure the down payment assistance commonly gifted by the seller.

If you would like to help us fight to save the DPA click the link below to write your Elected Officials today! It only takes minutes and time is running out!

http://capwiz.com/nehemia/issues/alert/?alertid=11709431

Lisa Kratz Apex Mortgage | Meridian, Idaho
| (208) 888-9251 | myIdahoHomeLoan.com

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July 30^th, 2008

President Bush has signed a massive housing bill intended to provide mortgage relief for 400,000 borrowers with $68 billion in loans. Many struggling homeowners will benefit from the program. Here’s what Idaho homeowners need to know.

Who’s eligible?

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it’s to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home’s appraised value at the time.

How can I apply?
Borrowers can contact their current mortgage servicer or go directly to an Idaho FHA-approved lender for help. Lisa Kratz at Apex Mortgage can help you right away at 208.888.9251 or www.myidahohomeloan.com

How does the refinancing process work?

This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home’s current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.

But lenders won’t sign off on a workout unless they think that they’ll lose less money on that than they would by allowing a home to go through the costly foreclosure process

Each loan will have to be underwritten by an Idaho FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home’s current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home’s market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?

There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they’ll pay a “3% exit fee” of the mortgage principal to the FHA when they resell or refinance.

Plus, they’ll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

What will I save?

Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.

Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgages.

By Jeanne Sahadi, CNNMoney.com senior writer

Last Updated: July 30, 2008: 7:47 AM EDT

Apex Mortgage | Meridian, Idaho | (208) 888-9251 | myIdahoHomeLoan.com

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In a previous article, we wrote about the benefits of going with an FHA home loan or refinance. But it gets even better! Let’s say you’re already in an FHA mortgage, but you want to take advantage of the new lower rates… or perhaps you want to change terms, such as the length of the loan.

The FHA permits what they call a “Streamline Refinance” on pre-existing FHA mortgages. The “streamline” refers to the amount of documentation and underwriting that lenders need to perform. The whole process is easier and faster… for everyone.

Streamline refinances can be done without an appraisal, but the new loan amount cannot exceed the original loan amount. A popular option, however, is to include all the closing costs into the new mortgage amount. To do this an appraisal is required to ensure there is sufficient equity in the property, which is based in part on the home’s market value.

The benefits of a Streamlined FHA Refinance (what we call one of the FHA’s “little secrets”) are excellent. They include:

• Little or no out-of-pocket costs
• No credit check, income verification, employee verification, or underwriting fee
• Appraisal usually not required
• Very little paperwork
• Reduced interest rates
• Easily increase or decrease the length of the term of your existing loan

The FHA Streamline Refi reduces your monthly expenses by lowering your monthly mortgage payment, but there is no option to receive cash back. It’s a good option for folks who are in good financial standing who want to further reduce their monthly expenses.

For a fast, free, pre-qualification for your FHA Streamline Refinance,
click here –> FHA Streamline pre-qualify.

–
Written by Lisa Kratz and Mike Little of myIdahoHomeLoan.com
Apex Mortgage  |  Meridian, Idaho  |  (208) 888-9251

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This article is part one in a two-part brief on Idaho FHA loans. Here we look at quick-facts for Idaho FHA loans, such as allowed property types, loan limits & terms, borrower eligibility, and current FHA interest rates. In part two, we’ll talk about the “Four C’s” of credit, specific to FHA borrowing.

The Federal Housing Administration, generally known as FHA, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States. FHA is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

An FHA home loan is a federal assistance mortgage loan, insured by the FHA. To promote home ownership, these loans require a small down payment and offer the most choices for someone wanting an Idaho refinance loan, especially with cash out.

If you’re considering an FHA loan, you should know the “Four C’s” of credit, specific to FHA lending:

Four C’s of Credit:

1. Credit History

Notables:

• FHA does not require the borrower to have perfect credit.
• Credit report should have no late payments for the last 12 months (exception would be on the new FHA Secure program for ARM loans that have recently adjusted).
• FHA is not FICO-driven, meaning borrowers do not need to have credit scores to qualify.
• Collections generally do not have to be paid; however, it is the underwriter’s discretion to require payment in full based upon amount of, age of, and number of collections.
• Judgments must be paid off prior to or at time of closing.

