Elva Wormley

Hi Dave and Mr. Burns,

The only real disadvantage is the 1.5% upfront MIP and the monthly MI. But the upside is the rates are better on a Jumbo FHA loan right now vs. a 90% no MI Jumbo loan.

Also, for now, mortgage insurance is tax-deductible. The 1.5% upfront MIP is financed in the loan amount.

Please feel free to email or give me a call. I am in San Jose, but I do work with borrowers throughout the state of California.

Elva Wormley
Branch Manager
(408) 467-0500
Allied Home Mortgage Capital Corporation - Tue Apr 22 2008, 14:05

Hi Dave,

I've been doing mortgages in California since 1981 and specifically, FHA loans since November 2002.

FHA will allow debt-to-income ratios that are in the 55% range if you can document certain compensating factors.

You don't have to meet all of these compensating factors, but at least 2 would give you a better chance for approval.

Feel free to call me or email if you would like more information.

Elva Wormley
(408) 467-0500


FYI...I copied this right out of the guidelines:

Compensating factors that may be used to justify approval of mortgage loans with ratios exceeding our benchmark guidelines are those listed below. Underwriters must record on the "remarks" section of the HUD 92900-WS/HUD 92900-PUR the compensating factor(s) used to support loan approval. Any compensating factor used to justify mortgage approval must be supported by documentation.

A. The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense for the new mortgage over the past 12-24 months.

B. The borrower makes a large downpayment (ten percent or more) toward the purchase of the property.

C. The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the use of credit.

D. Previous credit history shows that the borrower has the ability to devote a greater portion of income to housing expenses.

E. The borrower receives documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage, including food stamps and similar public benefits.

F. There is only a minimal increase in the borrower's housing expense.

G. The borrower has substantial documented cash reserves (at least three months' worth) after closing. In determining if an asset can be included as cash reserves or cash to close, the lender must judge whether or not the asset is liquid or readily convertible to cash and can be done so absent retirement or job termination. Also see paragraph 2-10K.

Funds borrowed against these accounts may be used for loan closing, but are not to be considered as cash reserves. "Assets" such as equity in other properties and the proceeds from a cash-out refinance are not to be considered as cash reserves. Similarly, funds from gifts from any source are not to be included as cash reserves.

H. The borrower has substantial nontaxable income (if no adjustment was made previously in the ratio computations).

I. The borrower has a potential for increased earnings, as indicated by job training or education in the borrower's profession.

J. The home is being purchased as a result of relocation of the primary wage-earner, and the secondary wage-earner has an established history of employment, is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area. The underwriter must document the availability of such possible employment. - Sun Apr 20 2008, 21:47

Hi Patti,

Changes in the interest rate charged on an ARM must correspond to changes in the weekly average yield on United States Treasury securities adjusted to a constant maturity of one year, or equivalent, as provided by the Department of the Treasury and found on the Federal Reserve Statistical Release H.15, Selected Interest Rates website at: http://www.federalreserve.gov/releases. Except as otherwise provided in this Mortgagee Letter, each change in the mortgage interest rate must correspond to the upward or downward change in this index.

I took this from the FHA guidelines...ML 2004-10.

Elva Wormley
Branch Manager
(408) 467-0500
Allied Home Mortgage Capital Corporation - Mon Apr 21 2008, 17:22

Hi Sharita,

The FHA 203k Re-Hab loan is a possibility.

Elva Wormley - Mon Apr 21 2008, 14:21

Hi Joan,

There are many first-time home buyer programs available.

My office is in San Jose, if you would like to work with a local mortgage professional. I've been working in the mortgage industry since 1981 and have helped many borrowers purchase their first homes.

You can reach me at 408-467-0500. My website address is http://www.alliedsanjose.com

You can also do a web search on my name, Elva Wormley, to learn more about me and the level of service I provide my clients.

Best regards,

Elva Wormley - Mon Apr 21 2008, 09:49

Teresa,

Ian's response was great! I would follow his advice.

Elva - Thu Dec 13 2007, 17:55

Hi Teresa,

I would recommend you start with “first-time buyers education” The MI (mortgage insurance) companies offer very good classes online. Here’s a link to one of the sites: http://www.mgichome.com/

Best wishes,
Elva - Thu Dec 13 2007, 17:50