FHA LOAN
Owning a house is one of the biggest investments a person would make in his entire life, but to some of us this is one of the hardest dreams to realize for the obvious reason that we don’t have enough money. And if ever we do get the house we always wanted, we find it hard staying in it because of the mortgage payments and we end up losing our home.

As a way of making this American dream a reality and to make homes affordable to all Americans, the FHA home mortgage loan was created. What the FHA does is insure home loans provided by lenders to accommodate more homebuyers and homeowners even if they have fair to poor credit, or if one could only afford a small down payment, or if a homeowner wish to get lower interest rates to make mortgage payments more affordable.

The FHA loan is the easiest real estate mortgage loan one could apply for as long as he is of legal age, has a valid social security number and has a steady employment history or has been with the same employer for two years. While refinancing with FHA is also every easy even for properties with little or with no equity and have a high interest rate with their current conventional loan. It is still possible for a homeowner to enjoy low interest rates even if the homeowner’s credit standing is not perfect, and with a loan-to-value as high as 97.75%. Another refinancing program of the FHA that offers low interest rates and is excellent for homeowners who wish to save money is the Streamline Refinancing which is exclusive for borrowers with FHA-insured loans.

This is also a good alternative for some homeowners that have equity in their property with a not so perfect credit and would like to pay off their debts to improve their financial and credit situation. This could help their financial status and they could even get cash out refinance up to 85%, just by paying off all their debts using FHA loan and enjoy a very low interest rates.

Lastly, FHA could allow you to buy a house with a down payment as little as 3.5% and not that many people know about this. And in case the home buyer credit score is less than 580 but higher than 520 then a 10% down payment would be required.

However a lot of people do not know that there are a lot of down payment assistance program are available to help homeowners get into a property with as little as 0.5% down payment for as long as the home buyer haven’t owned a property for the last 2 years to be considered as a first time home buyer. The buyer’s income should fit within the county median income limit that is required by the down payment assistance program.

It would be definitely wise to check with a professional about your mortgage matter to help you out and facilitate in getting the best loan that would suit your situation. Either you decide to get an FHA loan or not, and check out how to distinguish a good mortgage company to work with versus not.

Advantages
Lower Down Payment.
Lenient on Funds to Close.
Lenient on Credit History.
Lenient on Employment.
Better Interest Rates.
No Pre-Payment Penalty.

CREDIT QUALIFICATION:
530 – 579 = Minimum Down Payment is 10%
580 and Above = Minimum Down Payment is 3.5%

TYPES OF FHA LOAN
FHA STANDARD – PURCHASE
A loan for borrowers who wish to purchase a home which requires a down payment of just 3.5% of the lower amount between the value or the purchase price.

FHA STANDARD – REFI C/O-REFI NO C/O
REFI CASH OUT
It allows to cash out from your property with an FHA loan going up to 85% loan-to-value.
NO CASH OUT
It allows the borrower to refinance up to 97.75% of the property value..

FHA STANDARD – REFI C/O-REFI NO C/O
A special mortgage product for homeowners with existing FHA loans to refinance without increase in the loan amount but for the purpose of lowering the interest rate and mortgage payment and help them with the savings and will allow to finance up to 125% of loan-to-value.

FHA 203K
A federally insured mortgage for homeowners who want to rehabilitate or do repairs on a damaged primary residence.
This is an additional fund to the loan which covers the repairs and rehabilitation of a property to be purchased.

203K STREAMLINE
This is for less extensive improvements that does not require the services of a licensed professional like an architect, engineer or a contractor.

203K STANDARD
Intended for projects that involve structural changes like exterior grading, room additions, and projects that require engineering or architectural expertise as well as licensed contractors.

INCOME AND EMPLOYMENT
HOW THE INCOME IS CALCULATED TO QUALIFY FOR FHA LOAN?
Last 2 years of total gross income including variable income like bonus and overtime, divided by 24 months.
JOB REQUIREMENT
Borrower should have been employed for the past two years in the same line of work and everything must be documented.
DEBT-TO-INCOME RATIO (DTI)
47/56, the number 47 is the ratio of the mortgage payment versus the income where the 56 number is the ratio of the total housing expense versus the income.

FLOW PROCESS
STEP 1: BENEFIT BRIEFING CALL
A telephone call is initiated to find out whether our client will be purchasing new property or refinancing an existing mortgage.
Completing the application process to confirm client’s eligibility for the loan would be faster with better cooperation and accurate information from the client.

STEP 2: LOAN SAVER DIRECT PACKAGE
A package that will contain the loan application and the list of requirements is sent to the client for review and completion.
The client fills out the forms, and signs all the disclosures.
The client gathers all the documents necessary for the loan.
The client mails, faxes, or emails the documents to our loan processing team.

STEP 3: QUALIFICATION
Loan Saver Direct Underwriters reviews the application and all the documents submitted.
The Loan Officer discusses with the client the benefits gained from refinancing. He also sets the right expectations by disclosing all the loan details and fees involved.
If the client is agreeable to the terms, then we will commence with the next step of the loan process.

STEP 4: OPENING ESCROW AND LOAN PROCESS
Loan Saver Direct opens escrow and processes the loan.
An appraisal is requested by the lender, and the client is responsible for paying the cost involved, ranging between $450 to $475.
Final loan documents are released, and the client signs the loan documents with a notary.

STEP 5: CLOSING
The client brings funds to escrow if necessary.
The final closing package from escrow with the new loan terms and closing statement is provided to the client.