203(h) – the FHA Disaster Relief Mortgage

FHA Disaster Relief Mortgage (203h)

Hurricanes, more hurricanes, and wildfires.  Unfortunately, 2017 has given us a few events that have led to Presidentially declared disaster areas.  All of these events have unfortunately resulted in loss of life, and loss of property.  In events designated as federal disaster areas, HUD has a little-known program to help those who have lost their primary residence due to disaster – the FHA 203(h) mortgage loan.  This mortgage program is intended to offer those effected by a disaster an opportunity to purchase a new primary residence with $0 down payment required.

FHA disaster relief mortgage
Mason Mac has a product to help those effected by disasters buy a new home with $0 down

Who Can Benefit?

Renters AND home owners who lost their primary residence due to disaster can apply and obtain financing for a new primary residence with $0 down.  Evidence must be provided that the destroyed property is damaged to the point where reconstruction is required, and that it was used as a primary residence.

Those home owners who lost their home and are opting to rebuild can also use the FHA 203(h) mortgage to purchase a residence to live in as their primary residence while they go through what can be a long process of insurance claims, permitting, planning, and reconstruction of their prior residence.

There is no geographic restriction on the FHA 203(h) loan, so for those effected, a new property may be purchased anywhere.  After a disaster, many people opt to move elsewhere to avoid the likelihood of future disasters (for example, moving away from fire prone areas or coastal areas prone to hurricanes).  In these cases, a new home may be purchased anywhere with $0 down if the former primary residence was destroyed.

 

The Details

The process of obtaining an FHA 203(h) mortgage is largely the same as obtaining a standard FHA loan.  Credit guidelines are more lenient for 203(h) users when credit issues can be shown to have been caused by disaster, and the only additional paperwork is evidence that the former primary residence has been destroyed in a federally declared disaster area (when disaster strikes, these areas are listed at FEMA.gov).

Buyers opting to use 203(h) mortgage financing have up until 1 year from the time the disaster event was declared to begin the processing on their 203(h) loan.

The new property purchased can be a single family primary residence OR FHA-approved condo with loan amounts up to the local county limits and $0 down.

If the property effected by disaster had a mortgage on it, that mortgage does not need to be counted against the borrower when qualifying for their new loan if the buyer shows they’re working with that mortgage servicer to resolve the mortgage and insurance funds obtained from a claim on that property are applied toward the previous mortgage.

 

Where to get a 203(h) mortgage?

We’d strongly recommend working with your Mason Mac Loan Officer to get your 203(h) mortgage because a) we’re just a little biased, and more importantly b) our loan officers are all well trained and educated on the program and know how to navigate it from start to finish.

Not every lender offers the 203(h) mortgage loan product, so it’s important to find a lender that not only does the product, but a loan officer that is well versed in the product so they can guide you through an already difficult time with ease.

 

 

If you, friends, or loved ones have been effected by disaster and would like more information on the FHA 203(h) mortgage program, please give us a call or email your Mason Mac loan officer.  We’re here to help and happy to answer any questions you have.

Mason Mac Supports Veterans in LA County

This past weekend, Wendy Walker, branch manager of Mason Mac’s Newport Beach/Balboa Island branch and her team represented Mason Mac at the Los Angeles VAREP Veterans Housing summit.  VAREP is the Veterans Association of Real Estate Professionals, a HUD-approved non-profit dedicated to increasing sustainable home ownership, financial literacy, VA loan awareness, and economic opportunity for the active-military and veteran communities.

The LA Veterans Housing Summit event focused on education for veterans with a specific focus on the VA loan program and the home buying process.  Included in the summit was

Veterans Mortgage Loans
Mason Mac is here to serve our veterans and guide them through the VA loan process

information on the importance of good credit, available down payment assistance products, and a summary of the local housing market.

Mason Mac proudly offers the VA loan program throughout the greater LA area (and in all of the markets we serve), with a 2017 VA loan limit up to $636,150 (loan limit varies based on county/area) – Veterans may borrow more than the available market loan limit, however the loan limit caps the amount of money that can be borrower with no down payment for most veterans.

At the VAREP Veterans Housing Summit, Wendy’s team spoke with veterans from all branches of the military, and they were the only non-bank lender in attendance.  Being a non-bank lender, Mason Mac specializes in VA loans with no overlays – that means VA guidelines are our guidelines, and our VA loans are underwritten by our in-house staff of underwriters.

