A mortgage that is equal to or less than the dollar amount established by the conforming loan limit set by Fannie Mae and Freddie Mac's Federal regulator. In the United States, aconforming loanis a mortgage loan that conforms to GSE guidelines.In general, any loan which does not meet guidelines is a non-conforming loan. A loan which does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan.Starting in 1970,Fannie Maewas authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked withFreddie Macto develop uniform mortgage documents and national standards for what would come to be known as aconforming loan.Fannie Mae and Freddie Mac are continuously in the market for conforming loans; because of this, conforming loans benefit from greater liquidity than non-conforming loans.The Office of Federal Housing Enterprise Oversight (OFHEO) set the criteria on what constitutes a conforming loan limit thatFannie MaeandFreddie Maccan buy. Criteria include debt-to-income ratio limits and documentation requirements. The maximum loan amount is set based on the October-to-October changes in median home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because bothFannie MaeandFreddie Maconly buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.)A temporary increase in the Conforming Loan Limits for high-cost areas of living has been incorporated into the 2008 economic stimulus package. Congress has authorized an increase of the single family residences limits to the lesser of $729,750 or 125% of the median home value within the metropolitan statistical area (MSA). High-cost loans are only available through FHA loans.The bill was signed into law by President Bush on February 13, 2008 but the new rates are still not being honored by any lenders (as of March 30, 2009).The new jumbo-conforming program has been adopted by Fannie Mae and Freddie Mac effective April 1, 2008 until December 31, 2010. I have your best interests in mind so please let me know a little bit about your situation by using my interactivePurchase Assistanttool orRefinance Advisor. From there I can contact you with a custom quote of your best options, or you can always call me direct at (516) 469 6262. Please do not hesitate. ...read more
By Nikitas Kouimanis Mortgage Expert June 09, 2013
FHA Loans A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration. FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA Loans FHA Credit Scores<V Limits Minimum Credit Score Limitations Product Standard Loan Limits High Balance Purchase Transactions 640 640 No Cash-Out Refi 640 640 Making Homes Affordable 640 640 Cash-Out Refinance 640 640 Maximum LTV / CLTV Maximum LTV Maximum CLTV No Cash-Out Refi 97.75% 97.75% Cash Out Refi 85% 85% Streamline Refi 97.75% 125% Refi with new 2nd mortgage 85% 85% (MHA) Refi 97.75% 115% Purchase 96.5% 96.5% Identity of Interest 85% 85% Unrelated Non-OccupyingCo-Borrower 75% 75% 2nd Home (see guides) 85% 85% Maximum CLTV on ALL loans are shown above andall mortgages are limited to the Geographical Maximum. The Federal Housing Administration was begun as part of the New Deal in 1934. It guarantees private home mortgages (FHA loans) and provides funds to promote housing construction, especially for poorer people. It was authorized by the National Housing Act of 1934. FHA loan is a mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally-qualified lenders. FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance. Some FHA programs were subsidized by government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers. Over time, private mortgage insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI insurance. Eligible Properties 1-4 unit primary residences,Planned Urban Developments (PUDs),Approved Condos. Special eligibility requirements for certain properties are listed below. 3-4 Unit Properties The 3-4 Unit Property must be self-sufficient. The net rental income must be equal to or greater than the monthly mortgage payment. The net rental income is the appraiser's estimate for vacancies or the vacancy factor used by the jurisdictional HOC, whichever is greater. Borrowers must still qualify for the mortgage based on income, credit, cash to close, and projected rents received from the remaining units. Borrowers must have reserves equivalent to three months of PITI mortgage payments. These reserves cannot be gifted and must be the borrowers own funds. Rural Properties Rural properties are FHA eligible however no value can be assigned to any acres above 10. The sales price of the property must rely only on the first 10 acres including the house. Ineligible Properties If the re-sale date is 90 days or less following acquisition by the seller, the property is not eligible for an FHA mortgage. Co-ops are ineligible Commercial properties, boarding houses, hotels and motels, tourist homes, private clubs, sanitariums, and fraternity or sorority houses are also ineligible. FHA Approved Condo and Townhouse Projects Buying a condo or Townhouse provides a great opportunity for both first time homeowners and those downsizing their lifestyles. The FHA and HUD have approved FHA loans on condos and townhouses as long as the properties are on their pre-approved list. The FHA loan process is fairly easy if you do your homework before getting started on the purchase. Fortunately, you have arrived at the right place and we have made the process easier for you with this simple FHA condo purchasing checklist. Following these simple steps will get you on your way to buying your condo or townhouse and getting a FHA home loan. Having