FHA proposed changes vs new 97% loan to value program

FHA proposed changes VS new 97% loan to value program

The President is proposing that HUD lower the monthly mortgage insurance premium on FHA loans by .50 point from 1.35% for 96.5% loan to value loans to .85%.
I’ve done a comparison for you based on a buyer of a $150,000 single family property with a credit score of 700 & attached to this email.

A few points:
1. The payment on FHA Is lower initially, but the monthly Mortgage insurance can NOT be cancelled versus the monthly mortgage insurance on the 97% loan to value program can after approximately 5 years ( or 78% loan to value is reached based on original purchase price).
2. The My community mortgage program is a great conventional 3% down program that offers lower monthly mortgage insurance, but there are maximum household income guidelines that have to be met.

The 97% loan to value program has an initial higher monthly payment, but offers a slightly lower downpayment and the fact that the monthly mortgage insurance is cancellable, a savings of $27759 over the life of the loan if it’s kept all 360 payments is the gain for the borrower that chooses this program. The savings is a result of 300 months of a payment that’s $90.03/month lower than FHA and a $750 lower downpayment!
For borrowers with higher credit scores, the monthly mortgage insurance rate for the 97% loan to value purchase program is lower than in my example attached- resulting in an even lower payment!
The only catch is, on the 97% loan to value purchase program with Fannie Mae, at least one of the borrowers must be a first time buyer. No first time buyer requirement on FHA loans.

For your clients, I’ll determine the options they qualify for, and present all options available to your client & let them choose.

For buyers looking to build, construction loans still require a minimum 5% down payment, therefore none of these options apply, unless the client is taking out an end loan.

If you have any more questions, feel free to call or email me anytime.
Here’s to selling more homes in 2015.

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New Year, New Mortgage options

2015 has some new mortgage financing options in store. Fannie Mae and Freddie Mac announced they are bringing back 3% downpayment conventional loans. Both have different parameters and starting times.

Fannie Mae’s 3% down loan is available after December 13, 2014. One of the homebuyers must be a first time buyer (not owned a home within 3 years). This program is available under Fannie Mae’s standard and My Community loan program. Fannie Mae also allows for rate/term refinances under this program. These loans are only good for single family, owner occupied properties.

Freddie Mac’s 3% down program won’t be available until March 23, 2015. Freddie Mac is not requiring buyers to be first time buyers and the program is available for rate/term refinances.

Both of these options are not available for construction/permanent financing or on rehab loans. Investment properties and multi unit properties continue to need a larger downpayment. Both of these options are good up to the conforming loan limit of $417,000.

Both of these options are great for buyers with high credit scores, good debt to income ratios, but are low on cash. These are an alternative to FHA loans that require 3.5% down, but have monthly mortgage insurance for the life of the loan. Conventional loans allow for the dropping of monthly mortgage insurance once 22% equity is reached.

Looks like 2015 will have more options for more buyers to jump into the housing market and take advantage of low interest rates!

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My Community Mortgage- a great opportunity for buyers with less than 720 credit scores to lower their payment

Pricing is the same or better than a conventional loan- especially for those buying condo’s and have lower credit scores since those buyers are charged points based on their credit score- points are capped at .75 point.

Reduced mortgage insurance

Buyers must be first time buyers and can not own any other real property

Minimum credit score 620

Maximum loan amount $417000

First time buyers must take home buyers counseling course- most mortgage insurance companies offer these and they’re on-line

Minimum 5% down for fixed rates- can be gift funds

Minimum 10% down for adjustable rates- can be gift funds

Buyers must meet Fannie Mae median income guidelines for their area/county

See link for income :


This product is good on owner occupied properties only.

The reduced mortgage insurance and the cap on points charged all equal a lower payment for your borrower.

Another way we can help more buyers buy the home of their dreams

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Renovation Financing- turn that diamond in the rough into a gem!

Home buyers want their dream home at a rock bottom price in a great location or homeowners love the location of their home and don’t want to move and want to make some upgrades but are slim on equity. Contrary to popular belief, these situations can be resolved with one of two types of mortgage financing !

Renovation financing gives buyers the opportunities to buy properties possibly at a lower than market price and then make repairs to the property to “make it their dream home.” These programs are also good if you own a property and would like to make ugrades or repairs to the property . The homes are appraised “as if” the repairs are already completed.

There are two types of renovation financing:

1. FHA 203k

a. This program allows the buyer to roll in costs of non-structural repairs to the purchase price of the home. This is great if the property needs baths or kitchen updated, flooring, cabinets, countertops, new furnace and a/c, a roof, windows, insulation, siding, doors, or gutters .The work has to be done by a licensed contractor and completed within 6 months. This program allows for a low downpayment of 3.5% of the acquisition price of the home (sale price+cost of repairs) and the entire downpayment can be a gift from a family member. The seller can also contribute up to 6% of the sale price to pay the buyers closing costs. This program is only good on owner- occupied properties. On a refinance, this allows for repairs up to 96.5% of the “as completed” value. There is a maximum dollar amount of repairs .

2. Homestyle Renovation

a. This program allows the buyer to roll in costs of any repairs- including structural- to the cost of the home. If the house is too small & the buyer wants to do an addition- this program allows for it. This program is also good for investors buying properties and want to roll in costs of repairs.

