6 Top Mortgage Programs Available Today

April 13th, 2009

It is a historic time in the mortgage business over the past 18 months. The lending landscape has gone thru so many changes and tweaks over this time it made me ask:

What types of mortgages are still available today?

Michael Dunsky, of Mortgage Master in Walpole MA, sent over a terrific summary of the programs and their main features. Here they are:

FHA- The “Vogue” Loan!

Although FHA has not set a minimum FICO score, the industry has dictated a minimum 620+ score.
Minimum Down Payment is 3.5%.
Buyer must make a 3.5% down payment but there is no minimum required amount that has to be from the borrower’s own funds
Seller can contribute up to 6% of the Sales Price provided that the buyer has the minimum 3.5% down payment
Standard ratio guidelines are 31/43 but could go higher with Automated Underwriting approval
No Termite Inspection Required
No Non-Allowables required for the seller
Buyer can currently be in a Chapter 13 Bankruptcy and still purchase*; They can also purchase three years after a foreclosure and two years after a Chapter 7*
It is an assumable loan (important when rates go to 8% and they are at 6%).
Buyer can have Federal Tax Liens and not have to pay them off!* (*Subject to credit scores and industry guidelines).
FHA uses the standard Fannie Mae appraisal form- No VC sheets!

Mike Dunsky’s team has never had a FHA loan denied. Don’t let inexperienced loan officers “practice” on your clients- let them help!

Freddie/Fannie

Conforming interest rates up to $417,000
AU (Automatic Underwriting) has tightened their guidelines somewhat
Minimum of 5% down payment
Risked based pricing began 4/1/08 and increased again on 10/1/08 (this means that the better the credit score, the lower the rate… and vice versa)
Most PMI companies now requires a minimum of 680 FICO score and income/expense ratios 41%, but 45% on exception basis only
Most PMI companies requiring buyer to have a minimum of three lines of credit open for at least 12 -24 months
With 5% down, seller can pay up to 3% of buyer’s closing cost and pre-paids with down payment of 5-9.99% down
Seller can pay up to 6% of buyer’s closing cost and pre-paids with down payment of 10%+ down.

USDA

No Down Payment to Qualified Borrowers
Minimum 620+ credit score
No Monthly Mortgage Insurance.
Seller can pay UNLIMITED toward closing costs and pre-paids AND/OR all cost can be rolled into the note if the house appraises!
Standard ratio guidelines are 29/41 (but keep in mind, very inflexible)
No Cash Reserve Requirements
Must Purchase in an Eligible Rural Area* and be in guidelines for income limitations
Cannot own another property (although they do not need to be a First Time Home Buyer)

VA – for Veterans

There is NO down payment required!
Although VA has not set a minimum FICO score, the industry has dictated a minimum 620+ score
VA has become very strict on collections (discuss this with Mike)
Seller can pay any/all of reasonable buyer’s closing cost!
Ratios (Income vs Expenses) and Residual Income (VA calculation of monies left over after debt) must be in guidelines
Standard Debt to Income ratio guidelines are 41%, but could go higher with AU approval
Buyer CAN currently be in Chapter 13 BANKRUPTCY*
Buyers can purchase 2 years after a Foreclosure and/or Bankruptcy 7**Subject to credit scores and industry guidelines.

VA loans are unique- trust them only to loan teams who know them well- Mike’s Team are experts in these- let them help!

Investor Financing – Investment Properties

$417,000 for qualified full doc borrowers w/ 25% down (Freddie/Fannie) as PMI cannot be obtained – some instances allow 20% down payment.
Buyer must have 6 months PITI reserves for all properties owned.

Remember the 100% investment, stated income financing?…… Not going to happen again for a very long time.

Jumbo Loans

Pricing is much higher for fixed rate loans as risk is greater.
Loans up to 2,000,000 will require anywhere from 20-30% down (depending on multiple factors).
Minimum 680+ FICO
Financing criteria is much, much stricter!
Reduced Doc Loans (i.e., Stated Income, No Doc, No Ratio loans) currently not available in the market other than private money with significant down payments.

Great Jumbo ARM rates!!!

Michael Dunsky can be reached at 508-850-4124 or www.Dunsky.com. He is a very knowledgable and professional mortgage professional. Don’t play games with your financing, service is even more critical than rates in this marketplace!

Ed Daniels of Re/Max Executive Realty in Hopkinton, MA can be reached at 508-341-7880 for any additional real estate questions.

Categories: Market Conditions, Real Estate

This entry was posted on Monday, April 13th, 2009 at 4:33 pm and is filed under Market Conditions, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.