a high enough credit score. The FHA recently raised the credit requirement to a minimum score of 640. This is much lower than many banks but it still is a hard and fast rule. The next step is to find HUD condos and townhouses on the approved list for FHA loans. If the condo community is not on the HUD approved list you can't get qualified. However, it will onlytake a few seconds to search what is available in your community and we have it right here for you.To see if your condo is FHA approved go here.https://entp.hud.gov/idap /html/hicostlook.cfm FHA Mortgage Limits Knowing your local FHA lending limits is an essential step in the process when considering FHA financing. Clicking on the link below will open a separate browser window directly from HUD. Simply enter some basic information about your location and instantly know local lending limits.A complete schedule of FHA mortgage limits for all areas are available at:https://entp.hud.gov/idapp/html/hicostlook.cfm FHA Credit Guidelines Right now, borrowers with lower than a 640 score are NOT eligible for FHA financing. Further, the FHA requires a minimum credit score of between 640 for borrowers to be eligible for a mortgage with a maximum of a 90% loan to value (LTV) for the property. Per FHA rules, borrowers are eligible for maximum FHA financing (96.5% LTV) with a 640 credit score and above.HOWEVER, lenders who offer FHA mortgages have recently been very reluctant to provide those mortgages to borrowers with lower than a 640 middle credit score.Credit History Non-Traditional Credit: Non-Traditional Credit is acceptable if the borrower does not have any prior credit history or if that length of credit history is too short to qualify. We would need at least three letters from any repeated monthly obligation such as rent, utilities, store accounts, cell phone accounts, and/or any other acceptable sources. Make sure to let your FHA Loan Officer know about your current credit situation to avoid any mishaps in the processing of your mortgage. Judgments: Court orderedjudgments must be paid completely, unless the borrower has been making regular and timely payments and the creditor is willing to subordinate that judgment to the new insured mortgage. The borrower must provide a satisfactory written explanation. Collections: Handled on a case by case basis. Bankruptcy: -Chapter 7requires aminimum two-year lapse periodsince discharge date; minimum one-year lapse period may be acceptable if bankruptcy was caused by extenuating circumstances that are not likely to recur the reason cannot be debt caused by uneducated choices. Only extenuating circumstances will be considered and only after one year has passed. In all cases the borrower must have re-established credit and must demonstrate the ability to manage financial affairs. -Chapter 13is permitted if aone-year payout periodhas elapsed and performance has been satisfactory. The borrower must receive court approval to enter into the mortgage transaction. Foreclosures: Require aminimum of three yearssince the completion of the action and the borrower must have re-established good credit. Delinquency or Default on Federal Debt: If the borrower is presently delinquent on any federal debt or is obligated on any type of federal lien, he or she is not eligible for an FHA loan until the delinquent account is brought current, paid, or otherwise satisfied, or a satisfactory repayment plan is made between the borrower and the federal agency owed and is verified in writing. FHA Closing Costs and Allowable Seller Paid FHA closing costs are a significant reason for choosing an FHA home loan. Most traditional mortgages allow only a maximum of 3% seller contribution towards closings costs. With an FHA mortgage, the rules are that the seller is allowed to pay up to 6% of the sales price towards the buyer’s closings costs. This is usually more than enough to cover all of your FHA closing costs and even include discount points if you wish to buy down your mortgage interest rate. This, of course, means that you will have more money remaining after the close on your new home. Having the seller pay for some or all of your FHA closing costs can be a part of your negotiation when buying a home. Make sure to bring this up with your real estate agent and attorney at the very beginning of the home buying process. FHA Loan Checklist When you're applying for an FHA loan the following list of documents will help expedite the process. We can help you understand any part of the FHA loan process so don't hesitate to contact us with any questions. Employment Info Past two years completed tax returns.Past two years W-2's, 1099's and any other necessary tax forms.One month worth of newest pay stubs.Self-employed will need three years tax returns and YTD Profit&Loss; Statement. Savings Info Past three months full bank statements for all accounts.Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.). Personal Info Driver's License or other official State identification.Social Security Card.Any Divorce, Palimony, Alimony Documents.Green card or work-permit (if applicable). FHA Loan Common Questions Check out our list of common questions related to FHA mortgages. Check out our list of common questions related to FHA mortgages. What is the FHA? FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes. What makes a FHA insured mortgage beneficial? A FHA insured mortgage is easy to qualify for, can be obtained with less than perfect credit, costs less and requires a smaller down-payment. Where can I find FHA forms and other literature? A great source for FHA forms and information is http://www.hud.gov/library/index.cfm. What is the FHA loan limit in my area? The loan limit across the country is different. Click here to see limits in your area. Can I pay an FHA loan off early? Yes, however be sure to check the pre-payment section of your contract before signing. Can a FHA insured loan help me lower energy costs? Yes, through the Energy Efficient Mortgages Program you can finance 100 percent of the cost of making your home more energy efficient. Contact us to see how. Is there a FHA program to help me refinance my loan? Yes, the recently create FHASecure is one of the ways that we can help you refinance your current home loan. Contact us now to see what we can do for you. Can I refinance a fixed rate FHA loan? Yes. Talk with one of our professionals today to see if refinancing makes sense for you. What is the recommended debt-to-income ratio for FHA loans? The recommended debt-to-income ratio for a FHA loan is 30%. Are FHA loans assumable? Absolutely, you can assume an existing FHA loan or allow a buyer to assume yours. Will I have to pay mortgage insurance with an FHA loan? Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans. Can I get a "fixer-upper" of a home with a FHA mortgage? Yes, however you might be required to fix certain problems in the home before you can get the full loan. Speak with us today for details on this. Quick Links Apply for a FHA LoanFHA Loan ChecklistCommon FHA QuestionsFHA QualificationsBenefits of FHA Loans FHA Qualifications Qualifying for a home mortgage loan can be difficult, near impossible without a sizable down payment and a moderate credit report. If this describes you and you financial position, an FHA loan may be for you! There are fewer restrictions for FHA loan qualification in comparison to astandard mortgage loan. Qualifications for an FHA loan are: Proven employment status of at least 2 years.Steady or increasing income over a 2 year period.History of on-time payment. No more than two missed payments on your credit.If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.Those with foreclosures must wait at least 3 years since the most recent foreclosure.Monthly mortgage payment should be roughly 30% of your gross income.You must pay a minimum of a 3.5% down-payment.Agree to 2.25% in closing costsOnly certain properties are eligible - single-family homes, condominiums and 2-4 unit properties.The property must be your primary residence. These are the basic qualifications for an FHA loan through us, as you can see FHA loans can be to qualify for. To learn more contact us or apply online to get the process started. FHA Loan Benefits FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage. Easier to Qualify for – because they’re backed by the federal government lenders are more likely to give you the kind of loan that you need. Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs. Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan. Better Interest Rates – with the backing of the government these loans typically have a better interest rate than most traditional mortgage loans. Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. The will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire. How FHA Loans Work We want to help you understand how a FHA mortgage loan works. In all actuality the Federal Housing Administration (FHA) doesn’t loan any money, they insure it. This means that you’re considered to be a less risky borrower than someone who might not have the backing of the federal government. Our role is to make sure that you qualify for an FHA mortgage and structure our loan to reflect it. The other pages in the FHA loan center can help you understand more about this unique program. Whether you’re trying to determine if you qualify or if you’re interested in finding out what kind of documentation you’ll need to ultimately get your loan, our site can provide you the information you’re seeking. Additionally we’re more than happy to take your phone calls at 212-920-4471.An important resource for considering a FHA loan is theofficial Housing and Urban Development website. There you can find even more answers to questions and learn more about insuring your loan through the Federal Housing Administration.For More Information Refer To The HUD/FHA Website @FHA Website FHA Loan Limits 2012 FHA Mortgage Limits - see FHA High Balance Notes Below Region 1 Unit 2 Units 3 Units 4 Units Minimum Limit Caps $271,050 $347,000 $419,400 $521,250 Standard Limit Caps $417,000 $533,850 $645,300 $801,950 High Balance Caps $729,750 $934,200 $1,129,250 $1,403,400 Search by zip code A complete schedule of FHA mortgage limits for all areas is available at:https://entp.hud.gov/idapp/html/hicostlook.cfm To tell me more about your situation so I can get back to you and see if it is the right loan program for your specific home loan needs Apply here on myPurchase Assistant or myRefinance Advisor, or you can always call me direct at (516) 469 6262. Please do not hesitate. ...read more
By Nikitas Kouimanis Mortgage Expert June 04, 2013
