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How much mortgage do I qualify for?

The #1 question first time home buyers ask is: How much mortgage do I qualify for?

This is, by far, the wrong question to be asking.  They shouldn’t be basing their purchase price based on what mortgage they qualify for but instead, how much of a mortgage payment are they comfortable with paying every month.

For instance, they may qualify for a $2000.00 per month mortgage payment but that doesn’t mean they should be buying a house with payments that high.  Instead, they should be asking themselves what mortgage payment are they comfortable with paying every month so as not to be “House Poor”.  I usually advise married borrowers to base their mortgage payment based on one borrowers’ income, in the event the other borrower becomes temporarily unemployed.

The current Fannie Mae mortgage underwriting guidelines allow a borrower to obtain a mortgage payment up to 50% of their gross income.  Personally, I think that is crazy and here is why:

Assume you make $48,0000.00 annually.  That means the current guidelines will allow you to have a $2000.00 per month mortgage payment.  So let’s run the numbers and see why a $2000 mortgage payment would not work. If you make $48,000 annually, that breaks down to $4000 per month and after a minimum of 20% income tax, you will take home $3200.  So, use $3200 as your monthly bills starting point.

$3200

-$2000 – Mortgage

-$200 – Health Insurance

-$100 - Car Insurance

-$100 – Phone Bill

-$250 – Utilities (Power/Water/Sewer)

-$100 – Cable

-$200 – Auto Gas

_____________

$250 – left over for livable expenses (Savings, food, entertainment, etc.)

At $250 per month to live off of, you’ll own a big, beautiful home … that you can’t even afford to invite your friends over for the house warming party. Not my idea of a good time. Instead, go in to the home loan process with the idea of how much you want to pay per month. By doing this, you will be more effective in budgeting your money, thus being able to get a home you can afford to buy and comfortably enjoy living in.

The proper question to ask a mortgage company when thinking of buying a house is:

I would like my mortgage payment not to exceed “X” dollar amount per month.  What price range of a home should I consider buying?

For First Time Home Buyers, choosing the right mortgage broker or lender to work with is the key in successful homeownership. Your Loan Officer needs to take into account your short term and long-term goals and help you choose a mortgage payment that you are comfortable with rather than getting a big loan that benefits them only.

I pride myself with the integrity and experience that allows me to help my borrowers obtain a mortgage that best fits their needs and not my pocket.  Give me a call today and let me guide you through the proper home buying experience.

Experience, integrity and customer loyalty is how I’ve been serving Central Florida Homeowners since 2001. I help hundreds of homeowners every year by taking the time to look at their short and long-term goals. I help them customize a mortgage option that best fits their needs. As a consumer advocate and the Principal Broker at Florida Home Funding, my pledge to you is:

  • I work for you, not the banks
  • I put your best interests first
  • I work around your schedule, not banker’s hours
  • I give straightforward answers to all your questions
  • I have more financing options than any bank
  • With access to wholesale mortgage rates, I am confident that there is not a bank in town that can beat my rates

This is how I have maintained an “A+” rating with the Better Business Bureau and have some of the best online reviews. Don’t take my word for it, see for yourself.

Call me and let’s talk about to a mortgage that fits your lifestyle for you to comfortably enjoy for years to come…

When it comes to getting a mortgage

you have more options than you think

FHA loan requirements 2017 in Florida (Frequently asked questions)

What is the maximum loan amount/limit 2017? Maximum loan amount vary by county for traditional forward FHA loans.  The current base FHA loan limit in most of Florida counties for a one-family home is set at $275,665.00.  https://entp.hud.gov/idapp/html/hicostlook.cfm

What is the minimum credit score required for FHA loans and first time home buyers?  A tri-merged credit report is required with a middle credit score of at least 620.  Depending on overall credit, sometimes borrowers may qualify with middle scores as low as 580.  In some instances, where a co-borrower does not have any credit scores, FHA will consider approval so long as the primary borrower meets the minimum credit score requirements and has more than 50% of the qualifying income with a minimum of 3 tradelines active for last 24 months.  Regardless of credit scores, FHA still evaluates overall credit history to determine if borrower gets approved eligible findings that meet FHA approval guidelines.

