Interest rates continued their slow but steady decent during the week ended December 31 according to results of the Primary Mortgage Market Survey released by Freddie Mac Wednesday morning. The 30-year fixed-rate mortgage (FRM) hit yet another historic…(read more)

This is typically the first question our Las Vegas Mortgage clients ask when applying for a new home loan.

If you were to type “Mortgage - how much can I borrow” in a search engine, the top results generally turn up mortgage calculators and mortgage lead sellers.

Even though an online mortgage calculator may be a good tool for reference, it probably won’t give you the full story about what size mortgage you can borrow.

Banks look at a few things when qualifying a borrower for a new mortgage:

• Credit

The most obvious measure of a borrower’s credit standing is the score, which can range between 300 and 850.  While there are several mortgage programs with different credit guidelines, having a 620 or greater will increase your chances of getting approved.

There is other criteria that banks look at regarding a borrower’s credit standing, such as payment history, total balances and limits, type of credit borrowed, and recent inquiries.

• Debt-to-Income Ratio

The (DTI) is calculated by dividing a borrower’s total monthly liabilities (minimum credit payments, auto loans / leases, child support, mortgage payments…) by the verifiable monthly income.

* Verifiable income includes pay stubs, W2’s, Tax Returns, and in some cases 1099’s and bank statements.

Example Scenario:

Current liabilities + new mortgage payment = $1,500 a month

(divided by)

Gross Monthly Income of $3,500

The DTI would be 42%.

Most mortgage guidelines require a 45% or lower Debt-to-Income ratio.

• Loan-to-Value

The (LTV) is calculated differently depending on whether the new transaction is a purchase, refinance, or rehab loan.

Basically, it is the amount of the new loan in comparison to the total value of the property.

When qualifying for a Las Vegas FHA loan on a purchase, a 3.5% down payment would equal a 96.5% LTV.

Keep in mind that banks will verify a paper-trail of the assets used for the down payment, so it is important to communicate with your loan officer about your current financial position.

There are a few factors to consider when deciding on the amount of your new mortgage:

1.  Desired Down Payment

2.  Budgeted Monthly Payment

3.  Length of time you want to own the property

Updated Clark County Nevada lending limits will also play a role in determining the type of mortgage program and amount you are qualified for.

For the year 2009, FHA limits are set at $287,500, down from $400,000, while VA and Conventional loan limits are still at $417,000.

Since Las Vegas mortgage rates may also have an impact on your monthly mortgage payment, it is important to pay attention to the market.

Schedule a strategy session with our professional Las Vegas Mortgage staff by phone or at our office to discuss the best lending solution for you and your family.

Other Valuable Articles:

How Much Can I Borrow, and Other FHA Basics

FHA Credit Issues Explained

How Does a Streamlined 203k Loan Work?

Written By: Mark Madsen Communications Director Raintree Mortgage Services Las Vegas, NV, 89147	Work: 702-432-5626 mark (at) myfhablog.com MyFHAblog.com
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One common misconception out there about FHA loans is that you can only have one at a time.  Although it is most common for folks to have only one FHA loan, there are cases where Winter Haven, Florida home buyers might in fact qualify to purchase two homes using FHA financing.

If you live here in the Winter Haven area and are considering a second home purchase, contact me so we can determine whether you might qualify for a second FHA loan.

• Do you have limited down payment funds?
• Do the funds you have available for your FHA down payment qualify solely as family gift funds?
• Do you have a lower credit score than is typically allowed for a conventional loan? (Lower than 650)

If you answered yes to any of these questions, you may be eligible for FHA Financing on your second home purchase.

Now, you might wonder how it’s possible to gain FHA approval on a second home when you haven’t sold your current FHA financed property.  That’s why I’m here.  The following situations may allow you to have more than one FHA mortgage:

• Relocation - If you now work in a geographic area that represents an unreasonable commuting distance from current home, you may use FHA financing to purchase another home.  The first home may be kept and maintained as a rental property if you wish.
• Increase in Family Size - Should your family “outgrow” your present FHA financed home, you may obtain a second FHA loan.  The one caveat here is that your present FHA loan has to be paid down so that your balanced owed on the first home represents at or below 75% of the current appraised value. You may see this as 75% Loan to Value (LTV)
• Vacating a Jointly Owned Property - An example here would be a divorce, where you or your spouse stays in the first FHA financed home and the other seeks FHA financing on another property.
• Non-Occupying Co-Borrower - An example here would be a parent or other family member with one FHA loan serving as a co-borrower on a home for a college student living away from home.  Because you are not living in the second home, you are defined as a “non-occupying co-borrower” - retaining a joint interest in the new property as well as primary interest in your first FHA financed home.

