FHA Loans and FHA Mortgages

Nehemiah programs are just one form of a down payment assistance program. You can use these in conjunction with FHA loans. There are other down payment assistance programs such as AmeriDream, Genesis, and a few others.

Lately I have been reading a few blogs that state that these down payment assistance programs are like laundering money. Okay….  I’ll talk about this in a few. Other blogs have talked about how bad the Nehemiah program in itself is bad. The reason why is because it’s more expensive than other DPA programs. Okay?  I’ll talk about this soon.

 

So, what about those that say these DPA’s are like money laundering. Well, HUD says that you, the borrower, can get 100% of your monies gifted to you. These gifts can come from a family member or a non-profit organization. Okay, sounds good. Believe it or not, the DPA companies are non-profit. So, why is it labeled as illegal? Someone’s opinion? One argument that I have heard is that these non-profit companies are making money off of the borrower. A small measly $500?  Then Mr. Borrower, save the money to put down on the house. Me?  I think it’s a great program if used correctly.

Which gets us to the second part, that the Nehemiah program is more expensive than AmeriDream, Genesis, and a few others. Okay?  What, an extra $100 to $200?  I have had much success with Nehemiah and I have learned in life…."don’t fix it if it’s not broken".  Right?  Or do you take that risk for a $200 savings. Sure, some of you have had some success with the other programs. I just won’t risk it.

 

As it stands, the Down Payment Assistance programs have helped over 600,000 families since 1997. I will agree that some institutions have abused this type of program. Meaning that the appraisal of the property was sometimes in question, when the lender would try and push the value of the home, so it would include everything that the borrower would need for both down payment and closing costs. And then there are some that argue the reason why these DPA’s are being shut town because of tax implications.

Overall, I have my various opinions on these types of programs. There could be an argument made that a homebuyer with no sweat equity, has nothing to really lose in the whole transaction. And my bigger concern in regards to this is if properly set up, a homebuyer could realistically come to the closing table with no money out of pocket because of these DPA programs. And there have been many times to where that buyer won’t even have $500 saved up after closing. This leaves the homebuyer in a precarious position because no matter what kind of home that you are buying, new or old, things happen. There will be times when you will need money to fix the house or to buy a new appliance. 

On the flip side, these types of DPA loans have put many worthy buyers into homes that were very deserving. My job is not to pass judgment amongst any buyer. My job is to properly educate the homebuyer in their decisions and to make sure that I give them a respectable mortgage, to ensure that they understand the whole mortgage/home buying process.  

 

Knowing that this has not been resolved hurts a lot of us in the today’s industry. But we just have to keep moving along as business as usual, until a decision is rendered. For any of your mortgage needs, please make sure that you speak to a mortgage professional who is on top of these chain of events. Someone that not only knows their mortgage products, but who understands today’s market.

 

FYI -  These down payment assistance programs are not limited to first time homebuyers.  Nor do you need to qualify for them. Just as long as you are approved for a mortgage.

 

For more information, I wrote a more detailed blog on Nehemiah and how to get into a house with little or no monies.  You can use FHA Nehemiah and these other down payment assistance programs for both FHA mortgages and conventional loans.  Do you truly think that FHA/HUD would want to see these programs disappear?  No…

Creative FHA financing – No money out of pocket from the buyer!!! – Part 1

http://www.fhaloansfhamortgages.com/003970

 

FHA loans have been the choice of mortgages as of lately in many parts of the country for numerous reasons. What I do hate hearing is that they have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage industry and the real estate industry.

The subprime loan for many years could go down to a 500 credit score, as long as you had more money down. But your rate was usually higher. The better your score, the less you needed to put down, the lower your rate. Sounds good, right?  Wrong, because the subprime rate was always higher than the FHA rates.

To compound this, so many thought just because you had a conventional loan, that you had the better loan. This was not always true when putting zero percent down or 3 percent down. In most cases, you were told this, because that particular lender was not FHA approved. Now?  Even with 10% down and credit scores less than 680, FHA loans in most cases, will be the best mortgage for you.

 

Okay, you could argue the fact that this is just my opinion. True, even though I have almost 16 years of experience as a loan officer in the mortgage industry. But numbers don’t lie. Let me show you…..

The example below is based on a $300,000 purchase price with 10% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 680, certain fee penalties would apply to you, which would increase your rate.  The FICO (credit score) that I am going to use is 659, which is above the average credit score and I will still show in this example that FHA loans are cheaper, even with 10% down.  