Bankruptcy Guidelines:
Chapter 13

• Borrower required to be in re-payment program for 12 months with no late payments (proof required).
• Borrower must receive permission from the court to enter into a mortgage transaction.
• Cash-out refi to pay off the bankruptcy.
• Credit Counseling is viewed the same as Chapter 13 (acceptable 12 month payment history and written permission from counseling agency required).

Chapter 7

• Must be 2 years from the discharge date, with no late payments. Full bankruptcy and discharge papers required.

Foreclosure

• Must be 3 years from date paid.

Debt-to-Income (DTI) Calculations

• Installment loans with less than 10 months remaining are not required to be calculated in DTI unless they are significant enough to affect mortgage payment ability.
• Student loans deferred for 12 months or more are not required to be calculated in DTI.

Social Security Numbers

• FHA requires lenders to verify Social Security Numbers.
• Only acceptable verification document is Social Security Card.
• FHA validates all Social Security numbers at time FHA case number assigned.

2. Credit Report

• Last 12 months must be very accurate.
• Most updated copy is retrieved from the major credit bureaus.
• If debt needs to be paid off, get it paid and obtain new credit report.
• Inaccuracies or late payments must be explained in writing.

3. Capacity to Repay

Employment:

• Borrower must have 2-year history of employment.
• College education is acceptable as part of 2-year history as long as entering workforce in field of study.
• Employment gaps greater than 60 days need to be addressed.
• If re-entering work force from extended absence, six month current history is required.
• Frequent job changes, within same line of work, but continues to advance in income/benefits, considered favorable.
• Bonus, Overtime, Commission and Part-time/Secondary income requires a 2-year history. Less than 2 years, but more than 1 year may be acceptable in certain cases.
• Self-employed borrowers require 2-year history. If borrower working for family, tax returns and proof of borrowers ownership in business required. 25% or more is considered self-employed.
• FHA is a full/alternative documentation program, meaning stated income is not an option, and bank statements documenting income are not acceptable.

Income:

• Alimony/child support must have 3 years continuance and 6 months history of consecutive payments.
  Social Security and/or Retirement Income must have 3 years continuance.

Ratios:

• Debt to Income ratio = 31/43.
• For new construction or energy efficient homes = 33/45.
• Higher ratios may be acceptable with compensating factors.

Compensating factors:

• Current housing expense equal to or greater than proposed housing.
• Large down payment/low LTV.
• Conservative attitude towards the use of credit.
• Previous credit history shows ability to devote a greater portion to housing.
• Borrower receives compensation or income not reflected in effective income.
• Minimal increase in housing expense.
• Cash reserves after closing.
• Potential increase in earnings.

4. Cash to Close

The down payment can be from the following sources:

• Own funds from checking/savings account (must be seasoned for 60 days and documented via bank statements or verification-of-deposit).
• Proceeds from sale of existing home.
• 401K (use 60%).
• Gift Funds; requires gift letter, copy of check, copy of deposit slip, and verification donor has means to donate.
• Secured loans.

Down payment-assistance program via a FHHL-approved down payment assistance provider.

Make sure you have a complete understanding of all closing costs, including Reserves, Broker Fee, Tax Service Fee, and any other fees, before you get to closing.

Collateral

A property appraisal is required:

• Repairs required to correct any health and safety hazards.
• Weather related escrows allowed.
• Must be a FHA-approved appraiser.
• Additional inspections required if determined by appraiser and/or underwriter.
• New construction additional guidelines.

–
Article written by Lisa Kratz and Mike Little
Apex Mortgage in Meridian, Idaho  |  (208) 888-9251  |  www.myidahohomeloan.com

<< Part 1

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