General Mortgage Knowledge

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  1. conventional mortgage
    a mortgage NOT insured or guaranteed by the FHA, VA, USDA
  2. conforming loans
    mortgages that meet loan limits for purchase by Fannie Mae and Freddie Mac
  3. non-conforming loans
    mortgages that do not meet loan limits for purchase by Fannie Mae and Freddie Mac
  4. Conforming loan limits
    • $417,000 in most locations
    • $625,500 in high-cost areas
  5. conforming mortgages requirements
    down payment of at least 5% or PMI
  6. Fannie Mae and Freddie Mac may not purchase a loan...
    with an LTV above 80% unless it is insured or guaranteed
  7. Conventional Income Qualification
    • 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%
  8. Conventional Credit Qualification
    minimum credit scores today range from 620-700
  9. Underwriting for conforming loans
    • underwriting systems:
    • -Desktop Underwriter (DU)
    • -Desktop Originator (DO)
    • -Loan Prospector
  10. Nonconforming mortgages
    • jumbo loans
    • Alt-A
    • subprime loans
    • nontraditional mortgages
    • niche loans
  11. jumbo loans
    exceed the loans limits established by Fannie Mae and Freddie Mac
  12. Alt-A loans
    do not quite meet requirements for prime rate loans
  13. subprime loans
    higher-interest loans with blemished credit that do not conform
  14. nontraditional mortgages
    other than a 30-year fixed-rate mortgage
  15. niche loans
    borrowers with unique circumstances or needs
  16. non-conventional mortgages
    guaranteed or insured by government agencies, FHA, VA, RHS (USDA)
  17. FHA Loans
    FHA does not make, buy, or sell loans. It insures the full value of the loan
  18. FHA mortgage insurance
    must make an upfront mortgage insurance payment (lump sum or financed)
  19. FHA Loan Limits
    • the floor: $271,050
    • the ceiling: $625,500
  20. FHA insurance endorsement
    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)
  21. UFMIP
    upfront MIP, 1.75% of the base loan amount
  22. Annual MIP
    • depends on
    • -LTV ratio
    • -length of loan term
    • -base amount of the loan
  23. Cancellation of mortgage insurance
    • 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
  24. FHA Down Payment
    down payment requirements are lower than conventional
  25. FHA credit score requirements
    • minimum FICO score of 580 qualifies for 3.5% down payment
    • FICO score less than 580, put down at least 10%
  26. Cash-out refinance
    owned property at least 12 months, eligible for a max of 85% of the appraised value
  27. HECM
    • Home Equity Conversion Mortgage
    • 62 or older
    • counseling from HUD-approved required
  28. Streamline refinance
    existing FHA loan is refinanced with another FHA insurance loan
  29. For VA loans, VA...
    • establishes eligibility requirements
    • guarantees the loan (guarantee to repay a portion of a loan balance)
  30. VA loan advantages
    • 100% financing
    • no prepayment penalties
    • lenient underwriting requirements
    • limited closing costs
    • seller concessions are allowed
    • VA assistance available
  31. VA Loan Guaranty Max
    the basic entitlement is $36,000, but high-cost areas an additional $68,250
  32. COE
    • Certificate of Eligibility
    • for a veteran who wants to secure a VA loan
  33. Funding Fees
    • veterans contributions to mortgage lending transactions
    • can be financed
  34. VA DTI
    up to 41%
  35. USDA (RHS) Loans
    • RHS Direct Loans
    • RHS Guaranteed Loans
  36. RHS Direct Loans
    • funded directly by the US government
    • funded by private lenders, but are guaranteed by the RHS
  37. Dodd-Frank made it illegal to...
    • 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
  38. Qualified Mortgage overview
    safe harbor from liability for lenders
  39. Qualified mortgage
    • 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%
  40. QM Rebuttle
    borrower must prove that the creditor failed to make a reasonable and good faith determination of repayment ability
  41. FHA Qualified Mortgages
    a number of similarities with conventional
  42. VA Qualified Mortgages
    yes
  43. Temporary Definition of QM
    • 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
  44. Non-qualified mortgages
    underwriting must be in compliance with the ATR rule
  45. Home Equity Loans
    • closed-end loan
    • lump sum, borrower begins repayment
  46. HELOC
    • open-end credit
    • similar to credit cards
  47. Piggyback Loans
    to avoid paying PMI
  48. Construction Loans
    interim loan used to pay for the construction of buildings or homes
  49. Bridge financing
    • 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
  50. nontraditional mortgage products
    any mortgage product other than a 30-year fixed-rate mortgage
  51. Interest-Only Loans
    • 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

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Author:
reynoldson.ben
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326159
Filename:
General Mortgage Knowledge
Updated:
2016-11-29 22:17:09
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