Stated Income Mortgage Loans also known as a type of reduced-documentation- mortgage in which income is disclosed on the loan application and employment is verified however the income is typically stated. Where rates are typically higher. A Stated Income Loan is a mortgage where the lender does not verify the borrower's income by looking at their pay stubs, W-2 (employee income) forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word.Reasons For Stated Income Loans These loans are nominally intended for self-employed borrowers, or other borrowers who might have difficulty documenting their income. Stated income loans have been extended to customers with a wide range of credit histories, including sub-prime borrowers. The lack of verification makes these loans particularly simple targets for fraud. Stated income loans fill a gap of situations which normal loan standards would not approve. For example, a standard rule is that a customer's mortgage and other loan payments should take up no more than 45% of the person's income. This would seem prudent for a person just owning their main home. However, a real estate investor may have multiple properties and for each may receive only a small amount more than their loan payments on each house, but end up with $200,000 in disposable income. Nevertheless, a non-stated income loan would decline this person since their debt to income ratio would not be in line. The same issue can arise with self-employed borrowers, where the bank with a fully documented loan would include the borrower's business debt in their debt to income calculation. Stated income loans also help borrowers where fully documented loans normally would not consider the source of income as being reliable and stable, such as investors who consistently earn capital gains. Fully documented loans also do not consider potential future income increases. Another type of loan that uses the same principles is the no income disclosure loan. In August 2006, Steven Krystofiak, president of the Mortgage Brokers Association for Responsible Lending, in a statement at a Federal Reserve hearing on mortgage regulation, reported that his organization had compared a sample of 100 stated income mortgage applications to IRS records, and found almost 60% of the sampled loans had overstated their income by more than 50 percent. U.S... Senator Chuck Schumer is currently leading an effort to restrict stated income loan; his Borrowers Protection Act of 2007 would essentially forbid them. A few years later, Chuck Shumer's efforts came to fruition with the Dodd-Frank Financial Reform Bill HR4173. Within the Bill, Section 1411 has the following excerpt, "A creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability...” Currently, lenders are conducting their own version of income and asset verification. Stated Income Loans are still offered typically by small local banks. Qualification requirements are based on stable employment, good reserves, good FICO and no less than 35% equity position in the property. Stated income loan availability changes state to state, county to county. They are specifically for Self-employed borrowers only. We do have an investor that will lend to w2 employees but you need to have 50% equity in the home and the maximum loan amount is 1 million. Otherwise this type of loan is the loan of choice for self-employed people. If you are self-employed, it may be difficult to document a regular income. You might make a great deal of money one month only to follow it up with nothing the next. With a traditional lender, it is hard to convince them that you are a good risk. For self-employed people, it represents an opportunity to own a house without getting a regular job. The pros of this loan are that you have a quicker application process - The process of getting your money is usually faster with a stated income loan. When you apply for a regular loan, they have to review the loan as well as verify everything about it with your employer and document it. With a stated income loan, they can skip this step and get on to lending you the money you need. Make your own decisions - With a traditional loan banks try to make your financial decisions for you. They have many complicated ratios and formulas that they use to justify a loan amount for you. For example, if you are buying a duplex, they will only let you count a portion of the projected rental income in your income. However, with a stated income loan, you don't have to worry about whether or not the bank thinks you can afford it. You see the monthly payment and you decide whether or not you can afford it. The cons of this loan are higher interest rates - As a result of the hassle-free level of faith in you, you will usually be charged a higher interest rate. They are taking a bigger risk by extending this type of loan to you. Therefore, they want to be well compensated for the risk that they are taking. This means more money coming out of your pocket each month and over the life of the loan. Higher chance of default - While they do not like to admit it, sometimes the bank actually does know what they are doing in the approval process. They have many statistics to back up their decisions to lend or not. When you use a stated income loan, you are eliminating all of these built-in protection mechanisms. When you show them your income, debts, and credit score, they are basing their decision to lend on the history of others in your situation.Out Line For The Reduced Doc Product Also Known As The Stated Income Mortgage LoanThe Reduced Doc Loan Program is for self-employed “business owners” only* buying or refinancing, including Cash-Out, their 1-4 family primary home or their one family or condo vacation home. Fixed, ARM or Interest only^^ products are available for this program. Debt to Income (DTI) should not exceed 38/44 with qualification based on using the fully amortized payment.Maximum financing is:All ARM Products65LTV/CLTV up to $750,000 (1-4 Fam&Condo;)60LTV/CLTV from $750,100 to $1M (1-4 FAM&Condo)50LTV/CLTV from $1,000,100 to $1.5MM (1-4 FAM&Condo)50LTV/CLTV from $1,500,100 to $3M (1-2 FAM&Condo) All Fixed Rate Products 65LTV/CLTV up to $750,000 (1-4 FAM&Condo) 60LTV/CLTV from $750,100 to $1M (1-4 FAM&Condo) ^^2-4 family homes are excluded from the Interest Only productsINCOMEBorrower must provide proof (such as a CPA letter) that they are a self-employed owner in an established business for at least two full years and their credit will be a major factor in the approval process.