What is the FHA waiting period for borrowers with previous bankruptcy? Bankruptcy does not automatically disqualify a borrower from obtaining an FHA loan.  Minimum 2 years since discharge of chapter 7 bankruptcy.  Borrower with less than 2 years’ discharge may qualify for financing so long as they meet the extenuating circumstances as defined by FHA/HUD.  Same rule applies for borrower with chapter 13 bankruptcy.  However, borrower with chapter 13 bankruptcy may still qualify if the bankruptcy has been discharged less than 2 years if the lender is willing to do a manual underwrite with satisfactory payment history under the chapter 13 plan.

How does FHA treat Charge-Offs for Credit card and instalment loan? Charge-off accounts are not included in borrowers’ debt.

How does FHA treat Collection Accounts for Credit card and instalment loan?  Non-medical collection accounts when the cumulative outstanding balance is greater than $2,000 borrower may either pay-off the balance or for the purpose of DTI (Debt-to-Income), provide proof payment plan or lender must use 5% of the outstanding balance and include it in the borrower’s DTI calculation.

Borrowers applying for FHA loans that are currently in Consumer Credit Counseling: If the file receives automated Approve/Eligible findings then no documentation is required from the borrower.

FHA guidelines for Delinquent Child Support: Delinquent child support must be paid current or in a payment plan.

FHA guidelines for Delinquent Federal Tax Debt: Borrowers with delinquent tax debt are ineligible unless currently in payment plan.

FHA guidelines for borrower with previous Foreclosure and Deed-in-Lieu: Foreclosure waiting period is measured from the date of title transfer.  3 years must have elapsed from the time title transferred. If the foreclosed loan was an FHA loan, the 3-year waiting period is based on the date the FHA claim was paid (e.g. foreclosure 11/12/12, FHA claim dates was 7/12/13, the 3-year waiting period ends 7/13/16).  Borrowers with foreclosure/DIL within 3 years of case number assignment that was due to documented extenuating circumstances may be eligible if the borrower has re-established good credit since the foreclosure. A downgrade to manual underwriting is required. If the foreclosure was included in the bankruptcy, the foreclosure waiting period still applies. HUD treats the foreclosure and BK independently, not as a single event.

FHA guidelines for borrower with previous Short Sale and Pre-Foreclosure: The 3-year waiting period from date of title transfer still applies unless they were current at the time on short sale.

Can you get an FHA loan if you have a Tax Lien:  Borrowers with delinquent tax debt are ineligible unless currently in repayment plan. Repayment Plan Tax liens are not required to be paid in full if documentation is provided indicating the borrower is in a valid payment plan. The following is required: • The borrower must have made a minimum of 3 months of scheduled payments and documentation of the payments is required. • The payment must be included in the DTI calculation. • The borrower cannot prepay the payments to meet the 3-month payment requirement NOTE: Borrowers with delinquent taxes may or may not have a tax lien. Borrowers currently in a repayment plan, and the IRS has not filed a tax lien, are not required to meet the minimum 3-month payment requirement. The payment to the IRS will be included in the DTI calculation.

What is the Down Payment for FHA loan? The borrower’s minimum required investment is 3.5% of the purchase price/ adjusted value of the property.  The source must be from borrower’s own funds or from an acceptable gift/donor.

What are the FHA guidelines for income and debt ratios (also called DTI or Debt-to-Income ratio)?  Maximum debt to income ratio varies based on overall credit history and assets.  Typically, the DTI cannot exceed 45% of the borrower’s gross income.  However, in some cases borrowers with as high as 54.9% DTI may be eligible and in other cases borrowers may be capped at 43% DTI.

