Legal Sources of Funds; FHA Purchase to $800,000

I received the following questions from a very seasoned real estate agent the other week: “I have a 3.5% down offer for $795,000 on my desk – A. Does FHA even go that high; and B. What are the legal sources of funds for a down payment and closing costs?” MAX FHA LOAN AMOUNTS In […]Read More

No Bubble Here; FHA Condo Spot Approvals

FHA CONDO SPOT APPROVALS ARE BACK STARTING TOMORROW Starting tomorrow, an entire condominium complex will no longer need to be “FHA Approved” for a buyer to use FHA financing to purchase a unit within the complex. Buyers can now obtain what is called a “Spot Approval” to get just get a single unit “FHA approved.” […]Read More

FHA: “Condo Complexes No Longer Have to Be FHA Approved” – Spot Approvals Return!

About ten years ago “FHA Spot Approvals” went the way of the dodo bird, in that they disappeared. This was devastating to a lot of FHA buyers b/c condos were all that they could afford in their markets and so many condo complexes are NOT FHA approved. Fortunately, however, HUD/FHA will again allow for “Spot […]Read More

Why FHA’s BETTER Than Conventional In Hot Markets

My wife Heejin was “on call” for weekend referrals yesterday, and she had two buyers who wanted to switch from FHA financing to 5% down conventional financing. The buyers were making offers over list price in very competitive markets, and they were convinced their offers would be stronger with conventional financing. And Heejin screamed,“NOOOOOO, DON’T […]Read More

Both VA and FHA Require Formal Condo Approvals; Alternatives

Most agents and borrowers know that condo complexes need to be “FHA approved” before a unit within the complex can be purchased with FHA financing. What many don’t know, however, is that VA has the same requirement. VA and FHA do not unfortunately maintain the same list of approved condo complexes. You can find FHA’s […]Read More

What’s The Difference Between an FHA and VA Appraisal?

Agents and borrowers alike often find the appraisal process confusing and opaque – it’s why we consistently field questions on what appraisers look for when inspecting a property and how agents can best prepare. Not only can appraisers’ opinions on value make or break a deal, but they also play a crucial role in determining […]Read More

First Time Homebuyer Program Limitations; First Time Homebuyer Programs = FHA

Our first time homebuyers almost always ask about special financing programs for first time homebuyers. With the exception of a few down payment assistance programs and city-specific programs, there are no effective first time buyer programs other than good old fashioned FHA. JVM has access to various first time buyer programs, but they have significant […]Read More

FHA Loan Limits Up Too; Why & When To Use FHA?

HUD recently released FHA Loan Limits for 2018, and in high cost counties they largely (but not always) match the new loan limits for conforming loans. In high cost counties (most of the CA coast), the FHA Loan Limit ranges from $679,650 for a one unit property, all the way up to $1,307,175 for a […]Read More

FHA Financing Is Fast, “As Is,” & Easy; 15 Day Close

Heejin and I did a presentation yesterday on marketing for real estate agents, based on everything we have seen work and not work with the hundreds of agents we have worked with. It went really well, and if anyone would like to see it, please let us know. But, this blog topic surfaced after the […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]Read More

FHA Reminders: Attached PUDs, Refi’s to 96.5%; Cash-out Refi to 85%

A few quick but important reminders about FHA Financing, as we get questions often: 1. FHA financing is available for all Planned Unit Developments (PUDs) or “townhomes,” even if they are attached and in large complexes that look like condos. As long as they are not zoned as condos, they are eligible for FHA financing […]Read More

FHA Mortgage Insurance LOWER Than PMI In Many Cases; FHA = Good

FHA = Good. That is one of the primary points we make during our “Mortgage 101” Seminars. This is b/c too many Realtors labor under the myth that FHA financing is inferior to conventional financing. The myth stems from the days when FHA financing took longer to close and required clear Section I termite reports […]Read More

FHA Offers – Higher Esteem; Speed, Flexibility and “As Is”

One of the biggest takeaways from our “Mortgage 101” Seminars is to hold FHA offers in higher esteem. Here are a few reasons why: Speed: FHA Financing does not take longer than other types of financing. Skilled lenders can often close FHA loans faster than other types of loans. We have no trouble closing them in 17 days in […]Read More

