| Author |
Previous Topic | Next Topic |
|
slants
4274 Posts |
 Posted - 07/14/2008 : 4:02:37 PM
|
| Is it still acceptable to qualify DTI based on bought down rate? Or is full rate used for DTI calculation? |
|
EquitySmart
1240 Posts |
Posted - 07/14/2008 : 4:12:07 PM
|
| I believe you always use the second year rate to calculate DTI = start rate + 1% |
|
|
slants
4274 Posts |
Posted - 07/14/2008 : 4:26:00 PM
|
| Thank you. |
|
|
Hardboiled
40 Posts |
Posted - 07/14/2008 : 4:26:04 PM
|
| nope...used to it was awesome. It was fun getting people qualified on that and their competing offeres were 2/28 stated deals. I should call and laugh at the two or three people who went the other way...not that I am mean spirited vindictive or still pissed about paying for part of those appraisals. |
|
|
dkendall1979
10261 Posts |
Posted - 07/14/2008 : 4:27:07 PM
|
| Yeah, no more qualifying at the reduced rate. HUD changed that good ol guideline recently. |
|
|
slants
4274 Posts |
Posted - 07/14/2008 : 4:28:11 PM
|
| Bummer... Thanks for the update :-(. |
|
|
crankyusi
660 Posts |
Posted - 07/14/2008 : 5:19:24 PM
|
quote:
Originally posted by dkendall1979
Yeah, no more qualifying at the reduced rate. HUD changed that good ol guideline recently.
Have a link of some sort available? Been looking all over for that.. Thanx if you could. |
|
|
dkendall1979
10261 Posts |
Posted - 07/14/2008 : 5:29:45 PM
|
Not readily available, you can search hudclips.org in the bulletins, I'm sure it's in there somewhere.
quote:
Originally posted by crankyusi
quote:
Originally posted by dkendall1979
Yeah, no more qualifying at the reduced rate. HUD changed that good ol guideline recently.
Have a link of some sort available? Been looking all over for that.. Thanx if you could.
|
|
|
quick_n_low
291 Posts |
Posted - 07/14/2008 : 5:39:59 PM
|
| 3/1 FHA ARM uses the start rate to qualify |
|
|
crankyusi
660 Posts |
Posted - 07/14/2008 : 5:40:14 PM
|
Ok, thanks. For an ARM loan with an initial teaser, does the fully-amortizing interest rate need to be stated on Page 1 of the 1003 to comply (can't use the teaser)?
|
|
|
nowbroker
1384 Posts |
Posted - 07/14/2008 : 5:41:33 PM
|
FHA Mortgagee letter 2004-28
Interest Rate Buydown Accounts
Similar to HUD's risk-management efforts regarding inaccurate estimates of property taxes, the Department is concerned with the use of temporary interest rate buydown accounts on fixed-rate mortgages and the ensuing payment shock. Interest rate buydowns, although a small percentage of FHA's insured mortgage portfolio, have not performed as well as those mortgages made without buydowns. Consequently, FHA will no longer permit underwriting at the buydown rate on fixed-rate mortgages. Builders and sellers may still offer buydowns but the borrower must qualify at the note rate.
|
|
|
slants
4274 Posts |
Posted - 07/14/2008 : 5:55:39 PM
|
quote:
Originally posted by nowbroker
FHA Mortgagee letter 2004-28
Interest Rate Buydown Accounts
Similar to HUD's risk-management efforts regarding inaccurate estimates of property taxes, the Department is concerned with the use of temporary interest rate buydown accounts on fixed-rate mortgages and the ensuing payment shock. Interest rate buydowns, although a small percentage of FHA's insured mortgage portfolio, have not performed as well as those mortgages made without buydowns. Consequently, FHA will no longer permit underwriting at the buydown rate on fixed-rate mortgages. Builders and sellers may still offer buydowns but the borrower must qualify at the note rate.
Thanks nowbroker, so I can still use the start rate on 3/1 ARM's like quick_n_low posted? |
|
|
TransNet
523 Posts |
Posted - 07/14/2008 : 10:13:31 PM
|
quote:
Originally posted by slants
...so I can still use the start rate on 3/1 ARM's like quick_n_low posted?
Yes.
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/04-10ml.doc
"g. Borrowers choosing the 1-year ARM must qualify for payments based on the contract or initial rate plus one percentage point (1%). This only applies to the 1-year ARM where the loan to value (LTV) is 95.00 percent or greater. (For this purpose, the LTV is defined as the lesser of the base loan amount divided by the appraiser's estimate of value, or the percentage shown on line 16a of the HUD-92900-PUR or line 14a of the HUD-92900-WS.)"
"h. Borrowers choosing the 3-, 5-, 7- or 10-year ARMs are to be qualified at the entry
level (note) rate (i.e., there is no requirement to underwrite at one percentage point above the note rate as there is for 1-year ARMs)."
|
|
|
slants
4274 Posts |
Posted - 07/14/2008 : 10:17:11 PM
|
| Thanks everyone. That's a life saver. Didn't mean to doubt you quick_n_low. |
|
|
hlawler
145 Posts |
Posted - 07/15/2008 : 07:31:39 AM
|
| Some lenders will still qualify at the second year rate. Each company is different. I have also been using the 3/1 or 5/1 since the start rate has been lower than a second year rate on the buydown. |
|
|
| |
Previous Topic | Next Topic |
|
Search for: 
