Today is the second day of fall. As I exhale into a new season and break out the sweaters and warm drinks; I reflect on change.
The leaves are changing. The air is crisp. Here in Eugene, OR we have some rainy and some sunny days still. A new season of swim and coaching has started with a renewed sense of vigor and focus. Kids are back to school in a new grade, some are at new schools, new teachers, perhaps new friends. Fall brings with it a sense of excitement for a new year and a release of summer and the last year. Release. Release the past and focus on the present.
Today, at the office, was a class taught by David Kammerere and Robyn LaVassaur from Summit Funding. We talked about changes. Mostly changes to FHA loans that took effect Sept 14. Fall is still a great time to buy. If you are thinking of going FHA for your home loan make sure you talk with your lender about these changes.
- Gift Funds – must be sourced (even if wired). I’m imagining a young couple buying their first home and perhaps Mom and Dad are gifting their down payment. Now Mom and Dad need to prove to the lender they had the money to give.
- Student Loan Payments – whether deferred or not, will have to be counted either with the scheduled payment due after deferment or 2% of the total amount. This had not been the case before. I would caution families looking to college to consider how this will affect their buying power once out of college. Consider carefully your degree program and your funding needed and will it make sense once you are out? This also makes me think it is a more accurate assessment of a person’s financial position. It also seems to divide those that have and those that don’t with the continuous rise of higher education prices.
- Authorized User Accounts – have to be counted in the debt ratio unless you can get 12 months of canceled checks from the owner on the account. Business card? On a parents credit card? Now your business or place of employment needs to show they are making the payments and not you. Sometimes this is an asset when a parent can help a young person establish credit.
- Voluntary Alimony and Child Support – now accepted by FHA with 6 months receipt to document. This is a positive thing for those that didn’t go through the courts to establish payments. Yay!
- 30 day accounts – can be omitted from the DTI (debt to income) with 12 months evidence of the balance being paid in full and on time. If unable to document 5% of the balance will be included in the DTI. This is important for those of us with mileage cards who charge everything and then pay it off every month! Although if you are this diligent with your money you may be going conventional.
- Social Security – gross will be adjusted 15% instead of 25%. Not a huge change, really. Those on fixed income got to count up their income because it wasn’t taxed. Hmmm, the money still isn’t there – so the whole concept seems weird to me. Never the less – that’s how this one works.
- Employment – If employee has changed jobs more than 3x in the last 12 months or has changed line of work, it will be more difficult to document stability. This is the human component! A human underwriter is looking at your life an deciding if they will put their name on your loan and rate you as stable. Interesting! I’m glad there is a still a human component, actually. If this is your situation this may be a time where an explanation letter goes a long way. Hope you were paying attention in English class.
- Unemployment Gaps – If more than 6 months, will require at least 6 months on the new job before the case number is pulled. Did you realize you do not need to show 2 years at one job? Did you know if you have a steady contract job but the work is seasonal that doesn’t apply here? No shopping for homes until you have 6 months on a job after a 6 month hiatus.
- Short Sales, Foreclosures, and Bankruptcies – must be seasoned per normal guidelines prior to pulling the case number. Again – no home shopping until the seasoning period is over. You cannot have a case number til then. Wow! This used to be the close date! Check with me or your lender if you are not sure of your seasoning date! Did you know foreclosure seasoning dates start when the bank takes title? Not when you are moved out. Check to make sure title has transferred!
- NHF Platinum – GRANT money, not a second mortgage and doesn’t have to be your first home! This is intended to help with your down payment. It does need to be a primary residence, BUT you can be leaving one that you will rent and purchasing another. What?!?! Sounds awesome – cause it is :). Check with me or your lender today to see if this is the right program for you!!
What other change is right around the corner?? New TRID guidelines that will affect escrow, lenders, buyer, sellers….everyone in the real estate market. Let me know if you’d like to know more!
– Coach Gina
“Those who contemplate the beauty of the earth find resources of strength that will endure as long as life lasts.”