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Presented by Renee Duval NMLS#96967 Carol Jordan NMLS#98985 Certified Mortgage Professionals NH Mortgage Bankers & Brokers Association Licensed by the.

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Presentation on theme: "Presented by Renee Duval NMLS#96967 Carol Jordan NMLS#98985 Certified Mortgage Professionals NH Mortgage Bankers & Brokers Association Licensed by the."— Presentation transcript:

1 Presented by Renee Duval NMLS#96967 Carol Jordan NMLS#98985 Certified Mortgage Professionals NH Mortgage Bankers & Brokers Association Licensed by the New Hampshire Banking Department Merrimack Mortgage Company - NMLS ID #2561 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

2 The ABC’s of Mortgage Lending This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

3 Disclaimer The views expressed in this presentation are those of the presenters, Renee Duval and Carol Jordan and do not reflect those of our employer, colleagues or its clients. The information provided by us is for informational purposes only and is not intended as legal or tax advice. This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

4 Brief Recent History 2008 Housing Bubble Burst Poor Lending Practices contributed to the burst Rising Home Prices Inflated Appraisals Wall Street Greed No Income Verification Loans Negative Amortization Option ARMs Undisciplined Loan Officers This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

5 Federal Regulations 2008 & 2009 brought these updates: HVCC (Home Valuation Code of Conduct) Mortgage Licensing Act Mortgage Disclosure Improvement Act TILA – the Truth in Lending Act Homeownership and Equity Protection Act (HOEPA) RESPA (1974) Real Estate Settlement & Procedure Act This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

6 Compliance is Crucial… This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

7 NMLS National Mortgage Licensing System http://www.nmlsconsumeraccess.org/ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

8 NMLS National Mortgage Licensing System http://www.nmlsconsumeraccess.org/ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

9 NMLS National Mortgage Licensing System http://www.nmlsconsumeraccess.org/ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

10 NMLS National Mortgage Licensing System http://www.nmlsconsumeraccess.org/ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

11 Federal Regulations Dodd Frank - Consumer Protection Act July 21, 2010 CFPB (Consumer Finance Protection Bureau) created www.consumerfinance.gov This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

12 Federal Regulations Dodd Frank - Consumer Protection Act July 21, 2010 CFPB (Consumer Finance Protection Bureau) created www.consumerfinance.gov This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

13 Federal Regulations Dodd Frank - Consumer Protection Act July 21, 2010 CFPB (Consumer Finance Protection Bureau) created www.consumerfinance.gov Rules and regulations are designed to protect consumers This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

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18 Updates This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

19 Federal Regulations In 2014 mortgage lenders implemented new rules Qualified Mortgages Protect Homebuyers Protect Lenders Ability to Repay Follow guidelines already established May restrict debt ratio to 43% in some cases This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

20 Back to the ABC’s Government Loans VA –(Veterans Administration) RD (USDA Rural Housing) FHA (Federal Housing Administration) NHHFA (New Hampshire Housing Finance Authority) Conventional/ Conforming Fannie Mae & Freddie Mac My Community & Home Possible JUMBO Portfolio or Bank Product This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

21 The ABC’s come down to three C’s Cash Credit including capacity to repay Collateral This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

22 Cash needed to purchase a home Costs Down payment +Closing Costs +Prepaids Total needed Less Seller Concessions Less Lender Credits Less Cash Assistance = Total from Buyer* Cash Flow Deposit + Home Inspection costs + Appraisal + Home Insurance + Cash Due at closing = Total from Buyer* This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. *other items not disclosed by lender including additional inspection fees, fuel proration, homeowner association fees or buyer broker fees may also be due

23 Cash needed to purchase a home Closing Costs Credit Report Appraisal Transfer Tax Origination Fee & Points Flood Cert Recording Fees Title & Title Insurance Other misc fees Condo docs Employment verification Final Inspection fees other Prepaid Items Interest At closing, buyer pays interest from day of closing thru the end of the month Taxes Proration per P&S Escrow for lender Insurances Homeowners insurance Flood insurance Mortgage insurance This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

24 Closing Costs & Prepaids $300,000 sales price – 20% down This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Closing Costs & Prepaids equal about 3.6% of Sales Price – APR = 5.132%

25 Closing Costs & Prepaids $150,000 sales price – 20% down This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Closing Costs & Prepaids equal about 5.3% of Sales Price – APR = 5.223

