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Fha Financing A True Opportunity
- 1. FHA financing- A true opportunity Carlos Ramos Home Mortgage Consultant NMLSR ID 460046
- 4. FHA financing provides great opportunities while offering important consumer protections Low cash requirements for borrowers. The down payment, as low as 3.5%, and all of the closing costs on an FHA loan can be funded by a gift to the borrower or a down payment assistance program 1 . No negative amortization. All FHA loans are fully amortizing. As borrowers make their monthly payments, their loan balance falls. There are no “option payments” that may cause an unassuming borrower to continually increase the outstanding loan balance. Low margin options. The margin is the fixed amount added to the floating market rate to determine the new rate the borrower will pay when an ARM resets. The smaller the margin, the lower the borrower’s reset rate will be. And FHA offers low margins (1.75%) -- meaning that the rate borrowers pay after ARM resets are generally lower than what they’d pay on many comparable conventional ARMs. Lowest annual and lifetime caps. The rate on a 3/1 or 5/1 ARM 2 cannot rise by more than 2% at any annual reset. Over the life of an FHA loan, the rate cannot be higher than 6% above the loans initial rate. Available to non-citizens. Permanent and non-permanent resident aliens are eligible. 1. Not available on loan amounts in excess of $417,000. 2. 1/1, 7/1 and 10/1 ARMs are not currently available. For real estate professionals only.
- 14. And there’s more… FHA Financing is just one of many benefits and services Wells Fargo Home Mortgage provides to help real estate agents like you grow your business. For real estate professionals only.
Editor's Notes
- Set up: NOTE: 1. Before making this presentation to Realtors, please make sure you have either completed FHA training, or have a good understanding of FHA financing. 2. This deck is the approved power point presentation to be used with Realtors, and replaces any previous FHA financing decks you have been asked to use. Please see following notes pages for talking points. Follow the directions below to print your presentation with talking points and/or to give your presentation without showing the talking points. We recommend that you don’t read the slides bullet by bullet but instead use these notes to help move your presentation. To print the presentation with notes pages: Select “File” from the menu above. Select “Print” from the list of options. On the “Print” screen, go to the “Print What” drop down menu and select “Notes Pages” The slide and the corresponding notes pages will print. To show the presentation without notes pages: Select “View” from the menu above. Select “Slide Show” from the list of options. The slide show will appear on the full screen of your computer. Use your arrow keys to move the pages.
- OPTIONAL QUESTION: (Use to connect with agent, and as lead-in to program benefits). Before jumping into the details, let me ask you: How many of you have sold a home in the past 12 months using FHA financing How are you marketing your properties? How are you differentiating yourself in the market? What are the biggest challenges you’re seeing in our market right now? AFTER DISCUSSION: No doubt, there are a ton of challenges in our market right now. It’s a tight market and there’s a ton of competition. Not to mention that one of the leading reasons a home-sale doesn’t close: Financing.
- FHA is an exceptional program for first-time and repeat borrowers. Unlike other first-time homebuyer programs, FHA will provide financing to qualified borrowers who are now or were previously homeowners. And there are no income limitations like other LMI programs, such as those offered by states or municipalities. FHA has published minimum credit score requirements, however, they will continue to allow borrowers who do not have a credit score to use non-traditional credit to demonstrate their willingness and ability to manage credit
- NOTE: Read the bullets first FHA loans take experience in originating, processing, underwriting and closing---that’s why working with an experienced lender is so important. Wells Fargo Home Mortgage offers the lowest annual life caps and margin allowed. What does the competition charge? Typical ARMs have 2% annual and 6% lifetime caps. Although FHA allows annual and life caps on the 3/1 and 5/1 ARMs to 2% and 6%, WFHM limits the annual cap on the 5/1 to 1% and 5%. This is the Wells Fargo Home Mortgage advantage. EXAMPLE: From the first time the loan is reset on throughout the life of the loan, it makes a difference. Say the floating market rate is LIBOR, and it’s at 3% when it’s time to reset. An FHA margin of 2% will lead to a new rate of 5%; a higher margin – say 2.25% - on a conventional loan also using LIBOR will result in a new rate of 5.25%. That quarter point difference in rates persists year after year, resulting in lower monthly payments for FHA borrowers through the life of the loan.
- Read the slide to explain assumability.
