Homebuyers in the Minneapolis, St
Paul, Madison, Milwaukee area, and throughout all of Minnesota and Wisconsin
have heard the name before, but did you know that
FHA
financing is one of the most popular ways to become a homeowner or
refinance an existing mortgage. FHA's mortgage insurance programs
help low- and moderate-income families become homeowners by
lowering some of the costs of their mortgage loans.
FHA mortgage
insurance also encourages mortgage companies to make loans to
otherwise creditworthy borrowers and projects that might not be
able to meet conventional underwriting requirements, by
protecting the mortgage company against loan default on mortgages
for properties that meet certain minimum requirements--including
manufactured homes, single-family and multifamily properties.
We are a top FHA Home Loans Lender in Minnesota and
Wisconsin.
Find out why more and more people are turning back to FHA!
Although there are similarities
between FHA and
Conventional
mortgage loans there are also some big differences.
While FHA mortgage rates are similar, credit
guidelines are different. FHA allows for
borrowers with less than perfect credit
to receive the same interest rate as a
borrower with unblemished credit. Low
down payment conventional financing,
like FLEX 97, are much harder to qualify
for these days. Minimum credit scores
are much higher, and private mortgage
insurance is usually more expensive that FHA
home loans..
FHA was created by the Federal
Government to provide affordable housing financing for qualified
borrowers. FHA doesn't actually lend, they just insure the loan, eliminating the lender's
risk. The borrower pays a small upfront insurance premium, called MIP, which is
added to the loan amount. The borrower also pays a
small monthly
mortgage insurance premium. These funds go into a default pool, while covers any
foreclosures, and all FHA borrowers have to pay into this fund.
FHA Home Loan Down payment requirements can be
low. In contrast to conventional mortgage products,
which frequently require down payments of 5-10 percent or more of
the purchase price of the home, single-family mortgages insured
by FHA make it possible to have small down payments.
FHA
RULES HAVE CHANGED. I won't repeat the old
rules to avoid confusion, but currently FHA REQUIRES only a
3.5% down payment. This money can be your
own money, a gift from
a blood relative, or a gift or grant
from a true community,
state, or city program.
There are also
Closing costs which need to be paid, but almost 100%
of the time, these closing costs can be financed into the loan amount
by having the seller pay them. Seller
paid closing costs really is simply a
fancy term by which you are allowed to
"roll" your closing costs into the loan,
and pay them over the life of the loan,
versus having to come up with the money
today out of pocket.
FHA closing costs can
be financed, up to 6% of the purchase price. With most conventional loans, the
maximum is just 3%. Typically borrower must pay, at the time of purchase,
closing costs (the many fees and charges associated with buying a home). This
program allows the
borrower to finance many of these charges, thus reducing the
up-front cost of buying a home. FHA mortgage insurance is not
free: borrowers pay an up-front insurance premium (which may be
financed) at the time of purchase, as well as monthly premiums
that are not financed, but instead are added to the regular
mortgage payment.
Just like all loans, FHA home loans
require borrowers to provide proof of
sufficient income to pay the mortgage.
While
FHA
guidelines are generally more relaxed, FHA is NOT, and does not do
sub-prime loans. FHA
interest rates are extremely competitive with conventional rates.
Some fees are limited.
FHA rules impose limits on some of the fees that mortgage
companies may charge in making a loan. For example, the loan
origination fee charged by the mortgage company for the
administrative cost of processing the loan may not exceed one
percent of the amount of the mortgage.
FHA Loan Limits. Limits on the
loan amount. To make sure that its programs serve
low
and moderate-income people, FHA sets limits on the dollar value
of the mortgage loan. It is always changing, and does vary depending on which county the property is located.
Use our FREE Loan
Limit Lookup Tool to find out the limits in your area.
Fannie Mae &
Freddie Mac loans are conventional loans made at the risk of the lender
without benefit of any government guarantee or government insurance. A
conventional loan with an LTV (loan to value ratio) of greater than 80% requires
primary mortgage insurance, which can be paid monthly. The borrower must
(usually) have 5% of his/her own funds for the down payment.