Also on site at the VAREP Summit were local real estate agents focused on helping veterans view inventory of homes in the area that were for sale and of interest to the attending veterans.

The VA loan product is one of the most beneficial loan products available in today’s mortgage market.  For many veterans, here is no down payment requirement, and no monthly mortgage insurance.  Perhaps best of all, rates on VA loans are some of the most competitive across the entire spectrum of mortgage products.  Low rates, no monthly PMI, and a streamlined process make the VA loan a premium product for eligible veterans and their families.

 

Mason Mac offers the VA loan product in every state in which we’re licensed, and the Mason Mac team consists of many VA loan experts that know the product inside and out.  Like Wendy and her team at the LA Veterans Housing Summit, your Mason Mac loan officers are there to educate you and guide you through the process of exploring loan programs, finding the best one for you, and using it to get into your dream home – and if you’re a veteran, the whole process can be very easy and not involve a lot of money.

How Much Money Do I Need to Buy a Home

If you’re thinking about buying a home, one of the first questions you may have is how much money you’ll need.  While the answer is almost always “it depends”, one thing is for sure – most people are surprised to find out it takes less money than they think to buy a new home.  In fact, there are many mortgage programs that help people buy homes with NO money out of pocket, and other programs that require very little.  We’ll give you some of the basics here, and if you have any questions, we invite you to reach out to your Mason Mac Loan Officer for full details.

The 0% down payment options

Low down payment option mortgages
The cost of buying a new home may be a lot less than you think with our low down payment options

There are several 0% down payment mortgage options that allow a borrower to buy a home with no down payment money.  Some of these programs also allow for a seller to help with closing costs, so if you qualify for these loans it is possible to get a house without putting any money down!

The VA Loan

If you’re an eligible veteran, you can get up to 100% financing to buy a new home, and both a lender and seller can contribute to closing costs, so you’re able to get a new home for very little out of pocket cost.  VA loans offer a huge bonus in that they have very low fixed rates and no monthly mortgage insurance.  This combination of factors gives veterans access to one of the best loan products available.

The USDA Loan

USDA loans are available to low and moderate income buyers looking to buy outside of major metropolitan areas.  A Mason Mac loan officer can quickly tell you if you’ll qualify based on your income and the area you’d like to buy a home.  Like VA loans, USDA loans require no down payment and allow a seller to contribute toward closing costs, so it’s possible for buyers using a USDA loan to get into a home with little to no money out of pocket.

The DPA Programs

DPA stands for Down Payment Assistance, and comes in many forms.  Sometimes it’s a grant from a local county or organization.  Other times it’s a nationwide program that offers a 2nd mortgage to cover a down payment requirement. DPA comes in many forms, but usually has to be through an approved program that’s been given the OK by HUD or Fannie Mae.  DPA programs often assist with down payment but sometimes can help with closing costs as well.  Your Mason Mac loan officers are very familiar with DPA products in the areas we’re licensed.

The 3% Down Options

Do you need 20% down to buy a home?  This is usually a misconception when people are seeking a conventional mortgage loan, but in reality, you can get a conventional loan with as little as 3% down.  20% down avoids the need for mortgage insurance (PMI), but conventional loans are available with far less down, and like the 0% down programs, allows a seller to contribute toward closing costs.

The Just a Little Over 3% Option

FHA mortgage loans require a 3.5% down payment, and can sometimes offer lower rates and cheaper PMI than conventional loans, making them a great loan option for many borrowers.

FHA loans are also able to be accompanied by DPA help to turn a 3.5% down payment requirement into $0 out of pocket for a borrower down payment.  Sellers may contribute up to 6% of a purchase price toward a buyers closing costs, so FHA is another viable solution for buyers without too much of a down payment.  FHA is especially helpful for buyers with a low down payment and less than perfect credit.  Rates are more forgiving on FHA loans than conventional loans for past credit issues and lower FICO scores.

 

Whether it’s through FHA coupled with a DPA product, a conventional loan, or if you qualify for USDA or VA programs, chances are the amount of money you need to buy a new home is less than you think.  Call a Mason Mac loan officer today to get details, and learn which option is the best for you.  Whether you’re short on funds or looking to put 20% or more down, we’ll have loan options for you!

 

Buying a Home in a Hurricane

When Disaster Strikes, Know Your Options

 

Unfortunately, Hurricane Harvey has given us a reason to bring up a tough topic.  Disasters are a sad reality of life, and the potential for them is everywhere, whether it be the result of a hurricane, earthquake, tornado, flood, volcano, or something man made.  When disaster strikes, one of the most important things to consider once in a place of safety is what to do for shelter? For those buying a home, is the home under contract still there and in livable condition?  For those with a home destroyed by disaster, where to go?