What are FHA guidelines for Employment history and loan income requirements? A 2-year employment and income history is required for both employees and self-employed borrowers by way of pay stubs, tax returns and w2s/1099s.  Borrowers with court ordered alimony and child support must document receipt of the income for a minimum of 3 months and proof that it will continue for at least 3 years.

How does FHA treat differed Student loans? Borrowers with student loans that are in deferment or not fully amortized will be required to calculate 1% of the outstanding balance as minimum monthly payment to be included in their debt to income ratio (DTI) calculation.

What are FHA Eligible property types? Single family residences • 2-4 units • PUDs (attached/detached) • Condominiums (FHA approved projects. Approval must be valid at time of case number assignment) • Modular/prefabricated properties 1-unit only. Factory built but not built on a permanent chassis; built on-site similar to stick-built homes; permanently affixed to the foundation; must conform to local building codes. Property is legally classified as real property and assumes characteristics of stick-built such as permanent connections to water, electrical and waste disposal systems. • Mixed use subject to: - Property must conform to residential nature of the neighborhood, and - Commercial use cannot exceed 25% of the gross living area

What are FHA Ineligible properties? Non FHA approved condominium projects • Cooperative projects • Manufactured/mobile homes. Manufactured housing is defined as any dwelling built on a permanent chassis. Manufactured homes are ineligible even if the towing hitch, wheels and axles have been removed. • Condo Hotels (projects managed or operated as hotel/motel, hotel/motel conversions) • Unique properties • Farms, orchards, ranches • Rural property >10 acres. • Commercial property • Properties located in lava zones 1 and 2

Can you get an FHA loan for a Property acquired at auction? If the subject property is purchased at auction, the buyer’s premium may be included in the calculation of the final sales price, as long as the amount of the buyer’s premium is reasonable and customary for the area

What is the maximum Seller Contributions/concessions for FHA loans?  Seller and other third party contributions are limited to 6% of the sales price.

When it comes to getting a mortgage

you have more options than you think

#1 mistake when searching “Mortgage Rates Today”

#1 mistake when searching “Mortgage Rates Today”

The #1 mistake consumers make with the widely-searched term “mortgage rates today” is not knowing how to read the fine print and the multiple factors associated with determining accurate mortgage rates. The most deceptive advertised mortgage rates are either missing clear and conspicuous disclosures of the terms or have disclosures that require a very mortgage savvy person to understand.

For instance, some of the biggest online lenders advertise the lowest rate - but only based on very low loan-to-value and includes paying multiple discount points.  The fact is, most consumers don’t want to pay discount points. The cost associated with recuperating points with rates takes a long time to justify the benefits, and some people just don't have the money.  Another thing to consider is that mortgage rates today are subject to multiple criteria: Exact credit score, Loan amount, Loan-to-value, Purchase or refinance transaction, With and without cash out and Type of property.

Here are two categories of the type of companies that advertise mortgage rates to hook customers into completing an application (which eventually results in bait-and-switch tactics):

BIG Mortgage Lenders - The BIG online mortgage lenders with highly recognized names that sponsor the Superbowl and other major sporting events.  When it comes to lowest mortgage rates it’s not like a car dealership that gets better pricing based on volume. Pricing is purely based on overhead and cost of acquisition.  Often times, smaller mortgage brokers undercut these big lenders by a quarter to a half a percent when comparing same closing costs because they don’t have hundreds of employees or million-dollar advertising costs.

Lead generation websites with big brand names:  These websites are very deceptive and unregulated since they are not licensed mortgage companies and will do anything to get consumers to complete a form.  They will advertise 15 year mortgage rates or adjustable mortgage rates with the idea that consumers assume it's a 30 year fixed rate without any discount points. The truth in lending act clearly sets out guidelines mortgage lenders are supposed to follow when advertising rates to consumers.  However, these lead generation websites have zero understanding of the law and have only one goal in mind:  get consumers to complete an application so they can sell your information over and over which will result in you getting slammed with telemarketers.