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 620. It all comes down to the investor. We don’t have penalties on any credit score above 580. And I can still do credit scores down to 500 with a manual underwrite. Many lenders can’t go below 580.***

Type of Mortgage

Conventional Mortgage FHA Mortgage

Purchase Price $300,000 $300,000

Mortgage Amount w/ 10% down $270,000 $274,275 w/MIP

Mortgage Rate with zero points 6.625% 6.000%

Principal & Interest payment $1,729.73 $1,644.42

Monthly mortgage insurance $   117.00 $   111.97

Total mtg payment  PI with MI $1,846.73 $1,756.39

Monthly Savings   $90.34

 Disclaimer :  These rates are based on today’s rates for a 30 year mortgage and can change any time because of various market conditions. To compare this scenario apples to apples, the fees would are the same and with zero points. The conventional rate also includes the penalty for the 659 credit score.

Some of you might be saying that you will be adding $4,275 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don’t want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, which most people sell in a 6 year period, you would have saved $5,420.50 in payments in 5 years. This is a difference of $1,145.50 that you have saved!!!   And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest is lower, which would offset the interest that you would write off on the 6.625% rate. Just something else to remember, but consult your tax consultant or CPA. 

 

FYI –  If you sold your house in less than 3 years, you are entitled to a refund of the upfront mortgage insurance premium (UFMIP) of $4,275.

 

How dto I find an FHA approved lender?    You want to make sure who you are dealing with is FHA approved.

Why do I say this?  Not all lenders are approved FHA and some may tell you that you don’t qualify FHA because in reality, they aren’t FHA approved. 

You can find a HUD approved lender in your area by going to the following HUD website: http://www.hud.gov/ll/code/llplcrit.html     DISCLOSURE (just be careful of the spelling of the lender. If I put in my company’s full name, Infinity Home Mortgage Company, Inc, it tells me that there is no such company. If I put in Infinity Home Mortgage, it shows my company as being FHA approved. Just keep this in mind. You can always call HUD also. (202) 708-1112

http://www.fhaloansfhamortgages.com/0037C8

 

I just got meme’d by Jeff Dowler yesterday because Mary McKnight had meme’d him over the weekend.  My first thought was, rut row, because I did about 3 of these last year. For many of you that don’t know what a MEME is, it’s an Internet chain letter that I am suppose to talk about myself. These would be normally things that most wouldn’t know about me and I would share with anyone on the Internet in a blog. And for those of you who want to take a peek in regards to who Jeff Belonger is, here is one of the 3 meme’s that I wrote. What’s this MEME phenomenon going on in the blogging world? Well, I have been tagged, or in this case, Memed !!!

Now, Mary McKnight took it a step further. As I have explained, meme’s are suppose to be things that most people wouldn’t know about you. Mary decided to make this next wave of meme’s in a question format, asking 8 questions. The good part about this, I won’t be reveling secrets about myself that only the government knows about me. And the rules for this next wave of meme’s?  You must answer the 8 questions and meme 8 new people and they must respond in their own blog.

 

So, I guess I need to move forward and reveal myself in these next 8 questions……

1. Who is your favorite musical artist? (post a youtube video)

This is so unfair. Not only is it hard for me, but just after a 3 day weekend to where I didn’t have to think at all.  And now I am being asked to think…. again, I have so many, but here is one of them. Michael Jackson….not my favorite artist, but one who changed music in the 1980’s.  Sure, there has been so much controversy that has surrounded him in the last 2 decades, but he was one to revolutionize music videos, especially with his video,Thriller. But PYT was a favorite of mine from high school.

Overall, I could go back in history and pick so many more. But Michael Jackson stands out and so does Madonna. Both very creative when it came to music and opening the doors for music videos.

 

2. Who is your favorite artist (post a flicker photo)

Another tough one, because I like abstract art, contemporary art, sculptures, and architecture. I have been to many museums, including the Louvre in Paris, France. But I am feeling like a kid today, after spending all weekend with my 3 nieces and 3 nephews, ranging from 9 years of age to 6 weeks old.  And kids make you want to be a kid again at times. And why not forget about the oldies, that I wish kids had these days.  What about Charles M. Schulz……   remember any of these?  These were some of my favorites.

