What are the minimum Mortgage Requirements?

Novus Realty is a one stop shop for all your Real Estate needs. Our team is always focused on keeping up to date with the latest trends along with laws, policies and procedures that are changing on a daily basis. Keeping ourselves relevant is a major priority for our company. Today, we had the pleasure of meeting with Alex Castillo our in house Mortgage Broker. Alex offered a quick training for our Realtors on the basics of Mortgage Lending and the minimum Mortgage requirements for our clients. Here is a summary of the things that Mortgage Brokers are looking for in order to qualify a potential borrower:

 1. Down payment – always related to your LTV or loan-to-value-ratio, the more down payment means less money  that you will be financing and paying interest over time.

2. Affordability – determines your total budget or maximum purchase price.

3. Pre-qualification – does not require your social security and allows you to compare preliminary loan details before running a credit check.

3. Pre-approval – lender will run your credit and examine your finances, this will be the most accurate measure before shopping for a property.

4. Debt-to-income-ratio – total monthly debt and usually it should be no more than 36 percent of your gross monthly income.

5. Credit Score-lenders are always looking for credit scores over 700 to offer the best mortgage rates even though you may still get approved if you fall on the lower end but may not qualify for the best rates available at that point in time.

6. Employment History – a job history can be a great indicative of your ability to repay your mortgage. Borrowers are usually required to have at least two years working in the same field to be considered. As a self-employed individual, you may be asked to provide bank statement information for consideration.
As stated in the beginning, procedures and policies are constantly changing so it is always a good idea to keep an open mind and open communication with all the people involved in your transaction. At Novus Realty, we strive ourselves with all the knowledge and information necessary to make it a smooth and positive transition into purchasing your brand new home!

FHA financing condos again?

Could the Federal Housing Administration (FHA) finally be opening its doors again to financing more condominium units?

That could be excellent news for young, first-time buyers and for seniors who own condo units and need a reverse mortgage to supplement their post-retirement incomes.

Here’s why: FHA financing offers not only 3.5 percent minimum down payments but is far more lenient than other options on crucial issues such as credit scores and debt-to-income ratios.

But if a condo building is not certified as eligible for financing by FHA, all the individual units in the project are ineligible for mortgage financing as well. Young families can’t buy using FHA loans, sellers can’t sell and seniors can’t tap their equity through a reverse mortgage. It used to be different — for years FHA allowed so-called “spot” loans on individual units — but no more.

But maybe things are about to change. In a speech last week to the National Association of Realtors, Housing and Urban Development secretary Julian Castro said revisions to controversial FHA rules on condos have been completed and only await final Obama administration approval. The changes would simplify controversial certification procedures for condo buildings and amend other rules that have knocked thousands of condominium buildings out of eligibility.

Since adopting highly restrictive qualification rules early in the current administration, FHA — once a major player in the condo field and the go-to source of financing for moderate-income purchasers — has steadily seen its market share shrink. FHA once financed 80,000 to 90,000 condo units a year, but last year volume fell below 23,000. Many condo homeowner associations began losing their eligibility several years ago, and because of what they consider onerous recertification requirements, have never sought to reapply.

Castro provided no details on what changes are coming. But real estate and condo industry sources say they could build upon reforms announced last November that appear to have had at least modest success in encouraging condo homeowner boards to get onboard again.

Two California-based consultants who help associations and community managers work through the certification hoops told me they’ve seen a jump in activity in recent weeks. Condo boards that had been resistant to the FHA rules “aren’t fighting them as much any more,” says Natalie Stewart, president of FHA Review. “People need to sell their homes, people need to buy” affordable condo units, so some associations grudgingly are returning to the FHA fold.

Jon Eberhardt, president of Condo Approvals, LLC, said “we certainly have seen an uptick” in FHA certification applications. “I wouldn’t call it monumental, simply a steady growth” in the wake of last November’s changes, he added.

Dawn Bauman, senior vice president for government affairs at the Community Associations Institute, a Virginia-based group that represents 33,000-plus condo and homeowner associations and managers, confirmed that she’s also detected “an increase in the number of applicants” for condo certification and that regional FHA offices have been “more flexible” in recent months in evaluating applications.

What will be crucial to continuing the positive trend, industry experts say, is for the upcoming guidelines to make changes beyond simply streamlining condo certifications.

Since officials at FHA are mum about what’s in the upcoming package of regulations, it’s not clear how much — if any — of this might be included. But the same officials have to know there’s congressional action hovering in the wings: Bipartisan remedial legislation (H.R. 3700) passed the House in February by a 427-0 vote and is now pending in the Senate. The bill would require a dramatic streamlining of current rules and other changes designed to revive the condo financing business at FHA.

Fuente: TRD