Do yourself a favor and instead of searching “mortgage rates today”, search for the best local mortgage companies, mortgage lenders or mortgage brokers. Interview them and read their reviews.  Each local market has hundreds of mortgage companies and so there's no reason to try and get a mortgage from an out of state lender that's just a call center full of highly motivated sales people.  Just think about this: Would you invest money with a financial adviser over the phone, or would you rather deal with a local person that you can meet with face to face?

It's your financial future at stake, your social security number and your identity that you're sharing. Make sure you know where your information is going and who you're giving it to.

I’m Shahram Sondi (NMLS id: 186790), principal broker and president of Florida Home Funding, a Florida licensed mortgage broker. As a consumer advocate, I am constantly working to educate consumers on making good financial decisions. I have been serving the Central Florida market with experience and integrity since 2001. Tell me what you’re looking for, and we will personally present you with the lowest available mortgage rate today based on your desired mortgage type and term.

When it comes to getting a mortgage

you have more options than you think

Investment Property Mortgage & Rate Guide

Purchasing a home for investment purposes has been done for many years, especially in Florida where many people look to rent both long term and short term. Home prices are still good for the investor, but financing is not going to be quick nor easy since credit has been tight for some time now. With some preparation and understanding of the market, this is definitely possible as long as you are working with someone who can give you the proper advice for obtaining investment property loans.

An investment property is basically any property that is one to four units that the borrower does not occupy. Sometimes a primary residential property becomes an investment property when the owner decides to purchase another home to occupy and keeps the original home for rental income.

Investment property loans are generally conventional conforming loans which are sold to Fannie Mae or Freddie Mac. A good credit history and credit score is necessary to be approved for this type of loan. Most lenders require that at least a 20% down payment be made on an investment property for a first investment purchase and a higher down payment for two to four investment properties. Investment property mortgage rates are higher than rates for owner occupied property, however, lower mortgage rates are possible with higher down payments. Debt to income and loan to value are always a consideration when determining any mortgage rate.

The borrower who is applying for an investment property loan must submit the same documentation that is required for a regular loan. However, all of the expenses of the primary residence will be considered in the debt to income ratio for the debt to income ratio of the new investment loan. If there are previous investment properties involved, income tax returns will be used for rental income and any negative rental income will be calculated as an obligation and included in the DTI.

Other guidelines for investment property loans require that the borrower have a minimum of three months reserves available, sometimes more. The maximum seller contributions for this type of loan is limited to 2%.

In today’s market, property flipping is not illegal, but watched very carefully by lenders. An example of unacceptable property flipping is when a distressed property is purchased at a discounted price and then resold at a higher price to an uninformed home buyer. Property flipping is acceptable when a home has been improved for legitimate and verified renovations since the purchase and the higher sales price represents those improvements.

A property flip transaction will be considered for a conforming loan when the seller is the owner of record; a complete appraisal is performed; there are no interested party characteristics; the sale is within 0 to 90 days of the seller’s acquisition. If the sales prices increased 10% or more since the previous purchase, this increase will need to justified. In this case, the appraiser must take photos of any improvements and comment on the cost and contribution to the increase in value. The seller must submit all receipts, building permits and/or signed contracts to verify that the renovations took place. If the property flip is after 90 days and the sales price has increased 10% or more since the seller’s purchase, the increase must be supported by the appraisal.

Needless to say, investment property loans can be more intense than regular home mortgages. However, using a Florida mortgage broker who has experience with this type of mortgage will make this transaction much easier. If there are plans to purchase more than one investment property, it is a good idea to use the same Florida broker who already has a history of past purchases.

