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HUD & The FHA Presents… Credit Underwriting Loan Calculations Welcome!

HUD & The FHA Presents… Credit Underwriting Loan Calculations Welcome!. 1. Housekeeping Phone lines ~ Q&A ~ Polling Activities. Phone lines – muted Questions – Q&A panel Interactivity – voting tools and polling questions. 2. About Your Instructor…. Chip Cummings, CMC. 3.

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HUD & The FHA Presents… Credit Underwriting Loan Calculations Welcome!

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  1. HUD & The FHA Presents…Credit Underwriting Loan CalculationsWelcome! 1

  2. Housekeeping Phone lines ~ Q&A ~ Polling Activities • Phone lines – muted • Questions – Q&A panel • Interactivity – voting tools and polling questions 2

  3. About Your Instructor… Chip Cummings, CMC 3

  4. FHA Subject Matter Expert Welcome to our guest from the FHA – Phillip Caulfield who will be responding to participant questions and offering additional guidance during today’s webinar. 4

  5. Credit Underwriting Loan Calculations 5

  6. Discuss differences in FHA and conventional loans. Calculate FHA maximum loan amounts. Understand and calculate FHA mortgage insurance. Determine FHA loan amounts and calculations for three different types of FHA refinance loans. Course Objectives 6

  7. Together we will look at: Loan Limits – Ceiling/Floor Amounts; High-price Limits. Maximum Mortgage Calculations – Purchase loans. Types of FHA Refinance loans & Calculating loan amounts. Course Overview 7

  8. Polling Questions How long have you been in the mortgage industry? How long have you been working with FHA mortgage loans? 8

  9. FHA Loan AmountsLimits, LTVs, & Calculations 9

  10. Lower Cash Requirements Low Down-payment Finance the Upfront Mortgage Insurance 100% Gifted Funds Allowed FHA vs. Conventional Loans 10

  11. Loan limit based upon where the property is located County Limits Floor limits High cost areas Ceiling limits High-price exceptions FHA Loan Limits HUD 4155.1 1.A.2 11

  12. “Floor” Loan Limit: 65% of national conforming loan limit* 1-unit 271,050 2-unit 347,000 3-unit 419,400 4-unit 521,250 No county limit is less than this! FHA County Loan Limits *Good through 2013; See ML 12-26 12

  13. High-cost Areas Above the “floor” limits based upon median home prices in the area. Higher of Housing & Economic Stimulus Act (HERA) calculated limits for 2008 or National Housing Act (NHA) calculated loan limits. FHA Loan Limits – High Cost Areas ML 12-26 13

  14. “Ceiling” Limits: 1-unit 729,750 2-unit 934,200 3-unit 1,129,250 4-unit 1,403,400 FHA Loan Limits - Ceiling ML 12-26 14

  15. Special High-price Exceptions: Up to 150% of national ceiling Alaska, Hawaii, Guam & Virgin Islands 1-unit 1,094,625 2-unit 1,401,300 3-unit 1,693,875 4-unit 2,105,100 FHA Loan Limits ML 12-26 15

  16. https://entp.hud.gov/idapp/html/hicostlook.cfm 16

  17. FHA – Maximum Base Loan LTVs * Lower of LTV, appraised value or county limit 1 Permissible for family members or government agencies only 2 Lower of balance plus allowable costs, appraised value or county loan limit 3 Non-Credit Qualifying streamline refinances, use “without appraisal maximum (ML 11-11) 4155.1 3.B; ML 10-36; ML11-11 17

  18. Required on ALL Loans – Regardless of LTV FHA Mortgage Insurance • Two Types of Insurance: • Up-Front Mortgage Insurance Premium (UFMIP) • Annual MI – Paid monthly (aka Monthly MIP) 4155.1 2.A.1.b 18

  19. UFMIP Premiums: • 1.75%- Purchase & Rate/Term • .01% - Streamline Refinance • (Prior to 5/31/09) • 1.75%- All other refinances FHA Mortgage Insurance ML 12-04 19