- NOTE: Read the bullets first. There are so many flexible features available with the FHA product that can accommodate a wide array of customer needs. FHA can help you sell more listings and feel confident that your clients are in a safe and affordable loan. Borrowers can also receive 100% of the down payment and closing costs from an approved gift source (like a family member) or an FHA approved Down Payment Assistance program FHA allows a non-occupant co-borrower on 1 unit properties…one of the biggest advantages of FHA financing. Unlike conventional loans, the income and assets of the occupant borrower is combined with the income and assets of the non-occupant co-borrower to create ONE ratio. Like all loans, FHA borrowers are required to credit qualify. However, FHA programs are typically more lenient on credit, especially if the circumstances that caused the negative credit were beyond the control of the borrower. We must demonstrate that the problem that caused the negative credit (loss of job, health/accident issue, etc.) has been resolved and that new positive credit has been established.
- Flexible underwriting guidelines 100% of the down payment and closing costs can come from an FHA approved Down Payment Assistance program Like conventional financing, FHA has higher loan limits for 2,3 and 4 unit properties FHA’s published ratios are 31/43 however higher ratios are acceptable with verified compensating factors. Wells Fargo Home Mortgage also utilizes the FHA Total Scorecard system which can automatically approve loans
- FHA closely aligns with conventional appraisal requirements to the point that FHA appraisals are completed on FNMA forms. FHA’s property focus is on health, safety and soundness: Minor cosmetic repairs are not required No automatic well certs No automatic septic certs No automatic pest reports No automatic flat roof inspections Borrowers pay reasonable and customary fees, not the seller
- FHA typically attracts first-time buyers who are living on a very strict budget. Experienced buyers who obtain FHA financing are often focused on building equity, reducing their loan term, and paying off their loan faster. That’s why WFHM offers SAFE and FREE payment options to meet both these needs. Many other institutions CHARGE for this type of payment flexibility. Payments are drafted directly from the homeowner’s bank account on a schedule of the borrowers choosing: Monthly – the monthly amount is withdrawn once a month Twice a month – half of the monthly amount is withdrawn once a month Every other week (biweekly) – half of the monthly amount is withdrawn every two weeks Weekly – one quarter of the monthly amount is withdrawn every week Many borrowers like to tie their mortgage payments to their paycheck schedule. If the homeowner wants to work on reducing their fixed rate loan term from 30 years to about 21 years, the weekly or biweekly schedule will automatically generate 13 monthly payments over a 12-month span (either 26 half payments or 52 quarter-payments). That extra payment goes entirely toward paying off principal so that, over time, the amount of interest owed and the loan term is dramatically reduced. ARM loans are not impacted by weekly/biweekly payments. To get started on the program, the homebuyer has to make a monthly payment in advance but this is not a fee---this is simply to get set up on the schedule. And WFHM will work with the customer to set up this advance over time. Unlike most of our competitors who charge sign-up fees and monthly administrative fees, these options are completely FREE. This program has become extremely popular among our homebuyers.
- Seller contributions, up to 6% of the purchase price, can be used to cover the buyers closing costs thereby reducing their cash to close. You can also use seller contributions to create a temporary buydown…a reduced rate for up to 3 years that could drive more borrowers to your listings. And for those properties that might need a little TLC, minor non-structural repairs, there’s the FHA Streamline 203k program…a renovation program that can be used to make minor improvements (up to $35,000) like carpeting, paint, new appliances, etc AFTER CLOSE.
- Our commitment combined with the power of FHA can provide prime financing options that will benefit both you and your sellers: Promotes homeownership, Expand the pool of buyers, Increase traffic Expand your referral base, and Potentially move homes more quickly
- The Listing Edge program provides you marketing and financing tools that can give you an edge by showing your clients and potential clients how you go above and beyond to sell their home – especially in markets where property values are declining and/or inventories are sitting too long.
- I’d like to let you know what we have available to help market the FHA product to your customers. Promotional Flyer We typically place these in the house to help prospective buyers conceptualize how they can qualify for the home. Ad We can advertise together to let people know about FHA financing and how we can help them Brochure The brochure provides more detail for customers who might be interested in FHA financing.
- So FHA Financing is just one of the ways WFHM is geared to helping you grow your business and win in the market. Wells Fargo Home Mortgage continues to provide a wide variety of competitively priced prime and non-prime products through our retail channel, including nonconforming, new construction, renovation, reverse, FHA, VA and more. In addition, all of our purchase loans come with a money-backed Closing Guarantee SM for your customers.
- I want you to walk away knowing that: No other lender is as committed as we are to helping you grow your business and No other lender has the depth of products and services we have available That’s what the Stagecoach Priority program is about – delivering an exclusive package of benefits and services to help you take your business to the next stage.
- Conclusion: The mortgage market has certainly been challenging, my goal is to provide the best financing options to your customers…the latest programs and cutting edge information that will help you to sell more homes. Next Steps: Today, we’ve just scratched the surface about the power of FHA…I would like to schedule some 1-1 time to meet with you to provide further detail on FHA products and how they can be leveraged in your market.