Investment Property Mortgage

When it comes to getting a mortgage

you have more options than you think

First Time Home Buyer Florida Program Update

There is no magical way for a First time home buyer in Florida to get a mortgage loan to buy his/her first home.  You still have to meet the many criteria for a mortgage that will be securitized in the market and conform to the guidelines set forth by HUD and various regulatory agencies.  Typically, people associate first time home buyer loans with FHA loans. Thus, for the purpose of this first time home buyer update we will focus on providing potential Florida homeowners with qualification requirements pertaining to FHA loans.

Before we go into more detail, here is a simple way to look at how you qualify for a first time home buyer FHA loan:  You either make enough money to qualify for an FHA loan or you don’t.  You either have demonstrated credit worthiness or you haven’t.  It’s as simple as that!

First Time Home Buyer Florida Program FAQs

Here are some basic cost and qualification requirements for a first time home buyer in Florida:

  1. What is the minimum credit score for FHA loans? Although some Florida mortgage companies will go down to a 580 credit score, most lenders require a minimum of 620 credit score to approve an FHA loan.  Minimum FHA credit scores do not automatically qualify you for an FHA loan.  Most mortgage lenders also like to see 1-3 positive tradelines such as credit cards reported on your credit for a at least 12 months.  FHA does allow for nontraditional trade lines such as electric and cable but varies from lender to lender.
  2. How about bankruptcy or foreclosure? No bankruptcy in the last 2 years, no foreclosure, Deed in Lieu or Short Sale in the last 3 years from the date of your Florida mortgage loan application.  Simply put, if you have had a bankruptcy, it had to have been discharged over 2 years ago. A foreclosure had to be completed over 3 years ago from the time the deed transferred from your name to another.  Although there are talks about loosening up the foreclosure guidelines, for now you may want to use this timeline to be safe when evaluating your current circumstances.
  3. How much can you afford? Currently FHA in some cases allows all the way up to 55% debt-to-income ratio for loan income qualification purposes.  What this means is, your total monthly obligation cannot exceed 55% of your gross monthly income.  Preferably no one should want their monthly debt to be more than 41% but unfortunately certain homeowners try to push the envelope because they get emotionally attached to a home.
  4. What’s the minimum down payment for FHA loans? You need to put a minimum of 3.5% Down payment in excess of any closing costs or pre-paids.  This means, don’t assume that putting $7,000 down on a $200,000 home is all you need to become a first time home buyer.  You do have the option of asking the mortgage lender to give you credit from the rate towards closing costs in exchange for taking a higher rate if you have limited funds over the 3.5% down payment.  Some borrowers do qualify for Down Payment Assistant from government agencies which may also be an option.
  5. Can you get help with closing costs on an FHA loan? The seller can contribute up to 6% towards your closing costs but that cannot go toward the 3.5% down payment based on the purchase price of your desired home.  You may also search for a broker or a lender that will give you credit to cover all closing costs.  Here at Florida Home Funding, we always provide our first time home buyers with a no closing cost option.
  6. What’s the Maximum FHA loan amount you can get?  The maximum loan limits are set by your mortgage lender based on your income. In addition, the mortgage lender also has to take into account the Florida Maximum County loan limits set by HUD. For current FHA loan limits in Florida, visit  https://entp.hud.gov/idapp/html/hicostlook.cfm
  7. Do you have to pay anything extra on an FHA loan? All FHA loans have mortgage insurance added to your monthly mortgage payment.  FHA mortgage insurance currently is set to stay on your FHA loan for the life of the loan.  As an alternative, you may want to look at putting 3-5% down on a conventional mortgage, which does not result in lifetime mortgage insurance payments.  Lastly, FHA loans also come with a hefty upfront one-time mortgage insurance premium that is stacked on top of your principal loan amount.  The upfront mortgage insurance is 1.75% of your principal loan amount.

Contact a licensed Florida mortgage broker if you are looking for not only the best FHA loan rates in Florida but also if you would like a professional to sit with you, explain and lay out a successful long or short term strategy (based on HUD guidelines) to help you become a qualified first time home buyer in Florida.

When it comes to getting a mortgage

you have more options than you think

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