FHA flips and what you need to know

Click here to see the original waiver.

This means that buyers may use FHA financing to purchase a home that was previously purchased by the seller within the past 90 days.  Before this waiver an FHA purchaser was required to wait until the seller had owned the property for at least 90 days.

Summary of the waiver:

All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.  The lender is looking for the following:

Seller holds title to the property

LLC’s, corporations or trusts that are serving as sellers were established in accordance to the law

NO pattern of previous flipping as evidenced by multiple title transfer in the last 12 months (this is a big one to look out for)

Property was marketed open and fair

In cases where the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender follows these criteria:

Justify the increase with supporting documentation and/or a second appraisal (2^nd appraisal cannot be paid for by the borrower)

A property inspection must be ordered by the lender and the inspector can’t have an interest in the property or relationship with the seller.  The cost can be passed onto the borrower at closing.

The property inspection will be reviewed by the Mortgage Underwriter and repairs may be requested.  (Underwriter is primarily looking for health and safety issues)

Please note that if the sales price of the property is less than 20% above the seller’s acquisition cost the above does not apply.

Fannie Mae and Freddie Mac have “lookup” forms on their respective websites. Check Fannie Mae’s first because Fannie Mae’s market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

2. If my mortgage is held by Fannie Mae or Freddie Mac, does that mean I’m instantly eligible for the Home Affordable Refinance Program?

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

3. Is “HARP” the same thing as the governments “Making Home Affordable” program?

Yes, the names HARP and Making Home Affordable are interchangeable.

4. My mortgage is held by Fannie/Freddie. Now what do I do?

Find a recent mortgage statement and write “Fannie Mae” or “Freddie Mac” on it — whichever group backs your home loan — so you don’t forget. Give that information to us when you apply for your HARP refinance.

Even though this legislation has passed - all lenders are not all required to participate.  For right now, your first step is to contact a mortgage professional and get information as to their participation.

In the case of all loans, your loan must be delivered back to the existing owner of the loan.  Meaning, if Fannie Mae is the owner of the loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines.  The same is true for Freddie Mac.  You must first determine who owns your loan.  A borrower has the ability to do this by contacting their servicer and asking…or by using the links below.

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

Let’s look at the guidelines for both Fannie Mae and Freddie Mac and point out some of the key factors we see that will impact or enhance your ability to participate.

Here are a few of the new HARP Program qualifying guidelines:

Loan is backed by Fannie or Freddie [click to check the respective "look-ups"].
Your current mortgage home loan must have been securitized prior to June 1, 2009 by FNMA or FHMLC.
You  must have paid your mortgage on-time for the prior 6 months.
You must have paid on time for 11 of the last 12 months, or have no more than one 30 day late payment in that period.

It may be until early March before the banks will start accepting applications for HARP Refinances, but the numbers of packages are already stacking up… and if the program is all that we hope it will be for Arizona home owners, there will be a bunch of people running to get through the door.

No Loan-To-Value HARP Refinance for Phoenix Home Owners Underwater

• Fannie Mae, Freddie Mac and some of the bigger banks (Wells Fargo and Chase) are putting foreclosures on hold over the 2011 holiday season.  Starting Dec 19^th until after Jan 2^nd families in foreclosed homes won’t be kicked out.

• Fannie Mae officially announced the Conventional loan limits for 2012 are unchanged (Conventional limit in Arizona is $417K for one unit home).  Please click here to see full mortgagee letter.

• Well, the VA decreased funding fee was short lived.   On Nov 21^st the President signed into law that the reduced funding fee will once again revert back to the previous amounts until Sept 30^th 2016 – unless otherwise updated (For loans with a down payment of less than 5% the funding fee is 2.15% for a Veteran using it for the 1^st time or 3.3% for a Veteran subsequent use.)  Click here to see entire chart.

• Click here to see where Arizona’s unemployment numbers compare to the rest of the United States

HUD has announced that the loan limit will revert back to the previous limit of $346,250 through Dec 31^st, 2012.

Please click here to see the mortgagee letter.

PHOENIX HOME BUYER FOUNDATION PROGRAM

Helping families rebuild the foundation after suffering from a foreclosure or short sale.

What is Phoenix Home Buyer Foundation Program?

Phoenix Home Buyer Foundation Program was founded on the idea to assist people in purchasing a home again and help stabilize home prices in the Phoenix community at the same time.  Phoenix suffered significant losses to property values and home equity.  Bringing qualified homebuyers back into the Phoenix real estate market will enable the values to steady. The Foundation Program helps people with a previous foreclosure or short sale interested in purchasing, do so, in the shortest amount of time required.   

How does the program work?

We will analyze your credit and develop a strategic program to put you in the best position to purchase a home in the least amount of time.  We will help you in determining your first eligible date of purchase.  We will also review your debts and develop a financial budget to help keep you on track. 

What is the cost?

There is no cost for this program.

How will I know when I can purchase a home?

Our program provides a personal countdown clock that you will always have access so you will know the exact amount of time before you can purchase. 

How often will I hear from you?

We will communicate with you quarterly until you are 12 months away from purchasing.  Once you are 12 months away from purchasing, we will communicate with you monthly.  60 days prior to your first eligible purchase date, we will review your current financial position.  One month prior, we will request updated financial information for your prequalification and refer you to one of our preferred real estate partners.  On the day you are eligible to enter into a purchase contract, we will send you and your real estate agent the prequalification letter. 

How do I get started?

Getting started is easy.  You can email david@dkhomeloans.com and request the form to get started.

If you know someone with a previous foreclosure or short sale that would like to purchase a home, please have them give me a call.

