FHA Purchase loan Take the Steps to Get Your Mortgage
FHA Loan Limits
Purchasing a home is one of life's major landmarks and for some, it is even a dream come true. At 1st Nationwide we understand the magnitude of this decision and it is our goal to make your transition into home ownership unforgettable. Regardless of whether this is your first or your fifth home purchase we will do our best to ensure that you get to know the fha loans that are avaiable to you. To ensure getting you into your new home is a pleasant and memorable experience.
When you begin to seriously consider purchasing a new home it is important that you follow some simple steps to make sure that the process runs smoothly. The first thing you should do is an analysis of your debt to income ratio. This important step will let you know what type of home you can afford based on your monthly income and expenses.
The next important step in purchasing a new home is to get pre-approved for a home loan. Also checking out the fha limits in the area you are considering. The peace of mind that comes with knowing that your fha loan mortgage and credit report have been approved will allow you to shop for your new home with confidence. And when you find a home and are ready to make an offer the fact that you have already been pre-approved for your loan amount will give the seller confidence in you as a buyer
FHA Loans - Buying a Home using a FHA Loans
The FHA loan mortgage program was created to help increase homeownership. The FHA mortgage program makes buying a home easier and less expensive than other types of real estate mortgage home loan programs. Some highlights of the FHA loan mortgage program are:
Minimal Down Payment and Closing Costs:
Down payment less than 3.5% of Sales Price
100% Financing options available*
Gift for down payment and closing costs allowed.
No reserves or required.
FHA Loans have regulated closing costs.
Seller can credit up to 6% of sales price towards buyers costs.
Easier Credit Qualifying Guidelines such as:
Minimum FICO credit score of 620.
FHA Loans will allow a home purchase two years after a Bankruptcy.
FHA Loans will allow a home purchase three years after a Foreclosure.
Easier Debt Ratio & Job Requirement Guidelines such as:
Higher Debt Ratio's than other home loan programs.
Less than two years on the job is allowed.
Self-Employed individuals o.k.
These advantages of the FHA loan mortgage program has made it one of the best options for most first time home buyers as well as move-up home buyers.You do not have to be a first time buyer to obtain any of the FHA loans. Anyone may use a FHA loan mortgage as long as you do not have more than one FHA insured loan at any one time.
FHA Refinance Learn About Your Mortgage Options
Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work.
Sending a child to college, consolidating bills, taking a much needed vacation, or making home improvements are some of the ways homeowners tap into the equity they have accumulated in their home to help with these expenses. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.
FHA offers several different options to homeowners who are considering an FHA streamline refinance:
FHA STREAMLINE REFINANCE: CASH OUT REFINANCING
This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe, therefore repaying their current mortgage and using the equity they have built up in their home to take out another larger mortgage. This allows the homeowner to access the equity they have built up in their home and put it to good use where needed.
In order to get the most benefit from refinancing your mortgage, it is often best to consider refinancing after you have had time to build up a significant amount of equity in your home. If the property was purchased more than one year prior to the refinance, the homeowner can refinance the existing mortgage for up to 85 percent of the appraised value plus the allowable closing costs, which vary from state to state.
FHA STREAMLINE: FHA STREAMLINE REFINANCE
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back. This works well for people who are in good financial standing with no significant debt because it allows you a little extra money each month that can be put to good use elsewhere.
FHA Streamline Loan Requirements
FHA Streamline loans can help homeowners lower monthly mortgage payments and interest rates. But what do you need to qualify for an FHA Streamline loan? To begin, you need an existing FHA mortgage—if you don’t have an FHA loan but want to refinance, your options include conventional refinancing or applying for an FHA refinancing loan.
If you have a conventional loan you wish to refinance with an FHA refinancing loan, you’ll need to apply with the usual credit check, employment verification, debt-to-income ratio requirements and other considerations. An FHA Refinancing loan can get you many of the same results—if you refinance from a conventional loan to an FHA-insured refinancing loan you may get better rates and lower payments.
For those who do have an FHA loan mortgage, the other requirements for FHA Streamline include:
Being current on the existing loan with all mortgage payments made on time for the last year.
You must own the original property for at least six months before you can qualify for refinancing.
To refinance you’ll need an FHA-approved lender. If you don’t want to use your current lender, any bank you choose must be FHA approved.