BK’s & FHA Financing; 2 Years Seasoning Unless In Chapter 13

FHA requires only two years of seasoning from the date a bankruptcy is discharged. This is relatively well-known. What is not well known is that borrowers in a Chapter 13 bankruptcy do not need any seasoning to qualify for FHA financing, as long they have a one year history of timely payments to the bankruptcy […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]Read More

Credit Score Under 700 And Less Than 20% Down – FHA’s Better Deal

We have a borrower with a 670 credit score and 5% down payment who is comparing interest rates on the web, and getting severely misled. Borrowers often do not understand how significantly low credit scores affect interest rates with conventional financing. For borrowers with less than 20% down and lower credit scores (under 700, and […]Read More

FHA Is Faster Than Conventional; Myth That FHA Is Slower

We beat this dead horse often, but it keeps rearing its head. So we are re-beating it: FHA loans do not take longer to close than conventional loans (at least at JVM). They are often faster b/c of FHA’s flexibility. We got the below email from a listing agent yesterday after we closed his listing. […]Read More

FHA Better than 80/10/10 Conventional in Tight Market

We can close almost any purchase transaction in 14 days, using our uber-systematic, assembly-line process. One major exception is 80/10/10 loans with 10% down and a 1st and 2nd mortgage. 80/10/10 loans take us 21 days to close b/c we have to get two loans approved. Hence, if a borrower is making offers in very […]Read More

The Case For FHA: Lower MI; Good for Low Credit Scores; Fast Closing

We are making the case for FHA once again now that MI is so much lower (down to 0.85% from 1.35%). FHA interest rates are much lower than conventional rates, often over 1/2 percent lower. FHA rates are especially competitive for borrowers with low credit scores. It is a myth that FHA properties need to […]Read More

FHA No Longer Finances FLIPS

FHA will no longer finance “Flips.” A “Flip” is any property that was purchased and re-sold within 90 days of the purchase date. This means the contract for 2nd purchase cannot have any dates on it that are within 90 days of the previous purchase. If a buyer goes into contract within the 90 day […]Read More

Lender Credits For Closing Costs Again – Effect on Payment?

Yesterday, we recommended Lender Credits for closing costs for borrowers who are tight on cash. We pointed out how such credits result in higher rates, but we failed to mention the effect on a mortgage payment. Our borrower yesterday had a loan of approximately $400,000. If she locked in a rate of 3.75%, with a […]Read More

FHA Not ONLY For 1st Time Buyers; Who Uses FHA Financing?

FHA Financing is not just for first time buyers. FHA financing can be used by anybody who does not currently have an FHA loan. FHA financing is best for borrowers with limited cash, tight debt ratios, and/or credit issues. FHA is the most forgiving type of financing when it comes to all of these issues. […]Read More

FHA Financing for “Fixer;” Save Cash For Repairs; Refi Later

We sometimes have buyers, with ample cash, use FHA financing to buy total “fixers” and then use their cash savings (from the smaller down payment) for improvements. Once their improvements are done, they come back to us and use their much higher appraised value to do a no-cost refinance into a conventional loan. For example, […]Read More

FHA Loans Do Not Take Longer Than Conventional

We are frequently asked by Realtors if we can close FHA loans as fast as conventional loans, and our answer is always the same: “of course.” FHA loans do not take longer to close than conventional loans if a lender has well-trained staff. It is a myth that FHA loans take longer. There are few […]Read More

FHA Properties Do Not Have To Be In Better Condition; Misconception

We continue to hear Realtors express concern about whether or not properties are in good enough condition for FHA financing (as opposed to conventional financing). This is a misconception left over from years ago when FHA properties needed to have all Section I work cleared. We address this often, but FHA financed properties do not […]Read More

FHA Appraisals – Only One Is Allowed;Value Can’t Change w/ New Lender

We had a borrower leave us for an online lender about a month ago. The online lender screwed up the loan, and the appraisal came in low (despite ample comps that supported value). The borrower came back to us with 8 days left to close escrow, and we could have closed on time but for […]Read More

