Important Changes to an FHA Loan Program

FHA Loan Program Changes Affecting Pre-Approved Buyers

Craig Garcia, President
Capital Partners Mortgage

Today, we’re going to discuss FHA loans. Specifically, we need to look at two recent changes by the FHA that are having an effect on some homebuyers. For a quick overview of the distinctions that make FHA loans appealing to many first-time homebuyers, check out our FHA Loan Page.

The first change they may affect a group of buyers who have already received pre-approval for an FHA loan and make approval harder for similar buyers in the future. If your credit score is less than 620 and you have greater than a 43% debt-to-income ratio, your loan now needs to be manually underwritten. 

When you have a DU (desktop underwriter program) approval, which most of the time is the starting point for the loan, that’s usually good enough to get financing. Now, it isn’t for this lower credit score and higher DTI group. If you fall into this group, a live underwriter has to justify making the loan for you. It’s going to be difficult for them considering the reason for which they have to give justification. This is going to result in some people not qualifying for an FHA loan. It’s impactful.

The good news is that most of the borrowers out there pre-approved for FHA loans don’t fall in that group. Those that do may have to work on their credit or pay off some debt to qualify. It doesn’t mean they’re out of the market, but it may delay their purchase.

Also, last week the FHA said that for down payment assistance loans where a government agency is providing down payment assistance on an FHA First Mortgage, they will need more documentation from that government agency. The reaction across the industry is that now some lenders won’t provide loans in this circumstance. We still do, but we’re monitoring the situation.

In the case where your buyers, who may already be pre-approved, are affected – give us a call! We will see what assistance we can provide.

- Craig Garcia, President | Capital Partners Mortgage

www.capitalpartnersmtg.com

What's My Home Improvement R.O.I.??

5 Home Improvements Which Actually Impact Sales

Are you looking to update your home before a potential sale?
Not all renovations pay for themselves at the closing table.

If you’re in the process of selling your home, or just thinking about it; one of the first considerations is usually – should you do any home improvements before listing. 

Is that kitchen countertop outdated? Should you buy new carpet? What improvements should you make to ensure you get the best possible sales price when you list?

Guessing about the improvements, renovations or upgrades that make the biggest impact in sales price is really just a gamble. Design trends change so quickly that what is popular today could be dated tomorrow. Fortunately there are some timeless changes you can make to help present your home in the best possible light.

5 Improvements which provide the best return-on-investment

1. Green Energy - The "Green" movement is here to stay. Consider upgrading to energy efficient appliances and systems. Gardens which are water-friendly and low maintenance are also great investments.
2. Painting - Fresh paint, inside and/or out, is also a great way to spruce up the home. Designer magazines are filled with new palates and while a soft green might not appeal to every buyer, if it compliments your décor, it will show off the home in a modern light.
3. Spa Bathrooms - 2018 was considered the "Year of the Spa" in designer circles. Soft lighting, fresh colors, and a clean and welcoming bathroom are definitely a plus for today's home buyer.
4. Outdoor Living - While building an outdoor kitchen might not be in your budget, section an area of the yard where family and friends can gather for a meal or relax by the pool. Showcase Florida's warm indoor/outdoor lifestyle!
5. Bonus Rooms - If you have a spare bedroom or loft, consider converting the space into a media room. From home theaters to simple gaming/family spaces, bonus rooms are more popular than ever.

Selling your home is a big decision! Before you spend extra time, money, and energy on home improvements, make sure the home is clean, maintained, and decluttered. Then if you want to take it to the next level, consider a few updating projects to take it there!

Have you thought about any of these renovations? From
small and simple, to large-scale, you'll see some of your
best R.O.I. if you make any of these updates!

Borrowing Against the American Dream

Student Loan Debt & Its Effect on Mortgage Lending

Craig Garcia, President
Capital Partners Mortgage

Through the second quarter of last year, student loan debt lagged behind only mortgages as the largest consumer debt segment in the United States. And while mortgage debt has remained steady, with negligible growth over the last 10 years, student loan debt continues to skyrocket. 

That growth in outstanding student loan debt has ripple effects across the nation's economy, as younger generations see much of their spending power go to monthly payments on this debt. In turn, that keeps many from feeling like they can take the step of buying a house. Today's guest post comes from Craig Garcia, who gives a glimmer of hope, along with some advice, for anyone who still wants that piece of the American Dream that is homeownership.

I’d like to talk to you about student loans. A recent Federal Reserve study showed that student loan debt has become a major hurdle for younger generations looking to buy a home. Being in the mortgage lending business, and seeing what we see on a regular basis, I wholeheartedly agree. Most of you out there with student loans might say something like, “yes, we already knew that.”

What you might not understand is that one of the main obstacles actually stems from the mortgage loan industry itself. Loan programs are challenging. It’s why you shouldn’t just go and apply for a mortgage on your phone or without putting some thought into it. 

The four most common loan programs available to potential buyers all treat student loan debt and payments differently. That sets the stage for confusion. Let me break down some options available to those consumers with student loan debt, because our job is to help as many people as are able to successfully complete the home buying process!

1.     VA Loans – If your student loan payments could be deferred for up to a year after closing, then the VA will then be able to state that they won’t count any student loan payments against you when it comes to qualifying for a mortgage loan as a Veteran.

2.     Fannie Mae & Income-based Student Loan Repayment Plans – Your student loan lender has options to base your student loan payment on your income, temporarily offering you relief with lower, more manageable payment terms. The most aggressive loan program that will accept that lower payment when it comes to qualifying you for a loan is Fannie Mae’s conventional loan program. They will look at your new payment terms and accept those when determining your eligibility for a mortgage loan.

It’s important to remember that, in these circumstances, you will still need to be able to cover a mortgage payment and student loan payment eventually. Make sure you plan for those expenses and know that you will be able to successfully pay them.

It’s an unfortunate fact right now that student loan debt has become a large obstacle when it comes to purchasing a house, but it hasn’t made it impossible. If you feel that homeownership is the next step in your life, come talk to us at Capital Partners Mortgage today, and we can offer you advice and guidance as to how you can achieve this goal!

- Craig Garcia, President | Capital Partners Mortgage

www.capitalpartnersmtg.com