FHA Streamline loans do not require an appraisal, but a no-appraisal loan cannot exceed your current loan.
Closing costs must be paid up front or arranged for through a “no-cost” FHA Streamline refinance. You may also choose to include the closing costs into your loan a “with appraisal” FHA Streamline refinance. In these cases you must have enough equity in the home to cover the extra amount.
There is another Streamline product made for those who want a refinancing plan to help them modify or improve the home. This is known as an FHA Streamline 203(k) and 203(b) Loans. The 203 's are similar to ordinary Streamline fha loans with a few exceptions.
The 203(k) has a minimum of $5,000. The maximum loan amount is $35,000. This amount is added to your mortgage for weatherizing your home, removing lead paint and many other home improvements that don’t involve major alterations of the home.
You are required to use at least one contractor to do the repair work. Self-help renovations are not allowed unless the borrower can prove they have proper expertise.
When choosing a contractor, FHA guidelines state you must get an estimate which is broken down into specifics regarding the costs of each project. Contractors must sign an agreement to do all the work included in the estimate for the amount and within the time specified.
You must obtain all permits required by law.
There are restrictions on 203(k) & 203 (b) Streamline refinance loans. You cannot use the 203(k) loan to do major structural repairs such as altering a load-bearing wall or work that needs architectural plans. If your home improvement work exceeds $15,000 the FHA requires you to have a third-party inspection after the job is done.
You are permitted to make two payments to each contractor. If you do the work yourself as a qualified builder, the same rule applies.
When borrowing under the FHA Streamline 203(k) program you must “close out” the loan when the work is complete. According to FHA.gov, you may be required to furnish “mortgagor’s acknowledgement of satisfactory completion…mortgagee’s inspection report(s), change orders, mortgagee accounting of the escrow funds, and record of disbursements.” It’s important to keep records of these items and more to prove the work was completed according to the agreement and in a timely manner.
Should I Consider an FHA Refinance Loan?
There are many reasons to consider your FHA loans for refinance options. The most obvious is if you are at risk of going into default or foreclosure on your current home loan. If you in an “underwater” mortgage, or if you have an adjustable rate mortgage and are paying much more than anticipated per month, you should consider going into a fixed-rate FHA mortgage. FHA loans isn’t for everyone; to get an FHA streamline refinance loan approved you need to meet certain income requirements, debt-to-income ratio regulations and other rules.
You should consider applying for an FHA streamline refinance loan if:
You face foreclosure or default on your current mortgage.
You have an adjustable rate mortgage that is raising your mortgage payments higher than you can afford to pay.
Your income is considered average or below average for the area where you live.
Your mortgage payments make up 31% or more of your total income.
You occupy the building you want to refinance
DOES MY CREDIT RATING AFFECT MY CHANCES?
FHA streamline refinance loans, like any other line of credit, require a credit check before FHA refinancing is approved. However, don’t be discouraged if you have bad credit because of recent hard times. The FHA credit check compares your overall credit activity to any negative information in your credit report. To qualify for an FHA loan for refinancing purposes, your general pattern of credit activity will be considered, not just current or past problems. You may be surprised to learn FHA rules are much more flexible when it comes to reviewing your credit history for an FHA refinancing loan.
CAN I APPLY FOR FHA STREAMLINE REFINANCE LOAN AFTER FILING FOR BANKRUPTCY?
If you’ve been discharged from Chapter 7 bankruptcy for two years or more, you are eligible to apply for FHA refinancing. If you filed Chapter 13 bankruptcy and have made all payments on time for at least one year, you are eligible to apply for an FHA refinancing loan.
HOW CAN I GET READY FOR AN FHA STREAMLINE LOAN?
Even if you have good credit, it never hurts to prepare for your FHA loans with a credit check in the same way you’d prepare for any home loan. Make sure you’ve got a history of paying your bills on time, reduce your debt-to-income ratio as much as possible, and reduce the amount of potential debt you have in your name. Check your credit report to make sure you have current, accurate information and be sure to challenge any items on your credit report that are out of date or suspicious.
WHAT IF I ALREADY HAVE AN FHA LOAN MORTGAGE?