Order “Fresh Credit” On Day of Short Sale

And because these borrowers will never miss a payment up to the short sale date, they can still buy a new home the next day with FHA financing (as most know). But because short sales (once reported to credit bureaus) can lower credit scores as much as 100 points, it is essential to run a […]Read More

FHA MI Required MORE Than 5 Years for Purchases; 78% of Price

Mortgage Insurance for FHA Purchase Money Loans must remain in place until the loan balance is reduced to 78% of the PURCHASE PRICE. For purchase money loans, the current appraised value of the property is irrelevant (even after 5 years). We were originally told (and many people still believe) that FHA MI can be removed […]Read More

FHA Still Allows “FLIPS”; Investment Down Payments; Correction

We are hitting just a few disjointed topics today regarding items or questions that recently popped up. First of all, in response to our recent comments in regard to “Homebuyer’s Assistance” programs, a seasoned Realtor reminded us that some City (and State) programs are excellent and extremely favorable b/c they “gift” or “loan” a full […]Read More

Bi-Monthly Payments; FHA – Not ONLY for 1st First Time Buyers!

FHA is not for First Time Buyers only. We are asked about this constantly from both buyers and seasoned Realtors. So we will continue to post this reminder. ANYONE can get FHA financing, as long as they do not currently have FHA financing (and even then it is sometimes OK). We had a borrower pay […]Read More

FHA – Strap in Place and Turn On Water Heaters

We frequently get “As Is” FHA purchases involving houses in near perfect condition. But, the appraisers often have to return for re-inspections for two reasons: (1) to make sure the faucets work with hot water; and (2) to certify that the water heater has been strapped in place. Hence, if you are involved with an […]Read More

When a Borrower Must Have 5% of Her Own “Seasoned” Funds

We have a client buying a $426,000 house with almost 10% down and she has to get FHA financing (much to the consternation of her Realtor, who has been burned one too many times by persnickety FHA appraisers). The reason that we have to run with FHA financing is that almost all of her down […]Read More

FHA Loans – Only One Per Borrower; Exceptions to Rule

We have numerous borrowers refusing to lock now because they are convinced rates will go to 3.75% “this time.” But, like last year, those super-low-rates may never come and we may have seen the bottom. The tragedy is that many of these borrowers would have benefited tremendously from a refinance, but they end up getting […]Read More

3% Down Conventional Instead of FHA at 3.5% Down

Many of our lenders offer a 3% Down Conventional Loan, which is to be used in lieu of FHA. The PMI is the same as FHA’s MI rate of 1.15%, but the Conventional Loan’s Interest Rate is about 1/2 percent higher. It is also harder to qualify for the conventional loan, and Gift Funds are […]Read More

Condo Not FHA Approved? 5% Down Condo Loans

We had a highly qualified FHA buyer yesterday ask if a particular Condo Complex was FHA Approved. It was not FHA approved, but it makes little difference because the buyer can easily put down 5% (only 1.5% more than FHA requires) and garner conventional financing. As long as the resulting loan amount is under $417,000, […]Read More

FHA Appraisals and “As Is” Purchases

We constantly get “As Is” FHA purchases that seem like “smooth-sailing” until the appraisal comes back with all kinds of repair-needs called out. Appraisers have an obligation to call out a whole litany of defects and repairs. If they miss items, they can lose their licenses. These repair items include non-working plumbing and appliances, apparent […]Read More

Obscure Loan Conditions because of “BUYBACK” Threats

We have an FHA purchase right now involving a contract that initially indicated that the buyer was an investor. The buyer now intends to “occupy” the property, and the lender is concerned that the change of intent, as “owner occupancy” is a serious issue. So, the lender is asking for an addendum with very specific […]Read More

FHA Requires MI No Matter What for 30 Year Loans

We have a buyer putting down 30% on a $400,000 purchase, and she can ONLY get FHA financing, and she still has to pay for MI (both the monthly rate of 1.10% divided by 12, and the Up Front fee of 1%). And, she has to keep MI for 5 years. This illustrates two points: […]Read More