Now, you’re probably asking: “But wouldn’t the debt owed on your first FHA financed home factor in when qualifying for the second one?”  The answer may surprise you!

In most cases, the majority of debt you carry on your first FHA financed home will not be counted when you apply for your second FHA home loan!

Here’s how this breaks out:

• Relocation - If you’re not going to be living in the first FHA financed home, but want to keep it - rent it out!  Typically (depending on your area) 85% of the monthly rent can be used to offset the current payment.Simply furnish your FHA lender with a copy of a One-year lease and proof of security deposit ( or the first month’s rent), and chances are your second FHA home loan will be approved!
• Increase in Family Size -  The same rules apply as for relocation, but you must also show that you have a least a 25% equity share in the first property.
• Vacating a Jointly Owned Property -  In the divorce example, you may be exempt from the debt from your first FHA financed home being factored in at all, as long as:
  • There is a final divorce decree that awards the home and the debt to you former spouse; or
  • You can prove that the remaining occupant co-borrower has been making payments on their own and has an on-time 12-month payment history.
  • Non-Occupying Co-Borrower - In a case where you’re the co-borrower on another home but do not plan to live there, you just have to prove that the current resident has has been making payments on their own and has an on-time 12-month payment history.

So there you are! The “One FHA Loan at a time” myth has been dispelled!  Fact is, you may, in certain situations, have two FHA loans at a time.  It’s exciting news, especially in today’s real estate market.

However, do keep the following in mind:

Though it’s possible to have two FHA loans out at once, the main thing that FHA is trying to avoid here is catering to investors looking to “game the system.”

As such, Lenders pay special attention to how long the you lived in the first FHA financed property and the circumstances that have you looking for another FHA home loan.

If you live in the Winter Haven or the Polk County, Florida area and find that you are in the market for a second FHA home loan, give me a call at 863-604-3019 or contact me online  so we can get you squared away.

Apply for a Florida FHA Home Loan Today

Kevin Sandridge The Florida Mortgage Pro Signature Home Funding 410 Laurel Cove Way Winter Haven, FL, 33884	Mobile: 863-604-3019 Fax: 888-496-0265 kevin.s@sigfunding.com http://www.floridahomeloansspecialist.com
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U.S. house prices in November are down 18.0% compared to a year ago, according to the S&P Case-Shiller U.S. home price index, with the 20-city composite index falling to a reading of 158.16. Economists had expected the index to post a year-over-year…(read more)

Okay, so the subject line is long - but, believe it or not I cut it short. It could have been, “First Time Home Buyers can couple $7500 Tax Credit and Low Interest Rates and high inventories to buy Longwood Real Estate” We are seeing an unbelievable ‘perfect storm’ for buyers! Beware though - when it comes to mortgage rates, sometimes it’s better to “act now”… and no, that isn’t just salesmanship - its the difference between a rate in the 4% range and the 5% [or even 6%] range. Granted, all of these rates are historically low, but why settle for a 6-percenter when you can possible get a 4-percenter - even for an Orlando FHA Loan.

Last Tuesday, mortgage rates plummeted to their lowest levels in four years. Now, I love when mortgage hacks are right for the wrong reasons - don’t you? Many have pontificated that it was because the FED lowered that pesky FED Funds Rate - but if you have been a reader for any length of time you know more than they do because you know that long-term mortgage bonds frequently move in the opposite direction as the FED decisions. [I will not go into why here in this post.] It happened because the Fed said it would “employ all available tools” to resuscitate the US economy.

The next day, however, the markets had second thoughts.

After the sugar-high of this statement, the markets began considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date. Suddenly traders grew afraid that government action would devalue the dollar and lead to inflation — the enemy of low Longwood mortgage rates. [Okay, so I couldn't help myself - I went into why.]

As a result, that nice dip in rates - didn’t last… again. By the end of the day, mortgage rates were higher by as much as a .500% and nearly all of Tuesday’s big gains were erased and Longwood home loan rates went right back up to where they had been.

In hindsight, the reversal Wednesday wasn’t all that surprising — it’s the same trading pattern we’ve seen twice already this year.

• The first time was after the Fed’s “surprise” rate cut in January
• The second time was after the federal takeover of Fannie Mae and Freddie Mac in September.

Sharp rate drops tend to be followed by immediate bounce-backs, it seems.