** The DTI ratios should not exceed 36/44 on the RDLP program (on a fully amortized basis.) The borrower must be the owner of an established business entity that can be independently verified by a CPA or some other means. 1099 Independent Contractors do not qualify for this program and often work for one or more businesses but may not actually own the business. Landlords are usually not considered self-employed business owners for this program. All rental income must be verified by leases. The Reduced Doc Program may be combined with a borrower (including him/her) that has a salary or other verifiable form of income on the same application. The S/E borrower states their income confirms business ownership and verifies their liquid asset and reserves are commensurate with the income stated on the application. The salaried borrower lists and verifies their income by traditional means such as W-2's and pay stubs. The LTV and rates are based on the Reduced Doc Program.Note: Qualify all Amortized and Interest Only ARM Products at the higher of the actual product rate or the start rate for the NJ 10/1 Amortized ARMASSETSOn all purchases the borrower must have the down payment, the closing costs and 12 months PITI reserves in seasoned personal, business or retirement accounts at time of application.On all refinances the borrower must have the closing costs and 12 months PITI reserves in seasoned personal, business or retirement accounts at time of application.For all purchases a minimum 35% down payment is required. Liquid and near liquid assets seasoned for two months including reserves must be commensurate with the type of business the borrower owns and the income stated on the application. Assets must be in the applicant’s personal accounts or jointly with any co-borrower to be considered. Assets shared with other family members may not be considered.Any liquid or near liquid assets used for the transaction should be seasoned and verified with the last two months statements in domestic accounts. Foreign asset accounts are not acceptable.Proceeds from the sale of a departing residence or other real estate are acceptable for the down payment. However, the reserves requirements should be in personal seasoned liquid accounts.The minimum reserves for all Reduced Doc owner-occupied purchase and refinance transactions must be at least 12 months PITI. A second home requires an additional three months for a total of 15 months PITI. A non-traditional secondhome requires an additional 6 months PITI for a total of 18 Months PITI.Business assets for the transaction and reserves are acceptable if the borrower is 100% owner of the business and their company’s accountant confirms that personal use of the business funds will not adversely affect the business operations. In addition if business liquid assets are used they should be seasoned the same as personal assets and close attention will still be on the borrower’s personal liquid asset positions.Gifts, including gifts of equity and a refinance of recently inherited property are acceptable if the borrower has at least 35% of the purchase price or the value of the inherited property plus closing costs and the necessary reserves in personal seasoned liquid funds.CREDITPersonal credit use and history are very important. Over extended use of credit will be a concern.Although FICO scores are not used to evaluate any loan applications, a very strong credit profile including a satisfactoryrental reference or mortgage payment history is required and will be an important factor in the analysis of the loan request.A strong mortgage payment history means no late payments past the grace period, usually the 15th of the month. This is important. Copies of canceled mortgage payment checks or a detailed mortgage payment history from the lender showing no payments were made past the grace period or late fees paid may be required as documented proof. A Stated Income Loan is a loan program that isn’t for everyone, but it does have its advantages for specific situations. Use myPurchase Assistant or myRefinance Advisor to tell me more about your situation so I can get back to you and see if it is the right loan program for your specific home loan needs, from there I can contact you with a custom quote of your best options, or you can always call me direct at (516) 469 6262. Please do not hesitate. ...read more
By Nikitas Kouimanis Mortgage Expert June 02, 2013
When the economy tanked in the early 2000s most people began to worry about the state of their bank's health. At the present time, however, banks are beginning to stabilize and hire more workers as they iron out the remaining wrinkles in their business. Those interested in banking should have a wide r... ...read more
Banks and credit unions have been in the news a lot lately for many reasons. This has led many people to wonder if there are any difference between a bank and a credit union and have started to compare banks with credit unions. The two has similarities, but then they also have many differences as well... ...read more