26 Lender Credits lower buyers’ costs The rate / cost theory The lower the rate, the higher the cost The higher the rate, the lower the cost Pricing example to demonstrate lender credit Assume current rate is 4.5% with zero points If borrower takes rate of 4.75% they might get a 1% lender credit If borrower takes rate of 5% they might get 2% lender credit Actual #s based on $300,000 sales price / $240,000 loan This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Rate4.5%4.75%5% APR4.7244.9865.24 Total closing costs$5,802 Less lender credit0-2400-4800 Net closing costs after lender credit$5,802$3,402$1,002

27 Cash Requirements for owner Occupied Single Family Home Purchases VA & RD – no down payment required & Seller Can pay all Closing Costs & Prepaids NH Housing Flex with Cash Assistance- 3.5% down / ½ % net down payment after cash assistance FHA- Buyer must pay 3.5% of the sales price + home inspection (if seller pays all other closing costs & prepaids) NH Housing Home Preferred – 3% down & Seller can pay 3% Conventional – 5% down & Seller can pay 3% 10% down & Seller can pay up to 6% This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

28 Comparison Cash to close – assuming $300K Sales Price max seller concession zero point rate programVARDFHA Grant FHA NHH-HP down payment closing costs/prepaids seller concession cash from borrower This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Note: lender credits could be used, with higher corresponding rates, to reduce the closing costs on VA, RD and FHA scenarios above $0 $1,500 $10,500 $9,000 $10,775 $10,775 $10,775 $10,775 $10,775 $10,775 $9,275 $10,375 $9,000 $0 $3,000 $10,900 $10,775

29 Credit Scores Range is 300 – 850 Each of the 3 major bureaus gives a score Lenders use the middle score Actual formulas used are not public This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

30 Credit Scores This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

31 Credit Scores RD – (Rural Development) MMC requires 640 - NH Housing Requires 620 NH Housing -620 Minimum score FHA - 500 Minimum Score MMC requires 600 Score NH Housing requires 620 Many lenders require 640 VA – No Minimum Score MMC requires 640 - NH Housing Requires 620 Conventional – 620 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

32 Credit – it’s more than the score The ideal credit report 3 or more open lines of credit with no late payments in the past 24 months Balances on credit cards below 50% of limit No unpaid collection debt This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

33 Credit – it’s more than the score Other considerations Rental history payment shock Checking & Savings history This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

34 Credit – it’s more than the score Automated underwriting LP – loan prospector DU – desktop underwriter DO – desktop originator FHA score card GUS – Guaranteed Underwriting System This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

35 Credit – there’s a lot to look at.. Are there any accounts that do not belong to the borrower? Are there any duplicate accounts? Are any of the account references outdated? Are any of the account histories inaccurate? Are any monthly payments shown incorrectly? Are there any inquiries within the last six months? Are there any new accounts within the last 60 days? Is the current mortgage reference up to date? This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

36 Fair Credit Act Errors on the credit report may lower the credit score Borrowers have the right to dispute information Removing errors / updating info may result in an increase in the score Rapid Rescoring available to correct legitimate errors in the report This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

37 Credit Prequalification Loan Officer speaks with borrower about their income, assets & debt Credit report may be pulled Automated underwriting may occur Paystubs, W2s & tax returns may be reviewed Bank statements may be reviewed Prequal Letter written Loan Officer’s opinion Preapproval Borrower signs an application Credit report is obtained automated underwriting is completed Paystubs, W2s & tax returns in the file Bank statements in the file Underwriter reviews Commitment from lender This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

38 Collateral - Collateral is the subject property being financed The appraisal is the lender’s eyes Loan officers cannot communicate with the appraiser Appraisers are chosen on random basis This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

39 Collateral - If the appraised value is less than the sales price Buyer Options Accept value and put more down Accept value and loan amount is ok If large down payment Get mortgage insurance Pay higher mortgage insurance Price can be renegotiated seller comes down to appraised value Seller comes down some and buyer pays the difference This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

40 Collateral Requirements for Owner Occupied Water Test required for VA, RD and NH Housing Minimum property standards apply for all loan types Safety Livability Marketability “Sound, Safe & Sanitary” This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

41 The 3 C’s & Loan Types VA RD FHA Conventional Other Loan Types This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

42 VA – Veteran’s Administration VA home loan product for eligible Veterans and active duty servicemen and women Certificate of Eligibility is required Insured by the VA but originated by banks & mortgage companies Cleveland, Ohio, is our regional VA offer for mortgage loans This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

