Mortgage Help Desk

California Housing Finance Agency CalHFA FHA Loan Program for First Time Homebuyers in California

Guy Knox (imortgage) — Mon, 27 Dec 2010 13:22:30 -0800

California First Time Home-buyers, government programs are available to help you with affordable home-ownership by offering a low, fixed interest rate and Down-payment Assistance for eligible borrowers. The program I'm most excited about is CalHFA FHA Loan Program, currently offering an interest rate of 4.125% today. Compare that to today's open market rate of about 4.75% on a FHA 30 year fixed rate.

How the program works

CalHFAFHA will finance up to 96.5% of the purchase price or appraised value, whichever is less. Then, if eligible, you combine this program with one of the allowed Down-payment Assistance or Closing Cost Assistance programs.

Program Eligibility

Must be a First Time Home-buyer, meaning you have not owned AND occupied a home in the past (3) years.
Meet CalHFA income limits established for the county in which the house is located
Meet CalHFA sales price limits established for the county in which the house is located
Must be a U.S citizen, permanent resident or other qualified alien
Property types eligible are: Single Family, Condo or PUD (Units and Manufactured homes are not allowed)
Home-buyer education is required, CalHFA will accept Home-buyers Education Certificates from Fannie Mae, Freddie Mac or HUD-approved Housing Counselor
Other prgram requirements may apply

CalHFA FHA Loan Program Income Limits for Southern California

Sales Price Limits

County Household Size Income Maximum Non-Targeted Targeted

Los Angeles 1 or 2 $95,160 $656,775 $802,725

3+ persons $111,020

Orange 1 or 2 $111,600 $656,775 $802,725

3+ persons $130,200

San Diego 1 or 2 $99,120 $627,750 $767,250

3+ persons $115,640

Riverside 1 or 2 $79,920 $450,000 $550,000

3+ persons $93,240

San Bernardino 1 or 2 $79,920 $450,000 $550,000

3+ persons $93,240

Call me today! I can help you determine your CalHFA eligibility and purchasing power.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com

Back to Work After Absence

Guy Knox (imortgage) — Mon, 20 Dec 2010 21:27:09 -0800

Question: Borrower was unemployed for a year, but prior had strong work history. He has been back to work for over 7 months in the same field. Can we use his income to qualify?

Response: Since the borrower has been back to work for 6 months or more then he should be eligible to borrower money given the borrower is working a regular hourly or salaried schedule with regular pay.

Watch-out, if the borrower is 1099'd, piece work, commission, tip, contract, temp or any other non-standard form of pay, then lenders most likely will require the borrower be back to work for a minimum of 12 months to calculate an average for qualifying. Depending on the job type, the borrower may need to be back to work for a longer time period.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com

Landlord Experience on Rental Property

Guy Knox (imortgage) — Mon, 20 Dec 2010 20:34:32 -0800

Question: Is a borrower required to have landlord experience to use rental income to qualify on the subject property?

Response: Depends, Fannie Mae does not require the borrower to have experience managing rental properties; however, several investors do have the requirement.

Please check with the lender before referring your client, to see if they have a Company Overlay requiring experience managing rental property. Here at imortgage we have investors that do not, therefore we can use rental income in qualifying your clients.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com

FHA Loan & Delinquent Federal Debt & Judgment

Guy Knox (imortgage) — Fri, 17 Dec 2010 16:51:47 -0800

Question: My borrower defaulted on her student loans: does she have to pay them off on a FHA Loan? She also has a judgment: does that need to be paid off as well?

Response: For both the delinquent federal debt and the judgment, the borrower must either payoff the delinquent account OR she must document that the creditor has set up a payment plan and she has made payments as agreed for a minimum of 12 months.

I've been asked from time to time: why 12 months?

FHA was in major part created to help the under serviced in our country realize home ownership, but it is not an entitlement program. Quoted from the HUD 4155.1 handbook:

1.A.1.aa. Purpose of Underwriting

The purpose of underwriting is to

determine a borrower's ability and willingness to repay a mortgage debt to limit the probability of default and collection actions, and
examine the property offered as security to determine if it is sufficient collateral.

Darn near the 1st line of the Handbook sets the tone for Underwriting. Past behavior is a good indicator of future behavior, so by demonstrating you can consistently make good on your obligations for 12 months leads the underwriter to feel you may have changed your priorities and will most likely pay your housing expense on time.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com

Title

Guy Knox (imortgage) — Thu, 16 Dec 2010 19:24:45 -0800

Realtor asked: Is it Ok that the Seller be put on Title before we close on our transaction?

Response: No, the seller must be on title when the contract is written as well as when the appraisal and Prelim are order. Lenders typically require Title to provide a satisfactory 24 month chain of title to validate that the Seller truely owns the property they are selling.

I had this situation happen last year and the company I worked for at the time (Bank of America), required a cancellation of the original escrow and we had to start all over. The seller purchased the property on the court steps and within hours had a signed contract with my client.

Lesson to Learn: If you are an Investor, Listing Agent or Buyers Agent; have a really good Title Rep on speed dial to make sure this type of issue doesn't happen to you or your client.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com

Trust Assets

Guy Knox (imortgage) — Thu, 16 Dec 2010 16:07:48 -0800

Borrower asked: I want to use assets from my trust for the cash I need to close and satisfy reserve requirements; what documentation is required?

Response: To use the trust funds for the transaction, lenders most likely will require written documentation of the value of the trust account from either the trust manager or the trustee and require documentation of the conditions under which you can access the funds. You must document the ability to have immediate access to the funds.

The Mortgage Guy

Guy Knox
Loan Officer
imortgage
(951) 893-6307
Fax: (866) 933-8113
Guy.Knox@imortgage.com