March 18th, 2016 6:34 PM by Taydus Taydus
People do not think of FNMA as a business but it is just that. It is not a government entity but a government sponsored entity (GSE). As such FNMA has the ability to borrow directly from the U.S. Treasury Department.
I mention this because FNMA competes with FHA for new mortgages. As a result the new HOMEREADY Program mirrors the good features of the FHA loan but is better because there is no upfront Mortgage insurance (MI) and you can petition for the MI to be removed after 2 years and once you have a 25% equity position.
FHA mortgages are great for borrowers with bad credit, foreclosures and bankruptcies. Everyone else should take advantage of the HOMEREADY Program.
For everyone else especially people that live in rapidly appreciating Markets the FHA is not the loan of choice because you pay an upfront MI premium of 1.75% of the loan amount and the monthly MI never goes away.
The only way to get rid of the FHA MI is to refinance at a cost of approximately $3,000 and with no guarantee of todays' low rates.
HOMEREADY is a new program that replaces My Community. The key features of HOMEREADY are:
- Financing up to 97% LTV
- Lower MI coverage than conventional FNMA mortgage
- Down payment can be 100% gifted
- Allows for non-occupant co-borrowers
- Not restricted to first time buyers
The borrower must take a Homeownership Education class that takes approximately 4 hours to complete. Here is the link for additional information:
The one limitation on the program is an INCOME ELIGIBILITY requirement. The eligibility is based on the AMI (Area Median Income) per census track. There are a total of 1,249 census tracks in Colorado so it can get quite confusing and difficult to identify eligible neighborhoods.
To see if your borrower qualifies for the HOMEREADY Program in a specific area that you are interested in please visit:
Here you enter the zip code for that area. From there you can zoom in and click on a specific neighborhood. In order to be certain you need to input the actual address of the property in question.
To give you an idea of what you will find on the webpage here is a breakdown of the three income categories:
- 31% No income limit
- 44% 100% of AMI
- 25% 80% of AMI
(AREA MEDIAN INCOME)
For example, most of Boulder, Louisville, Lafayette and Longmont are 100% of AMI or $99,400.
If you go to Westminster and Broomfield the AMI ranges from $63,900 to $79,900. However the area South of West 104th between 287 and I-25 has no income restriction.
I can only present so much information in a newsletter so please do not hesitate to contact me if you have any questions or if I can be of any additional assistance.
The program is brand new but I have already had tremendous success and interest in the product.
I am here to help you make your buyers better borrowers and in so doing make your job easier and your close ratio higher.For more information please contact:Joe Taydus at Mutual Security Mortgage (303) 443-5575 Joe@MutualSecurity.com