Well it is another snowy day here in the great Midwest...one that causes drivers to forget how to drive and even causes schools in rural areas to start late. None the less it is another week being started off with info that can be used.
FHA in its wisdom some time back imposed an anti flipping rule, This was meant to stop the quick inflation of home values and prices due to rapid turn times/sales of property's. This was particularly true as values were increasing at a dramatic clip. An investor would buy and sell a home sometimes without ever moving in and within an hour or so of closing on the purchase the new sale would transpire. This was one of the things that caused homes to inflate the way that they did in value.
So FHA came out with a ruling that a a new purchase agreement on a home sale could not be executed within 90 days of the closing date/recording of sale of the previous home sale.
Last year they came out and decided to help infuse the home sale market and to get the economy stimulated that they would allow flips as they call them within 90 days under certain restrictions. They were going to allow this for a specific period of time. The issue was that not all lenders wanted to do them or if they did they imposed some of their own restrictions or overlays in regards to what might be required or allowed for such a transaction.
Well FHA has decided to extend this in hopes to try and jump start the home buying market.
Here is FHA's full announcement off of their website.
http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-007
Now back to that home buying process.......
The Loan Approval Process consists of a few different things. Who you speak to will give you different items that they feel are important and so I will list what I see.
How much home can a person afford?
In deciding this a lender will look at the following
Credit History
Cash Requirements
Closing costs
Income
Stability of employment
Existing debt
In reviewing these items a lender will help you look what what makes the most sense for you based on your constraints and abilities as well as the constraints of the loan products that you are interested in. Together a plan of action can be derived.
How important is your credit?
More so than in the past, your credit/fico score has become most likely the biggest factor. It can not only effect if you can get a mortgage but also what type and at what interest rate.
Even if you have no credit there can still be options for you.
What are and who determines the settlement fees?
There are 3 basic sets of costs or settlement fees when buying a home.
Down Payment
Amount required based on loan program.
Closing Costs
These consist of costs from the lender, title company, third parties involved in the loan and the government. Most of these are set for the specific task while a few are actually tied to the loan amount.
Pre-Paids
These are the odd costs that are hard for many to explain. Quite simply they are costs of owning your home that you are charged at closing in advance and are placed in to an escrow account. The exception to this would be any per diem based on your closing date.
What does my mortgage payment include?
In most cases your payment will be made up of;
principleinterest
property taxes
home owners insurance
mortgage insurance
The amounts of these items will be based on your individual costs for your property.
What is an escrow account?
Property taxes and home owners insurance are generally part of your mortgage payment. Money for your taxes and insurance is deposited in to a escrow account. When the money for taxes and/or insurance comes due it is paid from this account. When you first open your mortgage account your prepaid taxes and insurance are deposited in to this account. The account is reviewed at least annually to insure that there is enough money being collected to pay your costs.
What can I expect at application?
At application information is collected from the consumer that will aid in the decision making process as well as required disclosures that are to be signed. The information is reviewed and a credit report is run. Generally at this time the loan officer will run the loan through and automated underwriting program to determine loan eligibility. Additional information may be obtained and alternate loan programs may be addressed.
Typical documentation required at application may include;
2 months asset statements
2 years W2 forms
30 days of recent paystubs
Dependent on the situation additional information may be required such as paperwork pertaining to rental properties, bankruptcies, self employment, divorces and more.
We will talk about loan approval, appraisal and title in upcoming blogs as well as various other information as it becomes news worthy.
Again I welcome all comments and questions.
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