Mortgage Center

Our You a First Time Home Buyer?

Maricopa county has raised the loan limit for FHA to $346,250.

What is an FHA loan? fha logo

An FHA loan is a mortgage that is insured by the FHA, or the Federal Housing Administration. The FHA does not actually loan (provide mortgages) to borrowers-- the FHA provides insurance to the lender - Arizona Wholesale Mortgage.

This way, if the borrower was to default on their FHA mortgage (foreclose) and Arizona Wholesale Mortgage was the lender, then the FHA would cover most losses that the lender would incur.

This makes banks willing to lend FHA mortgage money.

The government gives the bank a guarantee and thus, the banks are far more likely to lend to you. In fact, the requirements for an FHA mortgage are often easier than they are for people with "perfect credit." Again, this is because the government is willing to stand behind your loan and insure the bank.

FHA Loans are not only for "first time homebuyers."

This is a myth. Anyone can secure an FHA mortgage. However, because there are limits to FHA loan amounts, oftentimes it is the first time homebuyer that ends up taking out an FHA loan. Usually, people that are selling a home to buy another are "upgrading." Plus, the equity from their previous sale will usually give them a large downpayment for their new home, so an FHA loan is not necessary.

Family Loans

FHA now allows buyers to receive loans from direct family members for their down payment funds and/or closing costs.   A document is prepared for the loan file that spells out the terms of the repayment agreement and any monthly payment is included in the buyer’s debt ratio.   This may be an unsecured debt or secured on the subject property.

CREDIT DO`S & DON`TS
DURING THE LOAN PROCESS

Good credit is critical when it comes to obtaining the best interest rates and terms on a mortgage. Here are some credit do`s and don`ts when looking for a mortgage.

Do Stay Current On Existing Accounts. One 30-day notice can cost you.

Do Continue To Use Your Credit As Normal. If it appears you are changing your pattern, it will raise a red flag and your score could go down.

Do Call Your Loan Officer Below. Call before making any address or credit changes that may affect your score.

Don`t Apply For New Credit. Every time you have your credit pulled by a potential creditor or lender, you can lose points from your credit score. This includes co-signing for a loan.

Don`t Pay Off Collections Or Charge-Offs. If you want to pay off old accounts, do it through escrow. Request a letter of deletion from the creditor.

Don`t Close Credit Card Accounts. If you close a credit card account, it may appear that your debt ratio has gone up. Closing a card will affect other factors in the score, including credit history.

Don`t Max Out Or Over Charge Credit Cards. Try to keep your credit card balances 30% below their limit during the loan process. If you pay down balances, do it across the board.

Don`t Consolidate Your Debt. When you consolidate all of your debt onto one or two credit cards, it will appear that you are maxed out on that card and you will be penalized.

Neighborhood Stabilization Program (NSP)

Potential homebuyers may qualify for $15,000 in down payment and closing cost assistance to help buy an affordable foreclosed single family home, townhouse or condominium in the city of Phoenix.

The full amount of the loan is repaid to the city when the homebuyer sells the home or refinances. The homes must meet U.S. Department of Housing and Urban Development Housing Quality Standards and funds cannot be used for rehabilitation activities.

Families must be Federal Housing Administration creditworthy and complete the NSP-required eight-hour Homeownership Education and Credit Assessment counseling. The property must be maintained as the principal residence.

For more information about the program, call 602-262-6602 or visit phoenix.gov/nsd/fland.html.

Homeownership Assistance Program Fact Sheet

Sweat Equity

Some new home builders will allow a buyer to use “sweat equity” as a portion of their down payment if they are short on funds to close. This is work performed by the buyer, prior to closing, and the value of the work is documented in the lender’s file as down payment funds. The work cannot be outside of the scope of the buyer’s skill level and the builder must agree to the process. So in most cases, this type of work is limited to painting.

Example:

1.       Buyer purchases a $150,000 new build and down payment requirement is 3% or $4,500.

2.       Buyer & builder agree on “sweat equity” for interior painting.   Estimated cost by appraiser is $1,500.

3.       Painting is done prior to closing and buyer’s down payment requirement is reduced to $3,000

Gift Funds

As always, FHA allows for family members to gift your buyer funds up to the full down payment and all closing costs/prepaid items.   Please be aware that FHA is auditing gift funds carefully and the donor must sign a gift letter and document their source of funds. If your buyer is using gift funds, the lender should discuss all documentation requirements directly with the donor at the time of application to avoid any difficulties later in the process.

Ask about the Arizona rural community loan program:

103% Loan Program with USDA Home Loan Program for the Rural Community

Find a location near you for the USDA Home Loan Program with Zero Down.

L & G Mortgage Tools:

Fixed Rate Loan Payment Calculator
This calculator computes the payments and interest for a fixed rate loan, using monthly interest compounding and monthly payments.

Home Affordability CalculatorThis calculator computes the most expensive home you can purchase based on the highest payment you can afford, but does not indicate whether you will qualify for the loan.

Mortgage Qualification Calculator
Most lenders base their home loan qualification on both your total monthly gross income and your monthly fixed debt expenses.

Mortgage Tax Savings CalculatorInterest and points paid for a home mortgage are tax deductible. Use this calculator to determine how much your mortgage could save you in income taxes.

Rent Vs. Purchase Calculator
This calculator compares the cost of renting vs. the real cost of buying a home.

Loan Comparison Calculator
This calculator will help you compare the total costs of two or three loans. This analysis includes the effect of a tax deduction. If the interest is not deductible, or if you do not want to show the effect of the tax deduction, choose an income tax of zero

With over 175 mortgage articles and live mortgage rates, this will provide answers to your mortgage questions.