43 VA Mortgages- Cash Low up front cost 100% Financing – No Down Payment required Seller can pay all closing costs VA Funding fee financed in to loan Veterans who receive disability pay are exempt Low monthly cost No monthly Mortgage Insurance Interest rates tend to be lower than on conventional mortgages No income limits unless combining with NHHFA This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

44 VA Mortgages- Credit No monthly Mortgage insurance means no second underwriting required No foreclosures of short sales in the past 3 years * No bankruptcies in the past 2 years* Automated and Manual underwriting available Debt ratios up to 50% often approved Residual income analyzed 2-4 unit purchases may allow use of rental income This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

45 VA Mortgages- Collateral No geographic restrictions Water Quality test Required Termite reports required Can not be paid for by the Veteran 1-4 Family dwellings allowed VA approved condos Appraisal must be completed by a VA Appraiser This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

46 VA Mortgages- Collateral Existing Housing - Appraisal Potential Property issues Running water, heat and electricity must be verified by the appraiser Safety- Livability- Marketability Appraisal required repairs Completed prior to closing Completed after closing with escrow account at 150% of cost to complete – estimates must be written No rehab option available This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

47 Rural Development What’s the Big Deal? Lower cash outlay Lower payment Is it a Deal Maker or Breaker? RD underwriting can be more lenient RD underwriting can be more strict This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

48 RD – Rural Housing Guaranteed Obtained thru a mortgage banker/broker Has upfront & monthly mortgage insurance Income Limits apply Buyer must pay for appraisal upfront Direct Obtained directly through RD’s office in Concord No monthly mortg ins Lower Income Limits RD does their own home inspection & appraisal Subsidized rate = lower payment & higher price This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

49 RD Mortgages - Cash Low up front cost 100% Financing – No Down Payment required Seller can pay all closing costs Rd Funding Fee financed in to loan Closing costs can be rolled into the loan Low monthly cost Low monthly Mortgage Insurance Calculated: Loan Amount X.5% /12 months On a $100K loan, the monthly fee would be $41.67 Interest rates tend to be lower than on Conventional mortgages Income limits apply This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

50 RD vs FHA Comparison Based on $300K sales price; $6000 taxes Rural Development Down Payment $ 0 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $11,000 At a Rate of 4.5% - APR 5.143 P&I =$1551.08 T&I =$ 575 MI =$ 125.01 PITI = $2251.09 FHA Down Payment $10,500 Est Closing Costs$ 5800 Est Prepaid Items $ 5200 Total Cash Needed $21,500 At a Rate of 4.5% - APR 6.064 P&I =$1492.52 T&I =$ 575 MI =$ 331.39 PITI = $2398.91 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

51 RD – Credit - Income Limits Nashua MSA Amherst, Brookline, Greenville, Hollis, Litchfield, Mason, Milford, Mont Vernon, New Ipswich, Pelham and Wilton 1-4 person household – max income $93,450/year 5-8 person household – max income $123,350/year Manchester MSA Bedford Goffstown & Weare 1-4 person household – max income $88,550/year 5-8 person household – max income $116,886/year Hillsborough County – non MSA towns Antrim, Bennington, Deering, Francistown, Greenfield, Hancock, Hillsboro, Lyndeboro, New Boston, Peterborough, Sharon, Temple and Windsor 1-4 person household – max income $91,800/year 5-8 person household – max income $121,176/year This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

52 RD – Credit - income limits Belknap, Carroll, Cheshire, Coos, Grafton & Sullivan Counties 1-4 person household – max income $86,700/year 5-8 person household – max income $114,444/year Merrimack County 1-4 person household – max income $91,450/year 5-8 person household – max income $120,714/year Western Rockingham County & Portsmouth-Rochester MSA 1-4 person household – max income $100,900/year 5-8 person household – max income $133,188/year This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

53 RD Mortgages- Credit For Qualified buyers who own no other real estate Ok to Buy and Sell on the same day Final underwriting required with RD No foreclosures of short sales in the past 3 years * No bankruptcies in the past 3 years* Automated and Manual underwriting available Debt ratios up to 49% often approved This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

54 RD Mortgages – Credit Assumes Borrower has $72,000 annual income and $700/month debt 620 score GUS Refer $6000 monthly income X 41% $2460 max housing & debt -700 debt $1760 max housing $225,000 Sales Price 680 score GUS Accept $6000 monthly income X 49% $2940 max housing & debt -700 debt $2140 max housing $275,000 Sales Price This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