Purchasing a home with a Phoenix VA loan may seem like a daunting task at first glance, but it is actually pretty simple.

The basic process is as follows:

Find a home in Phoenix you would like to buy and arrange the purchase with the seller.  You’ll then sign a purchase contract conditional upon approval of a Phoenix VA guaranteed loan.

Contact a reputable Phoenix VA home loan lender, present your Certificate of Eligibility, and begin the loan application. Your lender will determine your credit and submit a request to the VA to request a licensed appraiser to appraise the property.

If the determined value is acceptable to all involved parties, and the lender determines that your loan application meets the VA loan requirements, your mortgage can be approved.

You (and co-borrower, if applicable) will then attend the loan closing and sign the related papers. The closing escrow agent will explain all of the documents, along with loan terms, requirements and monthly payment details.

After these steps are completed, you will own your own Phoenix home with a low-interest VA purchase mortgage, with no private monthly mortgage insurance required.

Please note that when the VA receives report of the loan, the Certificate of Eligibility (COE) is adjusted to reflect use of entitlement and is then returned to the veteran. No further actions are required to get your COE back, which just makes the overall process easier for veterans.

A common question from many first time VA applicants is, “How long does the VA loan approval process actually take?” The overall period of time it takes for a Phoenix VA mortgage approval varies depending on the amount of volume the lender has at that moment. It also depends on how quickly the VA borrower is able to respond to documentation requests. Traditionally, getting full approval and closing a Phoenix VA purchase mortgage has been taking between 3 weeks to 45 days. This time-frame is more or less the same as that for conventional loans.

There are some things you can do to ensure your loan process is as quick as possible, such as sending requested documents as soon as possible, working with a knowledgeable VA loan specialist, and making your hours of availability as flexible as you can.

For further advice on how to make sure your loan process goes as fast and smoothly as possible, please read our article titled VA Mortgage Approval – How Long Does It Take?

However, Phoenix VA mortgage loans are for primary residences only; you cannot purchase an investment property or second home with a Phoenix VA home loan as these property types are not eligible for VA financing.

Once you have found a home, you will need to have it appraised for a Phoenix VA home loan.  Only a VA-approved appraiser is allowed to perform appraisals for VA home loans. A VA appraisal involves a thorough analysis of the home and property to determine what the current market of the home and property is. A VA appraisal is highly geared towards reporting any defects involving safety or security of the home.

Here is a list of things to consider when shopping for a new home:

• The appraiser needs to inspect both the inside and the outside of the house. If the house in question is being constructed, the appraiser still needs to analyze the property and construction site.

• The official appraisal report will contain a list of “observable repairs that need to be completed.”

• This report will also contain a list of “customer preference items to be installed.”

• A few small issues with the property won’t immediately disqualify it, but a lot of small issues or a few big issues may.

Our article The VA Loan Appraisal Process gives a fully detailed explanation of the process.

VA loan limits are also an important factor when it comes to borrowing for a home loan. In most veteran loan scenarios, the VA guarantees up to 25% of the total amount of the loan up to the VA loan limit in your county – which, in much of the US, is $417,000.

To check what the VA county loan limits are for each county in the United States, you can visit the U.S. Department of Veterans Affairs at their loan limit website. For counties that are not listed on the website, the official VA loan limit is automatically set at $417,000.

If the value of the home you want to purchase is greater than your county loan limit, you may still be eligible to utilize a Phoenix VA home loan. It is possible to get what is referred to as a “VA Jumbo Loan,” which will allow you to take out a VA loan on a home valued above the applicable county loan limit.  However, with VA Jumbo Loans, the VA mandates that the borrower pay 25% of the difference between the cost of the loan and the VA county loan limit. At the same time, the VA would still guarantee 25% of the county loan limit.

For more information on VA jumbo loans, please read our article titled Are There VA Jumbo Loans Available?

Veterans with active duty service during World War II and later periods are eligible for Phoenix Home Mortgage VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service and must not have been dishonorably discharged.

Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service. Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.

The VA does not require that you have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements.  The current FICO score requirement for most mortgage lenders is 620 for a Phoenix VA Home Loan.  To learn more about this, our article Credit Score Requirements For VA Mortgages is a great place to start.

Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit who they will lend to.

Since early 2010, many VA lenders in the U.S. have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky.  This is especially true for areas with major declining home values, such as Phoenix.

As a result, getting a loan without a down payment is almost impossible, though one of the few remaining options for 100% financing is a VA loan. 

There are three specific pieces of documentation a lender will need to determine your eligibility:

• A DD214 for discharged veterans.

• A statement of service for active military personnel.

• A certificate of eligibility (COE) to determine you have VA entitlement.

Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their VA loan requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is. 

Your VA lender can also help you attain your certificate of eligibility on your behalf.

Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.

You can find more information regarding these topics in our articles titled Divorce And VA Loan Eligibility, Does A Bankruptcy Mean I Can’t Get A VA Loan? and Can I Get A VA Loan If I’ve Had A Recent Foreclosure?

After signing your closing documents, the title company will send the signed documents back to AmeriFirst.  If our funding department receives the closing documents before noon, AmeriFirst will fund your loan and send the title company the wire the following day.  If the documents are received after 12 pm, then your loan will fund two days after receiving documents.  Example – closing documents received on Monday at 4pm will follow with funds sent on Wednesday morning to the title company. 

Once the title company receives the funds, they will record your deed with Maricopa County and you will receive the keys.  Typically, the deed is recorded around 4:30 in the afternoon.

 * This scenario is barring any unforeseen delays and only applicable with loans originated with David Krushinsky.  Certain transactions may require more time.