Requirements of a conventional
loan applicant include excellent credit, job stability with
sufficient income, a sizable down payment, and low debt to income
ratios. Borrowers who meet Fannie Mae or Freddie Mac conventional
guidelines are rewarded with an interest rate only slightly lower
than an FHA interest rate.
FHA Mortgage Insurance.
Mortgage insurance is required under all programs where the
borrower does not put at least 20% down payment. Under the OLD
FHA rules, mortgage insurance was required for the entire loan
period. Conventional loans are able to eliminate mortgage
insurance when you reach 80% loan-to-value (20% equity). A BIG
advantage over FHA. NOT ANYMORE! FHA mortgage insurance is
eliminated when you get to 78% loan-to-value (22% equity) by making payments, just like
conventional loans!
Non-conforming Bad Credit,
Sub-prime, Alt-A Loans Gone
Lenders, and the crazy lender days from
2000 - 2006 are long gone. Bad credit, sub-prime, stated income, no doc, Alt-A,
and everything else crazy is no longer available. FHA is your best option if you
are a weak credit risk, but it is NOT a bad credit loan. You have to qualify, it
has to make sense, and you have to have a little skin in the game (down
payment).
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FHA after a Short Sale |
203(k) & 203(k)
Streamline |
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The
FHA
Streamline Refinance
If you currently have an FHA mortgage you are eligible for one of
the simplest money saving refinances available today. The
FHA Streamline Refinance allows existing FHA borrowers to
reduce their interest rate without having to jump through hoops.
Basically, if you have made on time payments on your current FHA
loan for the past 12 months. You get (almost) an automatic
approval for the streamline refinance! No qualifying, and no appraisal. Closing
costs are rolled into the new loan, so you have no out of
pocket costs.
How easy is that? Apply online right now to explore your FHA Streamline Refinance options
|
Buying with
FHA after a Short Sale |
203(k) & 203(k)
Streamline |
Streamline Refinance
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An important tool for community and
neighborhood revitalization, the FHA 203(k) loan offers flexible qualifying
and low down payments:
- FHA standard guidelines
- Standard FHA down payment
- Flexible credit qualifying
- Assumable loans
- Finance up to 6 months of mortgage
payments
- Purchase or Refinance and Improve all in
one loan
The 203(k) loan program offers borrowers the
resources to rehabilitate a home that may be in need of repair, either the
home that they currently live in, or that special fixer-upper opportunity.
One single loan is used to pay for the purchase (or refinance) and the cost
of renovating the home.
Made available to certain lenders by the U.S.
Department of Housing and Urban Development (HUD), the FHA 203(k) program
has already provided many buyers with the funds necessary to buy their first
home, or greatly improve a current home. The FHA 203(k) loan is available to
borrowers of all income levels, to homeowners who plan to occupy the house,
and for homes with one to four units.
- 203K Eligible Borrowers:
- Owner Occupants - Purchase -
Refinance
- Non- Profits
- Investors NOT allowed
- Types of 203K Loans:
- 30 or 15 year fixed rates
- One year ARMS
- Assumable to a qualified buyer, with
no money down
- Eligible Properties:
- Single family dwellings
- Condominium
- Townhouse
- Mixed Use (Storefront)
- 1-4 Unit buildings- you can increase
or decrease the number of units with this loan.
- Structural Alteration and
Reconstruction:
- Changes for improved functions and
modernization
- Elimination of health/safety hazards
- Changes for aesthetic appeal
- Plumbing, heating air conditioning,
and electrical upgrades
- Well and/or septic repairs
- Roofing, gutters and downspouts
- Flooring, tiling and carpeting
- Energy conservation improvements
- Major landscape work and site
improvement
- Access for the disabled
- Home Inspection:
The cost of your construction is estimated by an FHA Approved 203(k)
consultant (estimator). The cost consultant assists you in determining
the scope of repairs and the costs budgeted for the renovation job.
- Perform a home inspection to create
preliminary costs estimates based upon FHA minimum property
standards plus the scope of work as defined by the home owner/buyer.
