General Mortgage Knowledge

a mortgage NOT insured or guaranteed by the FHA, VA, USDA

mortgages that meet loan limits for purchase by Fannie Mae and Freddie Mac

mortgages that do not meet loan limits for purchase by Fannie Mae and Freddie Mac

• $417,000 in most locations
• $625,500 in high-cost areas

down payment of at least 5% or PMI

with an LTV above 80% unless it is insured or guaranteed

• paystubs for the most recent 30-day period and W-2s for two-years
• more than 25% commission, 2 years tax returns
• more than 25% self-employed, 2 years tax returns
• social security, public assistance, disability, 'gross up' by 25%

minimum credit scores today range from 620-700

• underwriting systems:
• -Desktop Underwriter (DU)
• -Desktop Originator (DO)
• -Loan Prospector

• jumbo loans
• Alt-A
• subprime loans
• nontraditional mortgages
• niche loans

exceed the loans limits established by Fannie Mae and Freddie Mac

do not quite meet requirements for prime rate loans

higher-interest loans with blemished credit that do not conform

other than a 30-year fixed-rate mortgage

borrowers with unique circumstances or needs

guaranteed or insured by government agencies, FHA, VA, RHS (USDA)

FHA does not make, buy, or sell loans. It insures the full value of the loan

must make an upfront mortgage insurance payment (lump sum or financed)

• the floor: $271,050
• the ceiling: $625,500

within 60 days after the closing of a loan the lender must submit the closing package to HUD, who responds with an MIC (mortgage insurance certificate)

upfront MIP, 1.75% of the base loan amount

• depends on
• -LTV ratio
• -length of loan term
• -base amount of the loan

• strict limitations
• after 2001, before 2013, LTV reaches 78% of lesser of price of home or appraised value (minimum 5 years)
• after june 3, 2013, LTV ratio of 90% or less, terminates after 11 years automatically

down payment requirements are lower than conventional

• minimum FICO score of 580 qualifies for 3.5% down payment
• FICO score less than 580, put down at least 10%

owned property at least 12 months, eligible for a max of 85% of the appraised value

• Home Equity Conversion Mortgage
• 62 or older
• counseling from HUD-approved required

existing FHA loan is refinanced with another FHA insurance loan

• establishes eligibility requirements
• guarantees the loan (guarantee to repay a portion of a loan balance)

• 100% financing
• no prepayment penalties
• lenient underwriting requirements
• limited closing costs
• seller concessions are allowed
• VA assistance available

the basic entitlement is $36,000, but high-cost areas an additional $68,250

• Certificate of Eligibility
• for a veteran who wants to secure a VA loan

• veterans contributions to mortgage lending transactions
• can be financed

up to 41%

• RHS Direct Loans
• RHS Guaranteed Loans

• funded directly by the US government
• funded by private lenders, but are guaranteed by the RHS

• use negative amortization w/o disclosures and counseling
• originate a loan with prepayment penalties
• finance single-premium credit insurance
• originate a home loan w/o consideration of repayment ability

safe harbor from liability for lenders

• closed-end loan:
• -no negative amortization
• -no interest only loans
• -no balloon payments (exceptions)
• -not exceed 30 years
• -points do not exceed 3% of loan amount
• -DTI does not exceed 43%

borrower must prove that the creditor failed to make a reasonable and good faith determination of repayment ability

a number of similarities with conventional

yes

• until 2021
• -it has amortizing payments
• -it has loan term of 30 years or less
• -points that do not exceed 35
• -eligible for Fannie Mae or Freddie Mac, or is a USDA loan

underwriting must be in compliance with the ATR rule

• closed-end loan
• lump sum, borrower begins repayment

• open-end credit
• similar to credit cards

to avoid paying PMI

interim loan used to pay for the construction of buildings or homes

• range of short-term loans that are taken out by homeowners who are waiting for long-term financing
• often to help themselves thru transition of moving before selling old house

any mortgage product other than a 30-year fixed-rate mortgage

• typical candidates should be investors who purchase and sell properties within a short period of time
• ATR Rule eliminating possibility of qualifying just based on its low introductory rate