FHA

[Kimmy]

I have heard that there are no down payment FHA loans available...however when I went to the MH dealer, and he did the worksheet he calculated $3,750.00 down under a FHA guideline, the payments also figured in at $747.00 not inluding escrow at 6.5 for 30 years.

I have found an acre of land (perked) for 11,000, land in this area is going for 15K upwards. Land improvements will need to be done...clearing small brush,grading, and sowing fescue ($1,100)well,septic(6K). The total price of the financed amount would be $110,000, and this is for a top of the line Palm Harbor on an acre of improved land.

My credit is fair..and I understand FHA doesnt consider the FICO...I pulled my reports, and on 8 accts, I have two (30) day lates two years ago...all the accts are closed but one.

My debt/expense ratio is great....I make $2500 monthly with less than $200 total debt per month.....can someone take a little time to explain the factors in a FHA no money down loan...

I know that the worksheet that the dealer did is only an estimate....since I have my credit reports..all 3...can I go around to differant FHA lenders to see if I can get the no money down deal, this is a great piece of land for the price and I hate to pass it up...due to having to take time to save the down payment...this board has been extremly helpful, and I thank you for you time and consideration.

The reason I pulled the reports is that I dont want 6 inquirys from differant lenders with me just shopping around.

[rmurray]

The FHA does require 3% down..and the dealer can price in 6% for closing costs..Sounds like this is what he has done..The FHA allows this downpayment to be paid by chariable non profits...There are a number of programs that do...only if the dealer makes a contribution to the charity that is the downpayment and up to !% extra...Usually dealer price this into the home..Your dealer should be aware of the programs and know how to arrange for them...If he is not..his lender will be..

By the way...the payment amount you mentioned at the rate you mentioned is for an amount financed of $118,183.50..Does you $ 110,000 include the closing costs or not?...If not this is about right for closing costs on FHA.....

I am guessing that your escrows will be about $ 250..For a total payment af about $ 1000...This puts you over the FHA guidelines for income to debt ratio...There are exceptions if there is better credit, long time on the job and money in the bank or in 401K's....Does your dealer know if the area will stand this much appraisal?...Fha appraisors tend to be a little conservative..

[Kimmy]

Murray,
Thanks for your response.

Ok Im going to give a breakdown on what the original worksheet said when I first sat down with the dealer.Actually the figures I was using were a little arbitrary. Here goes.

OPTIONAL EQUIPMENT: del&setup-incld....anchored-incld.....12 seer heatpump $2200.....brick underpin 1 door vent 5K.....footers int&perimeter $2300.....well $3500....septic $2800....plumbing connect $500......electric 200 amp $750....closing cost $5200:BALANCE CARRIED TO OPTIONAL EQUIPMENT $22,250

BASE PRICE OF UNIT (HOME) $65,995.00 + OPTIONAL EQUIPMENT $22,250=SUB TOTAL $88,245

LAND ALLOWANCE=$22,000......he allowed 30K on the worksheet,but we found
2 acres (perked) for 22K

SALES TAX-----$500

NON-TAXABLE ITEMS----$35.00

VARIOUS FEES&INS-----$450

CASH PURCHASE PRICE---$111,330

CASH DOWN PAYMENT-----$3600

UNPAID BALANCE OF CASH PRICE-----$107,730

Ok thats it.....the original figure he had on the worksheet with the 30K land allowance,steps which we can do ourselves,5 years warrenty on appliances was $117,156.00 He said this loan is what we could qualify for.

On the worksheet at 6.5% rate,30 year term, he estimated payments on the 117K figure at 740.51+ escrow.....I shaved that price down to $107K...Im just curious as to how much that dropped my payments.

$107,730 for a home sitting on 2 acres of land seems to me to be a good deal.

Again thanks for your consideration

[AugustaGa]

If the figures above were the final figures the payment at 6.5% would be $ 680.93..

Your required downpayment is now lower...$ 3339.90....

If he added back the down and the charity fee...the payment would be $704.77 and you would invest no cash..

On top of the above principle and interest payment..there is the FHA insurance monthly fee of about $ 40.00...and then there is the tax and insurance escrow..which is 1/12th of the actual amount of the insurance and taxes...