3% Down Plus 2% Gift = 5% Down; Loan Limits Staying

Recently we touted a 3% down Conventional loan as an alternative to a 3.5% down FHA loan. Drawbacks to the 3% down loan include a very high PMI rate (1.15%), restrictive underwriting guidelines, and significant upward adjustments to the rate for the high “loan-to-value” ratio. Remember that sometimes FHA won’t work because one spouse has […]Read More

FHA Loans Are Truly for Anyone; No Income Limits

We had a well-off borrower yesterday tell us that she is “ineligible for FHA financing” because she “makes too much money.” We let her know that you cannot make too much money for FHA. The only thing that makes a borrower ineligible for FHA financing is having an FHA home loan on the books already. […]Read More

Open House Flyers; FHA Mortgage Insurance for 5 Years No Matter What

We do “Open House Flyers” every week for numerous Realtors. A few samples are attached. We can get them done quickly and easily, and they look great. Please let us know if you would like flyers for any of your open houses. We love to provide them, and there is no cost. FHA buyers must […]Read More

Fannie Mae’s 3% Down Loan – Alternative to FHA

Fannie Mae has a 3% Down (“conventional”) purchase that is a good alternative to FHA, if FHA is unavailable. Fannie’s program caps out at $417,000, while FHA goes to $729,750, and Fannie’s rates are higher than FHA’s for this program. In addition, the PMI rate for the alternative Fannie Program is 1.15% (the same as […]Read More

Getting Out of FHA MI?? FHA Assumable??

There is still much confusion about FHA loans, so we are addressing two issues today: (1) getting out of MI; and (2) if FHA loans are ‘assumable’. You can get out of FHA MI, but ONLY after a minimum of five years, and ONLY if your LTV drops to 78% or below. Many loan officers […]Read More

9 DAY CLOSING!!; FHA NOT for First Time Buyers Only

We closed a transaction in 9 business days. We got the transaction last Monday (12 days ago) and are recording today (despite a holiday, a subordination issue, and a minor appraisal issue). This is not the first time we have done this. We did this for Daniel Winkler and Associates in Albany, CA; I am […]Read More

FHA Energy Efficient Mortgages – Easy to Do – Very Beneficial

We often tout “EEM Loans” for FHA buyers, but we think we get far too few takers in light of how easy they are, and how beneficial they are. EEM or Energy Efficient Mortgages are simply FHA loans with an extra $8,000* tacked on to the loan to cover the cost of Energy Efficient Improvements […]Read More

3% Down Conventional – Alternative to FHA; Single Payment PMI

Several of our lenders are touting their 3% down alternative to FHA. The Monthly PMI rate for these 3% down loans is 1.15% (same as FHA’s), but there is NO up front PMI (FHA has a 1% Up Front MI fee). In addition, the down payment requirement is lower by 1/2 of a percent, and […]Read More

Co-Signer/Co-Borrower NOT Just for FHA; Freddie Allows Them

When discussing conventional or FHA loans, non-occupant co-borrowers, or co-signers, and blended ratios all refer to the same thing: Using a friend or relative to co-sign for a competitive owner-occupied loan even though that friend or relative will not live in the house. (Note: co-signer does not have to be a relative) Many people mistakenly […]Read More

Buying a Property After a Short Sale

We address short sales often, but we still get many questions so we are addressing the issue again. If a borrower is late with his mortgage payments (even once) prior to the short sale, then he cannot obtain FHA financing for 2 years or Conventional Financing for 4 years. For Conventional Financing, the four years […]Read More

What Makes a House “OK” for FHA? Condition Issues?

We get asked time and again about what properties “qualify” for FHA financing – the concern is usually in regard to condition. But now that FHA allows “As Is” purchases and, as long as NO reports are referenced in the purchase contract, FHA is largely the same as Fannie Mae or conventional, with respect to […]Read More

FHA MI vs. Conventional or Private Mortgage Insurance

FHA Monthly Mortgage Insurance is now 1.15% for most borrowers. It was only 0.55% prior to October of 2010; and it was 0.90% prior to today. Borrowers refinancing their FHA loans do NOT get to keep their old FHA MI rates. Up Front MI remains at 1% of the loan amount. This is the fee […]Read More