Posts Tagged Loan

Employment requirements and FHA Loans

Logo of the Federal Housing Administration.

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With the recently high unemployment rate one question I get asked quite often is: “Have I been at my job long enough to qualify for a mortgage loan?” So here is the rundown of FHA guidelines for employment history:

The borrower should have a consecutive two (2) year history of income with the same employer. However less than two years is acceptable if changes in employers are within the same field or industry. This is common with many Union employees who may work for several contractors in a year period.

The borrower must be able to document the reason for gaps in employment of longer than 30 days.

A newly employed borrower with less than a two year history of employment can provide documentation that they were attending school or a training program for the field of work they are presently employed in. Examples of such would be an person who just got a job as an engineer and just received their degree in engineering or a mechanic that just started working for a dealership and was in specialized training for their vocation prior to their employment.

Borrowers returning to the workforce after a leave of absence must be employed by the same employer prior to their leave.

Borrowers returning to the workforce after a leave of absence and working for a different employer or field of work must wait six (6) months before they are eligible for employment.

Review your situation with your loan officer if you have any question as to whether or not you’ll qualify.

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The VA Loan Funding Fee | Salt Lake City Mortgage

One of the great things about a VA loan is that there is no mortgage insurance (MI), however even the VA Loan Funding Fee can vary or even be waived depending on the amount of down payment, subsequent use or disability of the veteran.

Here is a quick guide to how much you can expect to pay as a funding fee for your VA loan:

Purchase and Construction Loans

Type of Veteran

Down Payment

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military None5% or more (up to 10%)

10% or more

2.15%

1.50%

1.25%

3.3% *

1.50%

1.25%

Reserves/National Guard None5% or more (up to 10%)

10% or more

2.4%

1.75%

1.5%

3.3% *

1.75%

1.5%

 Cash-Out Refinance Loans

Type of Veteran

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military

2.15%

3.3%

Reserves/National Guard

2.4%

3.3%

Type of Loan

Percentage for Either Type of Veteran Whether First Time or Subsequent Use

Interest Rate Reduction Refinancing Loans

.50%

Manufactured Home Loans (NOT permanently affixed)

1.00%

Loan Assumptions

.50%

 The following persons are exempt from paying the VA funding fee:

  • Veterans who are receiving VA compensation for service-connected disabilities.
  • Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
  • Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating and,
  • Surviving spouses of veterans who died in service or from service-connected disabilities.

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Mortgage Loan Tip: Closing Costs – Salt Lake City, UT

Typically real estate agents will negotiate for the seller of a home to contribute up to 3% of the purchase price of the home towards the buyer’s closing costs. What many don’t know though is that this really is the minimum amount that can be contributed. This is especially important when purchasing a home under $150,000 because closing costs can many times exceed the 3% and the buyer will have to come to the closing table with money above their down payment.

The reason this happens is that there are both fixed and variable closing costs. Some fees are fixed regardless of the loan amount (such as underwriting, processing, tax fees, appraisal, etc.) and others are based on a percentage of the loan amount or purchase price (origination fee, points paid to buy down the rate, title insurance, property taxes, per diem interest, etc.). Those fixed costs represent a larger percentage of a smaller loan than they do a larger loan.

So to that end, here are the guidelines for allowable seller contributions toward closing costs:

Conventional loans:

  • Primary residence
    • 3% for LTV/CLTV > 90%
    • 6% for LTV/CLTV > 75% to 89.99%
    • 9% for LTV/CLTV < 74.99%
  • Investment properties
    • 2%

FHA

  • 6%

VA

  • Seller can pay 100% of discount points and borrower’s non-recurring closing costs.
  • Seller can provide an additional amount not to exceed 4% of the estimated reasonable value to assist the borrower’s payment of buydown  points, prepaid expenses and funding fee.

Be sure your Realtor talks with your loan officer prior to putting an offer on a house. You want to make sure that enough seller concessions are negotiated to cover all your closing costs so that you don’t have to pay anything more than your down payment.

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