RE Financial Section 8
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
How does the FHA control the use of 203(k) money loaned for repairs to a home?
A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed.
Homeownership Voucher Assistance
Allows participants to use Housing Choice Voucher funds, which are normally used to pay rent, to help pay monthly homeownership expenses.
SAH and SHA Grants
Available to veterans with total and permanent service-related disabilities; used to adapt housing to accommodate the disability.
On an FHA 203(k) loan, the combined cost of home value and rehab must ______.
Fall within the FHA mortgage limit for the area where the property is located.
Energy Efficient Mortgage
Financed through FHA or VA. Desire to buy a better and more efficient home. Home improvements.
The Homeownership Voucher Assistance program is available to ______ to help pay monthly homeownership expenses.
First time homeowners
The amount of the ______ a veteran must pay depends on factors such as military status, down payment amount, and whether the veteran's entitlement is being used for the first time or a subsequent time.
Funding Fee
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.
The interest rate on an FHA Section 251 loan is adjusted based on ______.
Market indices approved by the FHA
To qualify for the FHA Streamline Refinance program, a homeowner must ______.
Not be delinquent on mortgage payments
housing ratio
Qualifying ratio mortgage lenders use to determine the percentage of a borrower's gross monthly income that will be used for housing expenses
debt-to-income ratio
Qualifying ratio used by mortgage lenders, calculated by dividing the borrower's recurring monthly debt by the borrower's total monthly income
The FHA ______ program allows a borrower to refinance an FHA loan without verifying income or assets.
Streamline Refinance
The FHA Energy Efficient Mortgage allows modifications such as solar panels as long as ______.
The cost of the modification is within limits based on the value of the home
FHA loan debt-to-income ratio
Their housing expenses (the ones that went into calculating the first ratio) plus any recurring debt (student loans, credit card payments, car payments) must not exceed 43% of their gross monthly income.
NADL Program
This is a direct home loan program from the VA to eligible Native American veterans.
Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan?
To roll the cost of rehabilitating the purchased home into the mortgage. The 203(k) loan is the same as the 203(b) loan, except that it includes funds to be used for rehabilitating the purchased home.
Cash-Out Refinance
a VA program that allows the homeowner to receive cash from the equity in their home.
certificate of eligibility (COE)
a document provided by the U.S. Department of Veterans Affairs stating whether an individual is eligible for the VA loan, and the dollar amount of eligibility available.
Title II Section 203(n)
a program specifically for the purchase of a unit in a cooperative housing project
FHA Loan credit requirement
at least 580 to qualify for a 3.5% down payment. Lower credit scores will still be eligible, but higher down payment will be required. 500 for 10% down
Jean is a high school English teacher. With the Good Neighbor Next Door program, she's able to buy a foreclosed FHA-insured property ______, though she does have to agree to live on the property for three years. a. For $100 b. For a 10% discount off list price c. For a 50% discount off list price and a down payment of only $100 d. With an interest-only loan and no down payment
c
Title II
covers loan insurance for many properties and situations
Debt-to-Income
debt-to-income ratio calculates total monthly debt payments (housing expense, installment debts [such as utilities], and other debt) against gross monthly income. Borrowers should come below a 41% ratio to qualify for a VA loan.
Specially Adapted Housing program
grant to help certain severely disabled veterans either adapt or build a home that will help them to acquire a barrier-free living environment in their own home.
annual MIP
mortgage insurance premium is paid over the life of the loan. a percentage, but it's based on the amount of the loan, the loan-to-value ratio, and the loan duration. Recalculated each year.
certificate of reasonable value (CRV)
A form indicating the appraised value of a property being financed with a VA loan. The VA requires a VA-assigned certified real estate appraiser to provide a formal estimate of value for the property
Good Neighbor Next Door
This program provides law enforcement officers, K-12 teachers, firefighters, and EMTs a deal on purchasing foreclosed FHA-insured properties in revitalization areas.
upfront MIP
mortgage insurance premium paid at closing. a percentage of the loan amount stipulated by the FHA (based on original
release of liability
new buyer takes full responsibility for defaulting on a loan
FHA Loans housing ratio
total housing expenses can't be more than 31% of their total gross monthly income
FHA county loan limits are based on ______.
Median price for the area and property type
restoration of entitlement (VA Loan)
program can be used multiple times full benefit restored upon repayment or full loan assumption (anyone can assume a VA loan) usually 1 VA loan at a time new certificate of eligibility release from lender and VA to get eligibility back
HUD's Home Equity Conversion Mortgage (HECM)
reserve mortgage that makes borrowing equity from one's home less expensive and safer for both the lender and the homeowner
Residual income
the amount of net income remaining—after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses—to cover family living expenses, such as food, health care, clothing, and gasoline.
substitution of entitlement
the new buyer's entitlement is substituted for the original buyer's entitlement used on the loan, restoring the original buyer's entitlement in the same way as if the loan had been repaid in full
FHA energy efficient mortgage (EEM) program
used in conjunction with other FHA loan programs to finance the cost of adding energy-efficient features to new or existing houses
203(k) loan purpose
used with a home purchase so that the cost of repairs is included with the mortgage loan
Home Equity Conversion Mortgage
Insurance of a reverse mortgage for homeowners age 62 and older who want to borrow against their home equity as a lump sum or on a monthly basis
IRRR
This program allows a VA loan to be refinanced in order to obtain a lower interest rate.
Cash-Out Refinancing
This program can be used to refinance a non-VA loan into a VA loan.
Who qualifies for Good Neighbor Program?
An emergency medical technician