Orange County FHA, VA & First Time Buyer Loan Information

My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

How the High Balance FHA Program Can Benefit Orange County Homeowners on a Refinance

The High Balance FHA Loan program, also known as the Jumbo FHA Loan program, is currently the best way for Orange County home owners with combined loan balances over $417,000 but under $729,750 to refinance with cash out. Keep in mind that per Fannie Mae guidelines, if a borrower is combining a 1st mortgage with a 2nd (or HELOC) that was not used for the initial purchase, then the resulting refinance would be considered a "cash out" refinance even if the borrower was not pulling additional cash out.

Why FHA is the Best Way to Refinance a Cashout Loan Over $417,000

FHA guidelines allow for "cash out" refinancing up to 85% of the properties value, even if the new loan amount is over $417,000. Fannie Mae will not allow a "cash out" refinance over 60% of the properties value if the new loan amount will be over $417,000. To make matters worse, combining a 1st and 2nd mortgage (or Equity Line) that was not used to purchase the home is automatically considered a cash out refinance. 60% loan to value leaves a lot of Orange County home ownerswho have a 1st and 2nd mortgage in a lurch. Also, FHA allows FICO scores to be lower than the Fannie Mae "Agency Jumbo" program. Most Orange County FHA Lenders can refinance a homeowner with a FICO score as low is 620.

**For Orange County VA loan program eligible homeowners, the VA program would be even better than FHA. VA will go to 90% of the properties value, and has no monthly Mortgage Insurance.

FHA Cash out Jumbo Refinance Example

Lets assume a home owner in Orange County has a 1st mortgage of $400,000 with a 5 year fixed interest rate of 6.5%. (For those of you with interest rates under 5%, believe me, there are plenty of home owners who haven't been able to take advantage of low rates.) The payment on the 1st is $2,623. They also have a 2nd mortgage of $100,000 with a fixed rate of 6.25%, yielding a payment of $615. The 2nd has a balloon payment in 3 more years. The property value is $650,000. This homeowner would not be able to refinance under Fannie Mae guidelines. But with an FHA loan, they can. Assuming an FHA interest rate of 5.5% on a new loan amount if $510,000, the payment would be $3,129 for the principal, interest, and mortgage insurance. By going with an FHA program, the homeowner is able to combine their 1st and 2nd into a fixed rate FHA loan, eliminating the looming rate change on the 1st mortgage and the balloon payment on the 2nd mortgage.

If the homeowner also had additional cash needs (home improvements, debt consolidation, etc), it would be possible to refinance up to a loan amount of $552,500, or 85% of the $650,000 proeprty value.

Although Jumbo loans are making a comeback in Orange County, the underwriting guidelines are still very tight when compared to an FHA loan.

What Does it Take to Qualify for an FHA Loan?

Well, Stated Income is out of the question. FHA is a Full Doc program, meaning the lender will need to see tax returns for the most recent 2 years, paystubs for the most recent 2 months, bank statements for 2 months, and first born. Well, maybe not first born, but you get the picture. Although everything will be closely reviewed, FHA is fairly flexible with the debt to income ratios. FHA is also very flexible with the FICO score.

What Programs Does FHA Offer?

The two basic FHA programs are the 30 year fixed and the 15 year fixed. The 30 year fixed tends to be the more popular program, but there are advantages to the FHA 15 year fixed program. Beside the fact that your home will be paid off in only 15 years, FHA also does not have Monthly Mortgage Insurance on the 15 year fixed program when the loan to value is less than 90%, which will be automatic on a cash out refinance.

The first step in finding out if an FHA Jumbo Refinance will work for your situation is to contact an Orange County FHA Lender (with 20 year experience) who can answer all your questions and prepare scenarios based on your qualifications.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Home Point Financial for more information about an Orange County, CA home loan.  949-829-1846

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

949-829-1846 | tstorm (at) ochomebuyerloans.com

 

Find Tim Storm on Google+

 

Subscribe to my blog Via Email:  Enter your email address:

Delivered by FeedBurner

Comment balloon 0 commentsTim Storm • January 13 2010 07:49PM
How the High Balance FHA Program Can Benefit Orange County Homeowners…
share
The High Balance FHA Loan program also known as the Jumbo FHA Loan program is currently the best way for Orange County home owners with combined loan balances over $417, 000 but under $729, 750 to refinance with cash out. Keep in mind that per… more
FHA Will Be the Loan of Choice for First Time Buyers in 2010
share
Just like in 2009, 2010 will be a big year for the FHA loan program and Orange County First Time Buyers There are several reasons for this, one of them being that there just aren't many competing loan programs. 4 Reasons FHA will Continue to be… more
FHA, Short Sales, and Short Payoff Refi's in Orange County
share
On December 16 FHA came out with Mortgagee Letter 09-52, which provides guidance to lenders in how to deal with borrowers who have had a Short Sale and borrowers who are refinancing a "short payoff". This has been occuring quite a bit in… more
HO-6 Condo Insurance Rules that Orange County Home Buyers Need to Know
share
When buying a condo in Orange County, it is important to understand the insurance requirements. Whether the loan will be FHA, VA USDA, Fannie Mae or Freddie Mac, the lender will need to make sure the property is insured beyond the typical "… more
Orange County Home Buyers will Benefit from Extended and Expanded…
share
Its official! Orange County, CA homebuyers will have more time to purchase a home and take advantage of the First Time Home Buyer Tax Credit Set to expire on November 30, 2009, the tax credit was just extended through June 30, 2010, and includes… more
Extension on First Time Buyer $8, 000 Tax Credit is on Horizon for…
share
On November 4 the Senate voted to extend to First Time Buyer Tax Credit which would be a big boost for Orange County home buyers. The current tax credit program is set to expire on November 30, 2009. Deals that are currently in escrow are "… more
Orange County FHA Condo List and Spot Approval Program Get Another…
share
Orange County, CA condo buyers using FHA financing just got an extra month added to the upcoming deadline of the end of the Spot Approval program. Back on June 12, 2009, FHA Mortgagee Letter 2009-19 was released, detailing new FHA Condo project… more
The #1 Way An Orange County, CA Mortgage PreQual Becomes a Denial
share
Too often, Orange County real estate transactions fall out of escrow just when they are supposed to be closing. Why? While there are no specific statistics to back an answer to this question, 2106 expenses would seem to be good answer to that… more
Need to Know Information Regarding FHA Financing on a Non Approved…
share
The FHA Spot Approval program for unapproved condominium projects is going away on October 1, 2009. But realistically, it's already gone. Most lenders are not about to begin the Spot Approval process when only a few weeks remain. According to the… more
Learn How the FHA 203K Streamline Loan Can Help Orange County First…
share
The FHA 203K Rehab loan program is a great loan for Orange County First Time Buyers Currently there is a very tight supply of homes available in southern California, especially in the $250, 000 to $500, 000 price, which is a sweet spot for Orange… more