I have no way of telling if the prices are reasonable or not in your area...one observation though...for FHA..the closing costs actually sound a little low...They are usually very close to 6% of the loan amount or about $6500.00...These do very a little with the lender but you want to be sure he has allocated them all..so that you do not have an unpleasent surprise at closing....The other thing that seems to be missing is a construction loan...Most dealers will not set a home without one..and you have to understand that there could be more costs involed with these...The best lenders have a 1 time close construction to perm loan that will cost about 1 1/2% additional closing cost...Any case..ask if it is included...A separte construction close can be very expensive...As much as 5%...

With no down...and $ 150/mo escrow (probably close) your payment would be $894.77.....With you other debt of $ 200/mo (I assume this is a slightly low estimate)...That would leave you with 44% debt to income ratio...This is on the upper side of the FHA guidelines..But your housing expense is at 36%...The FHA guideline calls for 29% housing expense...Remember there are exceptions to the rules related to the time on the job, cash in the bank, 401K and others...You should apply...

[Kimmy]

What an in depth answer...I really appreciate it...its a little intimidating going into the finance side of things...in fact its alot intimidation..your right, I cant stand any surprises ANYWHERE down the line....I just want to know what its going to cost me but I dont want to find an extra 2-3K tacked on somewhere inbetween.

[rmurray]

Have you spent a little time at this site..
www.mtgprofessor.com
This site is maintained by a collge professor in mortgages (sounds like and easy job)..
It is extremely well written and easy to understand..

Also..if you shop lenders..and the pull your credit...it will not count against your credit score..All mortgage credit requests ask for with in a 30 day period of time count as 1 request..which has little or no effect on your scores..

Shopping lenders can save you tens of thousands...let us assume you find one willing to finance at 1/4% lower rate...That would be nearly $ 15,000 interest over the life of the loan..

Also..closing costs and construction loan cost vary...
Most folks do not realize these fees are often negotiable..

If you are buying from a Palm Harbor owned store..do not let them talk you into 5 years of insurance up front..And if you want life or disability insurance..buy it from an insurance professional or web site specializing in insurance and not commission increases as your salesperson will be doing..

[Kimmy]

Ok...see, I was under the impression that evey time a lender pulled your file it counted as an inquiry......when you said "If you are buying from a Palm Harbor owned store..do not let them talk you into 5 years of insurance up front"

You are talking about the appliance warrenty...correct..because I assume the 5 years structural,plumbing,electrical, etc warrenty is already there...no extra charge, I know I dont want to finance the $700 5 years warrenty for 30 years...but I believe that charge was for the appliance warrenty...which all the applainces should be warrenteed for at least a year anyways...seeing as how there new!

[AugustaGa]

I meant the home owners policy....They will try to sell you 5 years of coverage all at once..,.of course you end up paying 30 years interest on this policy...Shop insurance with any carrier you can find..You will find the price vary a lot..
By the way...FHA..requires a 2/10 warranty...that is a ten year structure warranty...These policies have a low cost addon for including appliances to 10 years...With the appliance warranty the policy does not cost $ 700..

[D. Abben]

You're response to credit scoring is correct in regards to number of inquiries. However there is a down side. If the score is already marginal and there are excessive inquiries from different lenders, a discerning credit analyst will hold that against the customer. The reason for this that it creates the perception that other lenders have possibly turned this deal down. On FHA programs the rates should be standard across the board. Also, a stipulation I have run into on FHA deals is that all inquiries incurred over the last 6 months must be verified in letter form from each prospective lender stating whether the customer does or does not have an open account. This only adds to an already strigent paperwork process. My advice to any customer is to know exactly whats on your credit report and don't let every dealer run your credit. If they really want your business they will believe what you are telling them.

[D. Abben]

There is no reason to buy more than 1 years insurance at a time. There are a few lenders that require proof of 2 years or an escrow account is required.(In at least the park side of the business). Also, you are correct on credit life and disibility insurance, a customer could reference their life insurance policy to see if it is sufficient. Disibility insurance is a toss up, however it usually does not pay right away with the customer still responsible for payments that are due. Also, all customers should be sure the dealer is not bumping the interest rate themselves.(most lenders allow for this and especially if a broker is involved as it does not necessarily need to be disclosed like on conventional real estate) If this is an FHA deal it is likely not possible for them to do that.