  

    

 

3. Who is your favorite blogger?

Gee, another tough one.  I was just introduced to blogging about 21 months ago. I am just now getting out in the blogoshere, reading other bloggers, besides those on Active Rain.  My favorite bloger? I would have to say those bloggers that are not only true to themselves, but those that are upfront, honest, and caring when it comes to the general public and consumer. Making sure that they just don’t get an opinion, but the true facts, not being misled.

4. If you could meet anyone (alive or dead), who would it be and what is the most interesting thing about them?

Okay, the questions just seem to get tougher and tougher. I would love to pick all the easy ones, that most people mention when asked this question. Such people as Einstein, Jesus, Mother Theresa, Martin Luther King Jr, Winston Churchill, General Patton, Jeff Belonger….. and the list could go on forever. And maybe this person would be on many lists also. But someone that I found very interesting and who I would have loved to sit down with would be Benjamin Franklin. Gee, what wasn’t interesting about him. One of our founding fathers for the United States, who invented the lightning rod, bifocals, and the Franklin stove. He was also a painter, author, and a politician.

Overall, I know I could come up with several others, but he did so much back then that has influenced the way that we live, one way or another.

 

5. What did you want to be when you grew up?

I wish I could be more creative here. It wasn’t a scientist to save the world, someone finding cures to all diseases. Nor was it a lead singer in a group, or even anyone famous. Just that I wanted to be a fireman when I was little. Didn’t many of us pick this when we were younger?  I guess it goes back to the fact that I love helping people, hence why I love being a loan officer, for which I have been doing mortgages for almost 16 years now.

 

6. What is the most interesting piece of trivia you know?

Okay, I don’t know if I should be  Cliff Clavin here and just spout out a bunch of useless information. But for those that know me, you should know the answer. In any case, some interesting trivia. Not sure if this counts, but do you know that in Vermont, you can’t have more than 2 drinks in front of you at any given time. Meaning, if you wanted to do a shot and a beer, you would have to buy one and drink it, before you can have the other. And this next rule might make sense then. You can have an open container of beer in the car and drink it, as long as it is the passenger in the car. Now, I found these out when I use to go snow skiing in Vermont in the late 90’s. So I am not sure if these are true any more.

Here is something interesting for you music buffs.  REM got their name by randomly flipping through the dictionary, so says my music channel.

 

7. If you could live in any point in history what would it be and why?

Well,  I was never a history buff in HS nor enjoyed it, but have grown to love history as I have gotten older. As I mentioned, I love a lot of what went on during World War II.  But I guess what intrigues me the most would be the history of the Roman era and the Egyptian era. As I have mentioned, I love architecture and would love to have been there when they made the Coliseum and the pyramids. But I wouldn’t give up today’s plumbing and refrigeration.

 

8. What is the most interesting job you have ever held?

Not sure if interesting in this case can be clasified as fun. I was in the U.S. Army from 1986 to 1988. Not only do I take a lot of pride that I served our Country, even though it was during peace time, but it was different. Something that not many people will ever have the chance to explore or try. I learned a lot about myself back then and what I was capable of. Remember that old saying, “mind over matter".  Besides, it was an adventure, besides a job.  And currently, I absolutely love what I do now and that is helping people obtain the American Dream. No matter if it’s a purchase or a refinance. What I currently do now, I couldn’t really call it a job. But yes, it’s definitely an adventure also.

 

 

          

 

 

Now it’s my turn to have some fun, since I get to pick 8 people. And don’t get me wrong, I have fun when I get to share a little something about myself. Just don’t take everything that I say too seriously. The part that I do take seriously is my work, making sure that my clients not only get a fair deal, but understanding what they are doing. So, drum roll please…..   & don’t forget the meme law…. Each person chosen must answer all 8 questions and ask 8 other people to answers these same questions on their blogs!

So, when I call your name, please step up and show us what you got !!!

Greg Swann – BloodHound Blog

Patrick Kitano – Transparent Real Estate

Jason Sardi – The Insider’s Insight on Mortgages

Dan Green – Life in Queen City

Missy Caulk – Ann Arbor Real Estate Talk   Missy was already tagged by someone. (picking another)

Ed Rybczynski – Title-opoly

Tom Burris – Dallas Loan Guy

Beth Ramsey – Huntsville Real Estate

Virginia Hepp – Mesquite, Nevada  Real Estate Homes & Condos

 

http://www.fhaloansfhamortgages.com/0036FE