FHA Loans and the Consumer Workshops
Your client, Ray, wants to purchase a home listed for $200,000. The home is in a revitalization area, and Ray can purchase it under the Good Neighbor Program. How much will he have to pay for the home?
$200,000, less 50%, plus $100
Your client, Judy, with a credit score of 620, has been approved for an FHA loan for a home with a sales price of $200,000. What is the minimum down payment that will apply?
$7,000
Most consumers who use FHA financing will probably use the ____________, although other FHA loan programs are available.
203(b) program
Yes, Jenn needs to pay at least 3.5% as her down payment. Since the home is listed at $350,000 and Jenn assumes the appraisal will be close to that, how much cash should she estimate for her down payment?
350,000 X 3.5 (0.035) = 12,250
What is the HECM program?
A form of reverse mortgage insured by the FHA
Gina owns a townhome that she purchased with an FHA loan. Rates have gone down and she'd like to take advantage of the new lower rates, but she currently owes more than her home is worth. What options should Gina consider?
Ask her lender to give her an FHA Streamline Refinance. It allows a borrow with an FHA loan to refinance without requiring a new appraisal, and the loan-to-value ratio is unlimited.
Dinah has her heart set on a charming little one-bedroom cottage in an older, quiet neighborhood. It fits her needs perfectly and is in her price range ... until the cost of all the rehabilitation it needs is added on. How can she afford the home and turn it into her cozy one-woman dream?
Find an FHA-approved lender and apply for a 203(k) loan so that the cost of rehab can be added to her mortgage.
Mike and Carol Brady are retired. They don't have a ton of money left after sending all of their kids to good colleges. Now the kids are all grown up and scattered, forming families of their own. Mike and Carol need to figure out how to fund their golden years. What they do have is equity in their home. They don't want to sell (all of that space comes in handy during the holidays when the kids visit). They contact a lender, who recommends a couple of FHA programs. Which one do you think the lender recommends to them?
HECM program It's a reverse mortgage that's insured by the FHA, and which would use the equity in your home as security to give you a lump sum of money, a revolving line of credit, or a payment every month for as long as you live in the home. You have to be 62 to qualify The amount a lender will give for a HECM is based on their age and the value of their home. After the homeowners die, the house will be sold to pay off the loan.
What makes the HECM program safer for borrowers than a traditional reverse mortgage?
If more equity is paid out than remains, the homeowner doesn't have to make up the difference.
Gina can refinance her loan and take advantage of those lower interest rates, even though the value of the house has dropped below the amount that she owes. What would disqualify Gina from using this program?
She's delinquent on her current loan payments
The FHA Streamline Refinance program allows borrowers who already have an FHA loan to refinance. So what, you say? Here's what: The program allows a refinance without verifying the borrower's income or assets, and in some cases, without even requiring an appraisal. The streamline program is the simplest and easiest way to refinance an FHA loan. One of the biggest advantages to this program is that it allows for an unlimited loan-to-value ratio. In other words, the borrower doesn't need to have any equity in the property. Therefore, even homeowners who are severely underwater may still be able to take advantage of lower mortgage rates by refinancing with an FHA streamline. To qualify for a streamline refinance: The mortgage must already be FHA-insured
The refinance must result in a reduction of mortgage payments The homeowners must be current on their mortgage payments (not delinquent) No money may be taken out