If you are already making payments on an FHA loan mortgage and want to lower your interest rates, FHA Streamline Refinance is an option to consider. FHA Streamline loans don’t require any income verification and no credit report is needed unless your particular lender requires it. You can add another person to the property title with no credit check, but if you want to remove someone from your title, you’re required to get a full credit check before you can be approved for an FHA Streamline refinance loan. You may be able to get an FHA Streamline loan without a new appraisal. If you suspect your home is worth less than it was at the time of your last appraisal, it is best to see FHA refinancing without a new appraisal if possible, check the fha limits in your county.
If you aren’t sure whether you qualify for an FHA streamline refinance loan, contact your lender for additional details. Income requirements vary depending on your state of residence and your zip code; you may also find additional flexibility depending on your credit report and the nature of the building you want to refinance.
WHAT SHOULD I KNOW ABOUT TERMS FOR FHA STREAMLINE?
If you want to refinance your home mortgage using an FHA streamline refinancing loan, there are several things to know before you begin. FHA streamline refinance is not the same as the FHA HOPE for Homeowners program, which is designed to protect people from going into default or foreclosure. FHA streamline refinance is a loan can be taken out to lower your monthly payments, avoid going into default or foreclosure, and even help you pay for home improvements.
There are different types of FHA streamline refinance loans, each with specific terms and requirements. These include:
Cash-out FHA refinancing up to 85% of the home’s appraised value
Cash-out FHA streamline refinancing for up to 95% of the appraised value
No cash-out FHA streamline refinancing.
Streamline FHA refinancing
In the case of both cash-out FHA refinance loan options, you’re required to own the home for at least a year before applying.
HOW MUCH WILL I GET WHEN I DO AN FHA REFINANCING LOAN?
Figuring out the fha limit for cash-out FHA streamline refinance loans is simple once you determine what 85% or 95% of your home’s appraised value is. For no cash-out refinancing loans, the calculations become a bit more complex.
For “non-streamlined” FHA refinancing, the loan amount may be determined by one or two calculations:
A calculation made with the home’s maximum loan-to-value percentage multiplied by the home’s appraised value.
A second calculation involves the total of the original lien, any second mortgages or “junior liens” over one year old, plus closing costs and other expenses. This calculation is fairly complex and you may need help from your loan officer to understand all the factors that go into it.
The maximum amount of your loan for non-streamlined FHA refinancing will be determined by the lesser of these two calculations.
FHA Streamline refinance loans are only for those who have existing FHA loan mortgage. For Streamline FHA refinancing loans, there is no cash given to the buyer, but the calculations of the loan amounts are similar to non-streamlined FHA refinancing. There are two Streamline refinance loans. One requires a new appraisal of the home so that closing costs can be built into the cost of the loan rather than having the buyer pay those costs out of pocket. If the home has enough equity to cover the additional expense, the buyer can include the closing costs into the loan amount.
The no-appraisal FHA Streamline loan is limited to the amount of the original FHA home loan only. The buyer must make other arrangements to cover the closing costs rather than building them into the terms of the new FHA refinancing loan.
OTHER TERMS AND CONDITIONS
For non-Streamline FHA refinancing, you may be required to pre-qualify in the same way you did for your original FHA loan mortgage. Streamline FHA refinancing does not require a new credit check in most cases unless your bank has a policy requiring one.
In many cases you are required to be current on your mortgage payments. For 95% cash-out refinancing you are also required to have a record of on-time payments for the previous year.
One area that confuses some homeowners seeking FHA refinancing--the down payment issue. There is a minimum down payment requirement of 3.5% for all FHA mortgages issued after 1 January 2009. However, recent guidelines issued from the FHA states this requirement does not apply to FHA refinance mortgages --there is no down payment required to refinance, but you will have to pay closing costs.
Our goal is to make the loan process as simple, fast and worry-free as possible. We pride ourselves in offering the highest level of customer service, and appreciate the opportunity to earn your business. Whether your need is a fha streamline refinance for a lower rate, obtain a fha loan mortgage for a purchase, we will do our utmost to see that your needs are met in a timely fashion.
Our website provides resources to assist you in obtaining any fha loans, fha loan amount, fha loan requirementsand fha limits . Wondering if a home equity loan or second mortgage will lower your monthly payments? Use our Debt Consolidation mortgage calculator! Confused by all the loan programs? Our loan program page will assist you to determine the right loan specific to your needs.
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