  20. UFMIP Calculation: Multiply the BASE LOAN AMOUNT by the UFMIP FACTOR FHA Mortgage Insurance 20

  21. $222,000 Purchase Price FHA UFMIP Calculation 21

  22. FHA Mortgage Insurance - Annual Note: Effective for case numbers assigned after 4/1/13 * Effective for all case numbers assigned after 6/3/13 For loan amounts over $625,500 – add 20 bps for > 15 years. Add 25 bps for ≤ 15 years ML 13-04 22

  23. Monthly MIP Calculation: Multiply the BASE LOAN AMOUNTby the MIP FACTOR,anddivide by 12 FHA Mortgage Insurance - Annual 23

  24. $222,000 Purchase Price FHA Mortgage Insurance - Annual 4155.2 7.3.c; ML 13-04 24

  25. TOTAL Loan Amount equals Base Loan + UFMIP Round down to the nearest dollar Calculating Total Loan Amount 25

  26. $222,000 Purchase Price Calculating Total Loan Amount 26

  27. Interested Third Parties: Sellers Builders Realtors Contributions 4155.1 2.A.3 27

  28. Seller Contributions: Up to 6% of sales price Other Inducements to Purchase: Bonuses Non-realty items Repairs & Improvements: Mandatory repairs Contributions 4155.1 2.1-7a; 3.1-9a; ML 05-02 28

  29. Polling Question John & Marie are selling their home. The sales price of $219,000 includes a tractor/mower (worth $4,000). What adjustments (if any) will be made by the appraiser? 29

  30. Questions 30

  31. FHA Refinance ProgramTypes & Calculations 31

  32. Rate & Term Cash-out Refinance Non-credit Qualifying Streamline With or Without Appraisal Credit Qualifying Streamline With Appraisal Types of FHA Refinances 32

  33. Rate/Term Refinance 97.75% of appraised value Sales price (<12 months) County loan limit Full documentation Cash-out Refinance – 85% Over $500 at closing Refinance Guidelines - LTV 4155.1 3.B.1.a; 2.e 33

  34. Non-credit qualifying Streamline with or without Appraisal: Existing loan balance only Credit Qualifying Streamline with Appraisal: Lower of 97.75% of appraised value Existing principal balance + costs County loan limit 2nd Mortgage Subordination: 125% CLTV UFMIP and Annual Mortgage Insurance Required Refinance Guidelines - LTV 4155.1 3.C.2 34

  35. Polling Questions Mary & Sara currently have a sub-prime loan with a balance of $258,360. The appraised value is $271,700. What is the maximum possible base loan amount for a rate/term refinance? 35

  36. Anything over $500 cash back. 85% LTV. Must be principal residence (12 months). No late payments in last 12 months. 1-2 unit properties only! Cash-out Refinance ML 08-09; 08-40; 09-08; 11-11 36

  37. Must have owned for at least six months. Land Contracts treated as cash-out transactions. Divorce or buy-outs are NOT treated as cash-out. Cash-out Refinance ML 08-09; 08-40; 09-08; 11-11; 4155.1 2.B.6.a; 3.B.1.d 37

  38. Cash-out refinance: $326,000 appraised value $213,580 principal balance $326,000 x 85% = $277,100 $277,100 - $213,580 = $63,520 Cash-out* *less closing costs & prepaids Cash-out Refinance 38

  39. Any type of FHA to FHA refinance. Non-credit or Credit Qualifying With or Without Appraisal. Must show “tangible benefit.” 5% savings on P/I payment. FHA Streamline Refinance 4155.1 6.C.5; ML 11-11 39

  40. Must be current on payment: 12-month history/six-month minimum Manufactured housing – one-year minimum Can include two months’ interest FHA Streamline Refinance 4155.1 6.C.5; ML 11-11 40

  41. FHA Streamline Refinance ML 11-11; 4155.1 3.C.2.c 41

  42. Credit Qualifying With Appraisal: Allowed to include costs. May include escrows & prepaids. FHA Streamline Refinance ML 11-11; 4155.1 3.C.2.c; 3.B.1.b 42

  43. FHA Streamline Refinance 4155.1 3.C.3.a; 3.B.1.b 43

  44. Non-owner occupied: Must be Streamline WITHOUT appraisal Outstanding principal balance only FHA Streamline Refinance 4155.1 3.C.2.e 44

  45. FHA Streamline Refinance 45

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