 

The 203(h) loan can help you rebuild after disaster strikes

First, a note on perspective.  When disaster strikes, people are losing their homes, and sometimes, their lives.  Your lender absolutely, positively knows how important your real estate transaction is, but when something as devastating as a natural disaster takes place, you need to expect delays, as appraisal re-inspections are often required (always in Presidential declared disaster areas), and sometimes needed repairs must be made before you can close on your new home.  While delays and hold ups aren’t ideal, you’re a lucky one if that’s the only problem to come out of a disaster while you’re buying a home.

 

The Disaster Relief Mortgage

 

For those unfortunate ones who have been displaced and had their homes destroyed by a natural disaster, there’s the FHA 203(h) mortgage.  The FHA 203(h) mortgage loan allows those with homes located in an area designated by the President as a disaster area that were destroyed or damaged to finance the purchase or reconstruction of a primary residence.

The biggest perk of the 203(h) program is that it allows a homeowner or renter who lost their home to buy a new one with 0% down payment.  The program also allows up to 6% sellers assistance (closing cost help), so there is no savings or reserve requirement to obtain a loan for a new home.

The 203(h) can be used to borrow up to the local HUD loan limit for FHA loans, and with restrictions, any mortgage obligation on a previously occupied home in the disaster area can be excluded from qualifying, so the 203(h) can be a way for someone affected by disaster to get a truly fresh start.

 

Not every Loan Officer is well versed in the 203(h) loan, and not every lender offers it, but if you have any questions on the program, you can reach out to your Mason Mac loan officer or give us a call and we’ll be happy to answer any and all questions about  the program.

 

Can I Get a Mortgage With Less Than 20 Percent Down?

What Mortgage Options Are Available With Less Than 20% Down?

One of the biggest mortgage mysteries is how much money is needed as a down payment when purchasing a new home.  This question is often misunderstood, but also involves a lot of misconceptions.  One rumor that won’t seem to die is that to buy a home, you need a large down payment.  Usually 20% is the most common belief.  In reality, that’s about 20% more than most people need to buy a home.

With the resurgence of low- to no-down payment products and programs, getting a mortgage for a new home requires very little in the way of down payment.  Below, you can read about

Buying a home with less than 20% down
MasonMac can help bring you home with low and no down payment loan options

several programs that require little or no down payment, along with some info on when it’s a good idea to have or use a larger down payment, if possible.

 

The VA Loan program

For qualified veterans, the VA loan program allows a veteran and their spouse to purchase a new home with 0% down payment required (in most cases, as long as they have full eligibility and are buying a home using a VA loan under or equal to the VA mortgage limits for their area).

The VA loan has 0% down required, no monthly mortgage insurance, tremendous interest rates, allowances for sellers to pay closing costs, and flexible underwriting requirements for borrowers with less than perfect credit.  You do have to be a qualifying veteran to take advantage of this program, but if you can get a VA loan, it’s one of the best low/no down payment mortgage options available.

 

The USDA Loan program

USDA loans are available to low-moderate income buyers (low-moderate is subjective, but determined by county numbers, so those in high priced markets can have higher income than those in low priced markets), and require 0% down payment for qualified buyers.

USDA loans are available in rural areas (by definition, but many USDA-eligible areas are quite close to metropolitan areas), require $0 down, are flexible with credit requirements, allow sellers to pay closing costs, and have low monthly PMI.  Rates tend to be great on this product, too, so for those who can get a USDA loan, it’s a great product option for buyers without a lot of money for a down payment.

 

The FHA Loan Program

FHA loans generally have a down payment requirement, but it’s far less than 20%.  With just 3.5% down, a buyer can use the FHA loan program to obtain a great fixed rate.  To add to that, FHA allows buyers to use local or national down payment assistance programs to cover the gap between a true $0 down loan and FHAs 3.5% requirement.  There are many products and programs locally and nationally to help buyers with their down payment, and many will cover most or all of the down payment and closing cost requirements.

FHA loans have PMI, but it’s not that expensive, and the low rates and low down payment requirements, even with less than perfect credit, help to offset that cost.  Add in the fact that sellers can contribute to paying closing costs, and FHA becomes one of the best low down payment mortgage options out there.

