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sjkmtg
44 Posts |
 Posted - 11/05/2009 : 5:17:20 PM
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| I have a client that was approved for a USDA loan and because of the time frame in our state I was forced to change to FHA. What do I need to expect the underwriter to ask me for as far as it being a new home. This is the issue I expect to receive. The Mom of my client is having this home built and is going to sell it to her daughter when finished. The Mom bought the land in May of this year and we are just about at the 6 month on the seasoning. The Mom is giving the daughter a 3.5% equity as she has built the home with her own funds.Need some assurance or advise before I send in... |
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liverichly
7341 Posts |
Posted - 11/05/2009 : 6:18:01 PM
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You'll likely be limited to 85% LTV.
TRANSACTIONS THAT AFFECT MAXIMUM MORTGAGE CALCULATIONS. Certain types of loan transactions affect the amount of financing available and the calculation of the maximum mortgage. These transactions include identity-of-interest, properties with non-occupying co-borrowers, three- and four-unit properties, properties for which a house will be constructed by the borrower on his or her own land or as a general contractor, payoffs of land contracts, and transactions involving properties under construction or less than a year old. Unless otherwise stated in this Handbook, the mortgage calculation procedures described in paragraph 1-6 also apply.
A. Identity-of-Interest Transactions. Identity-of-interest transactions on principal residences are restricted to a maximum LTV ratio of 85 percent. Identity-of-interest is defined as a sales transaction between parties with family relationships or business relationships. However, maximum financing above 85 percent LTV is permissible under the following circumstances:
1. A family member purchases another family member's home as a principal residence.
If a property is sold from one family member to another and is the seller's investment property, the maximum mortgage is the lesser of either:
a. 85 percent of the appraised value, or
b. The appropriate LTV ratio percentage applied to the sales price, plus or minus required adjustments.
The 85 percent limit may be waived if the family member has been a tenant in the property for at least six months immediately predating the sales contract. A lease or other written evidence must be submitted to verify occupancy.
2. An employee of a builder purchases one of the builder's new homes or models as a principal residence.
3. A current tenant purchases the property that he or she has rented for at least six months immediately predating the sales contract. (A lease or other written evidence must be submitted to verify occupancy.)
4. A corporation transfers an employee to another location, purchases that employee’s home, and then sells the home to another employee.
You'll also need to be prepared to get a host of FHA new build forms completed by the builder.
Checklist for New Properties – Stick Built
Proposed – Approved prior to the beginning of construction by either a Conditional Commitment or Early Start
Letter.
Low Ratio Loan (90% or less):
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite State)
• Builder’s Certification (HUD-92541), not for endorsement binder
• Final inspection by fee inspector (HUD-92051), or C.O., (C.O. is not acceptable on condominium or
manufactured home)
• Health Authority Approval on well and septic if needed.
• Flood Insurance, if needed.
High Ratio Loan (90.01% or higher)
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite State)
• Builder’s Certification (HUD-92541), not on condominiums
• 1 year warranty (HUD-92544)
• 10 year warranty and final inspection by fee inspector (HUD-92051); OR Conditional Commitment and 3
inspections by fee inspector (HUD-92051); OR Early Start Letter and 3 inspections by fee inspector (HUD-
92051); OR Building Permit (or equivalent) and C.O. (or equivalent), (C.O. is not acceptable on condominium
or manufactured home)
• Health Authority Approval, if needed
• Flood Insurance, if needed
Under Construction
Low Ratio Loan (90% or less)
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite States)
• Builder’s Certification (HUD-92541), not for endorsement binder
• Final inspection by fee inspector (HUD-92051), or C.O., (C.O. is not acceptable on condominium or
manufactured home)
• Health Authority Approval on well and septic if needed.
• Flood Insurance, if needed.
High Ratio Loan (90.01% or higher)
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite State)
• Builder’s Certification (HUD-92541), not on condominiums
• 1 year warranty (HUD-92544)
• 10 year warranty and final inspection by fee inspector (HUD-92051); OR Conditional Commitment and 3
inspections by fee inspector (HUD-92051); OR Building Permit (or equivalent) and C.O. (or equivalent), (C.O.
is not acceptable on condominium or manufactured home)
• Health Authority Approval, if needed
• Flood Insurance, if needed
Existing (New) – Less than 1 year
Low Ratio Loan (90% or less)
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite States)
• Builder’s Certification (HUD-92541)
• Health Authority Approval on well and septic if needed.
• Flood Insurance, if needed.
High Ratio Loan (90.01% or higher)
• Subterranean Termite Treatment Report – NPCA-99A and 99B (Termite State)
• Builder’s Certification (HUD-92541), not on condominiums
• 1 year warranty (HUD-92544)
• 10 year warranty; OR Building Permit (or equivalent) and C.O. (or equivalent), (C.O. is not acceptable on
condominium or manufactured home)
• Health Authority Approval, if needed
• Flood Insurance, if needed |
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the_mortgage_guy
3209 Posts |
Posted - 11/06/2009 : 06:06:55 AM
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They can be done at 96.5 but this one wont happen if mom is gifting 3.5% and or any seller paids.
As shane said, expect 85%.
Also, daughter would need to show rent history for last 12 months - cancelled checks or managment company only. |
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LO1003
538 Posts |
Posted - 11/06/2009 : 06:21:23 AM
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| Worse case scenario you do a gift of equity for 15%. I would go ahead and work up your contract that way just in case u/w plays hardball and then you would have trouble going back and increasing the sales price at a later date. Also, get mom to pay cc & pp items (you may have to increase sales price some more) so the kid can get in for zero out of pocket (or is that a sin to recommend that these days?). |
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