Archive for the '100% Financing' Category
Safe 100% Financing with “MyCommunity Mortgage”
I recently wrote about FHA Access, a wonderful and safe way to obtain 103% financing. With 100% financing becoming more scarce every day, I’ve been rechecking guidelines for traditional 100% loan programs. I’ve done plenty of FHA, VA and 100% agency loans, but that was years ago, and it’s time now to reconsider programs that promote sustainable homeownership while helping borrowers who qualify but lack a down payment.
I want to share a few highlights from my conversation yesterday with an underwriter about Fannie Mae’s MyCommunity Mortgage™. This program isn’t new, but it does require that borrowers prove income. At the peak of our market here in California, people were buying homes for which they weren’t qualified—at least in traditional underwriting terms. That’s an interesting comment all by itself, isn’t it.
The link above to MyCommunity Mortgage™ is 6 months old, and Fannie Mae is nationwide. The rules can vary by state or by a particular wholesaler’s agreement with the agencies, so I called to update myself on the current local guidelines and pricing.
read comments (8)100% Financing Pullback hits Prime and ALT A
…the jist of this is that HSBC pulled it’s high LTV 2nds off the shelf today. 100% financing is disappearing fast. MortgageIT and Chase Manhattan Mortgage also announced similar changes in the last two days.
IMMEDIATE CHANGES TO HSBC STAND ALONE AND BLENDED HOME EQUITY PRODUCTS
Due to current market conditions,we have made the following changes to our Home Equity Stand Alone and Blended lending guidelines effective April 5, 2007.
CHANGES TO ALL HELOAN and HELOC PRODUCTS
100% TLTVs no longer allowed on any HSBC Home Equity product New Maximum TLTV of 95% for Full Documentation New Minimum credit score of 660 for Full Documentation Maximum TLTV of 89.99% for Stated Income Please note that the last day to register loans under the old guidelines is April 5, 2007, 10:00 P.M. EST. Any loans registered before this time will be honored for 60 days from the effective date of the changes and must be closed by June 4, 2007 or they will be withdrawn.
FHA Access–A Safe Way to 103% Financing
A couple of weeks ago I wrote an article called Qualifying For a Home Loan: 6 Reasons to Consider FHA. Not all lenders have been around long enough to remember FHA loans. Those who have remember the extra requirements that made FHA loans unpopular with sellers. But it’s a buyer’s market today, and all that has changed.
Last week I originated my first FHA Access loan in 7 years, and I was reminded what a great program it is. FHA Access is a 2nd loan that pairs with a traditional FHA 1st and covers the 3% down payment and all of the buyer’s closing costs. The Access loan is an 8%, 20–year fixed rate mortgage for up to 6% of the purchase price.
While FHA loans have no income limits, Access does. The borrower’s income may not exceed 120% of the median income for the area. For most of the Sacramento region, the limit is $78,480. That’s pretty generous and shouldn’t be a problem for most people. FHA loans are no longer subject to strict debt to income ratios—instead we submit them through automated underwriting—Access debt to income ratios cannot exceed 43%.
With all the exploding 100% loans out there, FHA Access offers a path to sustainable home ownership without a big down payment.
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Worthless Pre-Approvals
So you’ve decided to buy a home. And being the educated consumer or Realtor that you are, you secured loan approval for your 100% financing in advance. Now, you’ve got a formal approval and all the conditions are met.
Smooth sailing, right? Not necessarily.
I recently wrote an article entitled 6 Reasons Your Next Loan May Take Longer Than It Should. The post got a lot of attention over at Active Rain where most people had begun experiencing these very problems. And I’m afraid it’s just the tip of the iceberg.