 

Conventional Loans

This one is probably the biggest mystery, and also where the 20% down misconception comes from.  In order to get a conventional loan without PMI, a buyer needs to either have 20% down or get creative with a first and 2nd mortgage (commonly referred to as an 80-10-10 or 80-15-5).

Conventional loans, though, can be obtained with as little as 3% down.  There are also products for 5% down, 10% down, and 15% down under the conventional loan umbrella.  Conventional loans are priced (both the loan rate and mortgage insurance, or PMI, rates) based on down payment and credit score, so a buyer with great credit and 15% down will see a lower monthly payment than someone with less than good credit and 5% down, but that doesn’t mean a conventional loan isn’t possible to get.  With low fixed rates, PMI that can be cancelled when enough equity accrues, and an easy loan process, conventional loans with less than 20% down can be a great choice for many buyers.

 

Bottom line is that if someone wants to buy a home with less than 20% down, they have a tremendous amount of loan options at their disposal.  Rates, mortgage insurance, and other factors will determine which loan program is best for a buyer, and a great loan officer can share all of the available options, along with their positives and negatives.  So if a down payment is what’s holding you back from owning a home, please reach out to one of our Mason-McDuffie Mortgage professionals.  Chances are, you’ll be able to call yourself a home owner a lot sooner than you think.

Using a Job Offer to Get a Mortgage

Making a job change is usually an exciting, and somewhat nerve wracking occasion.  The anticipation of a learning curve and training, the annoyance of a change in schedule or winding down work already started.  Add on top of all that a relocation or a move to the mix, and that opportunity starts to look like an awful lot of anxiety.

 

If a home purchase is involved with a job change, it’s important to know what your options are for a relocation mortgage or getting a loan for a job you haven’t started yet.

Mortgages for relocating professionals, teachers, and others with firm job offers
Mason Mac Offers Job Offer Letter Mortgage Loans

The Paystub Myth

Lots of people think they need to have a pay stub in order to get approved for a mortgage.  Why do they think this?  Because a lot of lenders even believe this is true.  And it is partially true.  For delivery of a loan to Fannie Mae (think most conventional loans), a pay stub is required.  But that doesn’t mean a lender can’t close and fund a loan, and deliver it later.  It comes down to a lender’s risk appetite.

Freddie Mac, the other outlet for conventional loans, doesn’t even require a pay stub at all.  Neither does HUD (neither FHA nor USDA loan require a pay stub prior to closing).

Bottom line, if buying a home before you start your new job would make your life easier, you’ve got plenty of options to do just that.

 

The Job Offer Letter Mortgage

With a job offer letter mortgage, you can qualify to buy a home with a non-contingent offer letter from a future employer.  Obviously, the offer has to be accepted before we can move forward with funding a loan.  And what about the phrase “non-contingent”?  Well, that means there can’t be unreasonable barriers to the offer being carried out.  For example, a recent law school grad cannot use a job offer letter that’s contingent on passing the Bar exam.

A job offer letter must clearly outline employment terms – namely salary and start date.  If that info is present and the income isn’t variable or commission-based, a lender can approve and fund a loan with nothing more than the offer letter for income documentation.

 

What types of loans are eligible?

Conventional loans (as little as 3% down) are able to be approved with a job offer letter (per the above – it must be a Freddie Mac loan, and must be on a primary residence).  FHA loans (as little as 3.5% down, and able to use HUD-approved down payment assistance program) can be approved with a job offer letter, too!  For our Veterans, VA will also accept a fully executed, non-contingent job offer letter as evidence of income to qualify.

As you can see, there are many options for someone wanting to buy a home before the start date of a new job.

 

Who Is a Job Offer Letter Mortgage Good For?

Anyone with a firm job offer letter that outlines a start date and base salary can use their letter to get a mortgage closed and funded before their start date.  Generally, the loan must close within 60 days of the employment start date, and lenders may require a borrower to have adequate funds to cover house expenses before the new salary will begin.

The program is especially beneficial for relocating professionals that want to buy and settle into a new area before their new position begins.  It is also a big hit with teachers and others in academia who often don’t see income until the start of a school year.  Any type of seasonal work can benefit tremendously from using a job offer letter mortgage.

 

Important to Remember

 

Not all lenders are created equal – many lenders will have the “we need a pay stub” overlay, but at Mason Mac, we can work with your job offer letter and get your loan approved and closed without a pay stub.

If you have any questions about your job offer letter scenario, or the need for a mortgage while relocating, please give us a call today or get an immediate response by asking an expert here!

 

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