- Once project has been determined,
the cost consultant prepares a "work-write up" and 3 contractor bid
packages are issued to the home owner/buyer.
- Appraisal:
The appraiser will be given a copy of your "work-write up" to estimate
an after improved value for your new or current home. We
loan against that improved value thus allowing you to finance the cost
of repairs.
- Other Eligible Costs:
(THESE COSTS MAY BE FINANCED INTO THE MORTGAGE LOAN)
- Contingency reserve (10-15%)
- Up to 6 months PITI mortgage
payments
- Permit costs
- Consultant fees
- Inspection and title update fees
- Architectural & Engineering fees (if
needed)
- Here are a few suggestions to get you
started:
|
Buying with
FHA after a Short Sale |
203(k) & 203(k)
Streamline |
Streamline Refinance
|
Buy HUD Homes |
|
HOPE for Homeowners |
FHA
LOAN LIMIT Lookup Tool |
<< Back to Top - FHA Loans In MN and WI >>
If you're a qualified buyer, you can use an FHA
loan to buy one of HUD's specifically designated
foreclosed homes for sale.
This is a national program, and there are
qualifying homes in every state. We
lend on this program for homes ONLY in Minnesota and Wisconsin, so please do NOT
contact us about other states.
- How Does It Work? Simple Just qualify
for a traditional FHA loan, then you MUST select a home to buy from the list
of available HUD foreclosed properties.
- Where can I see the list of available
houses? Easy.
Fill out this short form to receive the list of Minnesota and Wisconsin HUD
foreclosures
- What about closing costs? Closing
costs can be rolled into the transaction, up to 6% of the loan amount.
- How do I get started? It all starts
with a no obligation online
loan application or a call to (651) 552-3681, where one of our
specially trained Loan Officers will assist you.
|
Buying with
FHA after a Short Sale |
203(k) & 203(k)
Streamline |
Streamline Refinance
|
Buy HUD Homes |
|
HOPE for Homeowners |
FHA
LOAN LIMIT Lookup Tool |
<< Back to Top - FHA Loans In MN and WI >>
Can you buy a home AFTER a short sale?
Yes and No
We
get asked this question just about everyday, so here are the FHA rules.
A borrower
is not eligible for a new FHA-insured
mortgage
if he/she pursued a short sale agreement on his/her principal residence simply
to
• take advantage of declining market conditions, and
• purchase at a reduced price a similar or superior property within a reasonable
commuting distance.
Borrowers Current at the time of Short Sale
A borrower is considered eligible for a new FHA-insured
mortgage
if, from the date of
loan
application for the new mortgage, all
• mortgage
payments due on the prior
mortgage
were made within the month due for the 12 month period preceding the short sale,
and
•
installment debt payments for the same time period were also made withinthe
month due.
Borrowers in Default at the time of Short Sale
A borrower in default on his/her mortgage at the time of the short sale
(or preforeclosure sale) is not eligible for a new FHA-insured mortgage
for three years from the date of the pre-foreclosure sale.
Note: A borrower who sold his/her property under FHA’s
pre-foreclosure sale program is not eligible for a new FHA-insured mortgage
from the date that FHA paid the claim associated with the pre-foreclosure sale.
Exception: Lenders may make exceptions to this rule for
borrowers in default on their mortgage at the time of the short sale if
the
• default was due to circumstances beyond the borrower’s control, such as death
of primary wage earner or long term uninsured illness, and
• review of the credit report indicates satisfactory credit prior
to the circumstances beyond the borrower’s control that caused the default.
References:
• For detailed information on converting existing principal residences into
rental properties, see HUD 4155.1 4.E.4.g.
• For information on short payoffs, see HUD 4155.1 3.B.1.f.
http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4155.1/41551HSGH.pdf
|
Buying with
FHA after a Short Sale |
203(k) & 203(k)
Streamline |
Streamline Refinance
|
Buy HUD Homes |
|
HOPE for Homeowners |
FHA
LOAN LIMIT Lookup Tool |
<< Back to Top - FHA Loans In MN and WI >>