If you are considering buying a home, I recommend you read this. Being that I am a Orange County and Huntington Beach Real Estate Agent It is extremely important I understand the loan industry and bring clarity to my clients with the changes and/or answer questions they may have about getting a loan. That being said- the FHA has recently announced several changes that will impact underwriting in several areas. These changes are effective April 1, 2012.
Here’s a quick summary of these changes:
For self-employed borrowers:
Profit and Loss statements will now required if the last business tax return is more than three months old. statements must be audited if Profit and Loss income is greater than the two year average.
For loans with disputed accounts that receive an “Accept” by TOTAL: These are not required to be referred to a DE underwriter for review as long as the total amount of combined balances (1) does not exceed $1,000 and (2) the dates of last activity are older than two years. If singular or combined balances are more than $1,000 they must be paid in full at or prior to closing, or you must provide proof of payment arrangements with a three months of payments verified.
For collection accounts:
If the total balances of all collection accounts are less than $1,000, the borrower is not required to pay them off as a condition of approval. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with three months of payments verified. Judgments must be paid unless payment arrangements have been made and 3 months of payments are verified.
For definitions:
The following are now included in the definition of family member for the purposes of Identity of Interest transactions: Brother, Stepbrother, Sister, Stepsister, Uncle, and Aunt.
Loan Limits:
FHA loans have limits for different areas. For instance, If you are buying a single family home in Huntington Beach the limit for the loan amount they are allowed to loan you will several hundred of thousands more then lets say Indio California. Same goes with condos and townhomes. If you are buying a Huntington Beach condo that is for sale you will be able to get a higher loan amount then if you bought in Riverside. The FHA uses a formula based on prices in the area and that is what they use to set the caps on loan amounts.
If you have any questions regarding these updates, or questions relating to real estate in general, contact me by clicking “Lets Get Started” below. I’ll be happy to help you with whatever need or question you might have about the Costa Mesa real estate market. Remember my mission is to “provide you the best real estate experience you’ll have have.”