What can be learned from this? Get your ducks lined up if you intend on wanting to be able to pounce the next time Longwood mortgage rates fall. I had a boat-load of people call but wanted to think about it. I don’t fault a person for wanting to ponder things a bit before making a decision - I do it. Unfortunately the marketplace could care less and those that hesitate - pay more. While those that locked at the first opportunity to save money are sitting pretty today, the rest that “waited for rates to go lower” are likely kicking themselves about it.

Does this mean you missed it? Yes and No.

Call me [407-377-0500 x 210] and join my group of Longwood real estate buyers and those seeking a Longwood refinance who have gotten their paperwork in order to be able to get a low Longwood interest rate the next time it spikes lower.

Going forward, mortgage rates may fall, or they may not - but we’ve now seen the pattern 3 times now — when mortgage rates plunge like they did, they rarely stay that low for long. Lets get your finger on the trigger, get in and get locked as soon as possible.

Sleeping on it for even one night may end up costing you dearly. Don’t be that buyer or refinance candidate.

Qualify for an Orlando FHA loan now.

See if you qualify for a rate lowering refinance now.

(Image courtesy: The New York Times)

Chris Brown All Around Good Guy Trinity Mortgage 153 Parliament Loop #1001 Lake Mary, Florida, 32746	Work: 407 377 0500 x 210 Chris@OrlMtgPro.com www.MortgageChiliBlog.com
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After months of failed attempts, General Motors' financing arm, GMAC , was granted bank holding status from the Federal Reserve on Dec. 24 in a move that will allow the struggling firm to access funds from the Treasury's Troubled Asset Relief…(read more)

Mortgage rates fell for the 8 th straight week in the week ended December 24, establishing a new low for Freddie Mac's Primary Mortgage Market Survey. The 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with 0.8 point, down from last week…(read more)

How Much Do I Qualify For?

How much can I borrow is one of the most frequent questions I am asked. There are two things to consider when you are looking to purchase via FHA in Georgia or Alabama. First, you’ll be limited by FHA loan limits. These are county specific. For example an Atlanta FHA loan is limited to 2009 Metro Atlanta loan limits of $320,850 for single family residences. The rest of Georgia and Alabama, including Birmingham, Mobile, Huntsville and Savannah, are limited to $271,050.

The second thing to consider is debt to income ratio. FHA guidelines like for you to use no more than 31% of your income for housing. It is possible to exceed this amount with compensating factors such as a high credit score or plenty of assets. As far as your total debt to income ratio, FHA would like you to spend no more than 43% of your total income on debt. Of course, the same compensating factors listed above apply to this ratio as well so you can exceed that guideline in some instances.

What is the Down Payment Required?

The down payment requirements are changing to 3.5% on Jan. 1st, 2009 for traditional FHA purchases. However, FHA 203K Renovation Loans, along with FHA 203H loans for disaster victims and FHA Energy Efficient Mortgages, are not affected by the change and will remain at 3% down. One note is that on the FHA 203K and other FHA specialty products requiring the lower down payment, you can still include the appraisal and a portion of your closing cost in the down payment.

What Documentation Do I Need?

When applying for your Georgia or Alabama FHA loan you’ll need to fully document your income and assets along with providing full explanations of any credit problems in the past 2 years.

1. Two Years W2 & Two Most Recent Paystubs.
2. Tax Returns generally only needed for self-employed borrowers, borrowers with rental income and borrowers using commission income to qualify.
3. Two months full bank statements. Must be “official” statements and must include ALL pages.
4. Most recent statements for retirement and investment accounts.
5. Color copy of Driver’s License and Social Security Card.
6. Credit explanation letters, bankruptcy papers, divorce decrees, child support documentation, leases on rental properties, etc are required if applicable.

What Credit Score do I Need?

FHA and lender guidelines generally require a 580 mid score or above to qualify. However, 620 or above should get you the best FHA rate available. The higher the better though and home buyers with excellent scores will generally be required less documentation and have faster underwriting turntimes.

How Long Does the Process Take?

That depends on a number of factors, but 30 days or less should be the goal on a purchase. Borrowers with lower credit scores will generally be required to document more and therefore can sometimes take a little longer than borrowers with excellent credit. If you are doing a FHA 203K Renovation Loan then 30 days is still reasonable on the 203K streamline version, but plan for 45-60 on the full 203K due to the additional third party items needed. FHA Streamline refinances should be the quickest to close because of the reduced documentation requirements.

How Do I Get Started?

The first step is ALWAYS to call an experienced FHA loan officer to help you determine what you are qualified for. You should also be prepared with you income and asset documentation as well. The speed in which we can close you loan often depends on you more than anyone else.

Apply for Your Georgia or Alabama FHA Loan

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

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