Monday, July 27, 2015

Important Conventional Loan Guideline Revision Effective Last August 12, 2014

Did you know that if a mortgage debt has been discharged through a bankruptcy, even if the foreclosure takes place after the discharge of the bankruptcy, the borrower is held to the bankruptcy waiting period of 4 years to purchase a home and not the foreclosure waiting period of 7 years?

That’s important to know because many lenders who don’t understand conventional loan guidelines are mistakenly putting borrowers in a FHA Loan which have expensive mortgage insurance requirements and a loan limit of $271,050 in Maricopa County compared to conventional loans which in most cases have lower or no mortgage insurance requirements and a loan limit of $417,000 in Maricopa County.

Monday, July 20, 2015

A conventional 97% loan from Fannie Mae

A conventional 97% loan is a Fannie Mae home loan that allows home buyers to purchase a home with a 3% down payment and get a loan amount up to $417,000.  It is designed for 'first time home buyers' who may not have the resources for a large down payment. A 'first-time home buyer' is defined as a person who has not owned a home in the last three years.

Another great feature of this program is that the entire 3 % down payment can come in the form of a gift from a relative.

Closing costs can be paid by the seller with a limit of 3% of the sales price.

Compare the Conventional 97 to a FHA loan and you will find a lot of benefits to the Fannie Mae product.  The FHA mortgage requires a 1.75% upfront mortgage insurance premium usually added to the loan amount, Conventional 97 does not. The monthly MI on a FHA loan stays on the mortgage for the life of the loan. The Conventional 97% MI will drop off after the loan balances reaches 78% of the original appraised value. FHA is restricted to $271,051 whereas the Conventional 97% program allows loan amounts up to $417,000. FHA does have some advantages, especially for borrowers with lower credit scores and past foreclosures and bankruptcies.

I can guide your clients through the advantages and disadvantages of both the FHA loan and Conventional 97% product.