Both of these programs have a contingency built in , just in case the cost of the repairs goes over the estimate once work begins. If the contingency isn’t used, it is applied to the principle of the mortgage. Both of these programs also require the use of a general contractor to complete the repairs.

If you want to buy property with a home on it but want to demo the house and rebuild, a construction/permanent loan can finance this with as little as 10% equity in the property.

USDA Rural housing and VA loans (both Zero downpayment options!) do not allow for any rehab work/repairs. Houses purchased utilizing these types of financing must be safe, sound, have all mechanical systems functioning, utilities on, and habitable.

So as you can see, there are lots of options to make that home in a great location but your clients can’t seem to get past the green shag carpeting and the bright yellow kitchen cabinets, into their dream home!

As always, I’m here to consult with your clients to help determine the best mortgage options for their situation and make that dream home come true!

Feel free to call or email any questions or if you’d like to get together for coffee or lunch to discuss doing more business in 2014. I’m here to help you sell more homes!

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FHA Update

Good morning!

I have updates on FHA loans- Farmers National Bank is now offering FHA loans with a credit score of

**600 on purchases
**620 on cash out refi’s and VA loans
**660 FHA 203k Streamline’s

Debt to income ratio max 50%, downpayment 3.5%

I’ve attached a flyer with FHA maximum loan limits by county for your reference. Feel free to call with questions anytime at 440.452.3894

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Your time is valuable

Happy Monday Morning!! This week’s message is about Preapprovals.

In today’s tight real estate market- it pays for you and your clients to have them preapproved before submitting their offer.
A preapproval means the lender has verified income and assets available to close the transaction. Sellers are more apt to work with a preapproved buyers offer than a buyer that’s not preapproved. Your buyers want that house and the preapproval gives them a better shot at getting the home they want!
Also, your time is valuable- don’t waste your time working with a buyer that can’t purchase a home- thus you’re not getting a pay check from showing them a multitude of properties over many hours.

A preapproval is done at no cost to the client. Give you & your client peace of mind- Make sure they’re preapproved with a reputable lender before showing them any properties.

Farmers National Bank offers loans for residential and commercial properties.

For Commercial real estate loans- contact David Simko at 440.249.7389 or dsimko@farmersbankgroup.com.

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New Loan Programs

Farmers National Bank is proud to announce new loan programs:

** 95% loan to value construction to perm 30 year fixed rate financing with minimum credit score 680 for construction of single family owner occupied properties- 9 month construction term
** Portfolio Adjustable rate loans up to 95% loan to value for purchase or rate/term refinance of single family owner occupied properties
** Portfolio 15 year fixed rate loans up to 95% loan to value for the purchase, construction, or rate/term refinance of a single family owner occupied property

Minimum credit score, minimum loan amount $25000, and debt to income ratio’s apply. Call to see if your scenario fits into our guidelines

A few more ways Farmers National Bank helps get more of your clients into the home of their dreams! I look forward to working with your clients to make their homeownership dreams come true

If you’d like to meet to discuss these loan options and how they can help you sell more homes- call me at 440.452.3894.
Have a great week!

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Service vs Sales

This weeks message is a sales tip.

Sales is basically being a “helper”.

We Ask, Listen and then Help (serve our clients needs based on their answers to our questions).

Our clients are asking for our “help” all the time- which utility company supplies my new home, can you recommend a good dry cleaner in the area? Can you refer me to a knowledgeable banker? Realtor? Title company? We as sales people need to build our referral source base so we have the best referral sources to meet all of our client’s needs- whether now or in the future. A strong referral source base will keep more of our clients happy and keep them referring back to you!

Look at and evaluate your referral sources? Do you have enough referral sources? Are you happy with your referral sources for your clients? Stay in touch and check in with referral sources to see if anything is new in their business or possibly something is new in your business that you’d like to share. If you need more referral sources, get out and network! Get a referral to a few networking groups. Go to a meeting for each of them and then pick one or two groups to join that you Feel fit your needs and that you could also refer business to.

Remember- It’s not always WHAT you know, but WHO you know!

Happy helping!Service vs Sales Realtor

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Farmers National Bank Affordable Housing Program

Good morning and we’re starting the week with great news!

Farmers National Bank is rolling out a new affordable housing mortgage program

*Purchase a primary residence
*$5000 downpayment/closing cost grant that is forgiveable over a 5 year period. Grants are issued on a first come, first served basis and there is a limited amount of funds.
*30 year Fixed rate
*Payment must include escrows for real estate taxes and homeowners insurance
*Maximum 95% loan to value
*Borrower must contribute $500 or 1% of purchase price (whichever is greater) from their own funds – any other shortfall not covered by the Grant and buyers funds for closing costs, etc can come from a gift or seller concession. Maximum seller concession is 3% of sale price
*Minimum 620 credit score
*Homebuyers counseling required
*At least 3 years from previous bankruptcy or foreclosure discharge
*Household income is at or below 80% of the HUD median income level based on the number of individuals who will be living in the home, for the county where the subject property is located
*Repairs identified by the appraiser that affect the “safety and/or soundness” of the property, must be addressed prior to closing. Completed repairs are to be re-inspected by the appraiser prior to closing
*Minimum loan amount $25000

If you have any buyers that you think may qualify for this program- please give them my name and direct number 440.452.3894.

Another way Farmers National Bank helps more buyers achieve the American Dream of Homeownership!

Call me for an application or more details! 440.452.3894

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