55 RD Mortgages- Collateral Lot requirements Can not be sub-dividable Generally 5 acres or less Can not exceed 30% of total value In ground pools can not add value Well and Septic must be adequately spaced No underground oil tanks No post and piers Barns can not add excess value Appraiser must state property meets HUD minimum standard This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

56 RD Mortgages- Collateral Available in eligible communities Water Quality test required Nitrates, Nitrites, Lead, Total Coliform and E-Coli Dug well acceptable with well flow test Well and septic must be 100’ apart* Qualified properties Single family homes No in-law apartments (no 2-4 unit properties) Prior approved Condos Must have a refrigerator This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

57 RD – Collateral Eligible Communities Most towns in NH are eligible for RD 10 towns/cities are ineligible 2 towns/cities are partially ineligible 11 more will become ineligible in the future This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

58 RD – Collateral Ineligible Communities Parts of Goffstown & Hooksett Manchester Nashua, Hudson Concord (including Penacook) Derry, Londonderry Dover, Portsmouth Merrimack Salem This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

59 RD – Collateral Communities targeted to become ineligible in the future Amherst, Milford Bedford, Goffstown, Hooksett Durham, Exeter, Hampton, Raymond, Somersworth Keene Windham & Pelham This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

60 RD Mortgages- RD required repairs Potential Property issues Running water, heat and electricity must be on at time of appraisal (or a final inspection is required) Safety- Livability- Marketability Appraisal required repairs Completed prior to closing Completed after closing with escrow account at 150% of cost to complete – estimates must be written Rehab option available in combination with NHHFA This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

61 RD Collateral- Rehab RD does not have a rehab option NH Housing has an RD rehab option RD allows escrow for repairs * RD allows for repairs to be rolled into the loan if supported by appraisal * * Up to $10,000 total which includes 50% contingency reserve (max repair = approx $6650) This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

62 FHA Mortgages - Cash Low up front cost 3.5% Down Payment required Seller can pay up to 6% of sales price to help pay closing costs FHA upfront MIP (mortgage insurance premium) can be financed into loan Monthly cost Monthly Mortgage Insurance is 1.35% of loan/12 On a $100,000 loan, Mortgage Insurance is $125 per month Interest rates tend to be lower than on Conventional mortgages No Income limits apply unless combining with NHHFA This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

63 FHA Mortgages- Credit Not limited to 1 st time home buyers Owner occupied purchasers only No foreclosures/short sales in the past 3 yrs* No bankruptcies in the past 2 yrs* Automated and Manual underwriting Debt ratios up to 55% often approved * FHA back to work provisions may shorten the length of time between a BK, foreclosure or short sale and the time a borrower can purchase another home This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

64 FHA Mortgages- Collateral No Geographic Restrictions Loan Limits Apply (by county) Water Quality test not required Well and septic must be 100’ apart* 1-4 Family dwellings allowed Prior approved Condos Mobile homes on their own lot This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

65 FHA Mortgages- Collateral Loan Limits Apply (by county) Hillsborough County $295,950 Belknap, Cheshire, Grafton, Sullivan & Merrimack County$271,050 Rockingham/Strafford$470,350 * * Loans over $417,000 are JUMBO and additional guidelines apply This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

66 FHA Mortgages- FHA required repairs Potential Property issues Running water heat and electricity must be on at time of appraisal (or a final inspection is required) Safety – Livability - Marketability Appraisal required repairs Completed prior to closing Completed after closing with escrow account at 150% of cost to complete – estimates must be written FHA 203K and 203Ks rehab options are available Rehab option available in combination with NHHFA This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

67 FHA Mortgages- FHA required repairs FHA 203Ks (streamline) Up to $35,000 rehab account can be created No structural changes permitted Must use contractor(s) Written, signed estimates required 203Ks paperwork from contractor Contractor references verified Must be licensed & insured Must be lead paint certified for properties built before 1978 Can combine with NH Housing for 203Ks option This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

68 FHA Mortgages- renovation program FHA 203K (also known as full 203K) No max rehab account (loan limits apply) Structural changes permitted Must use contractor(s) Written, signed estimates required 203Ks paperwork from contractor Contractor references verified Must be licensed when applicable Must be insured Must be lead paint certified for properties built before 1978 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

69 NH Housing Flex Programs 2 rates available Combines with either VA, RD or FHA 3% grant comes with higher rate Water test required Income Limits apply MCC Available Home Preferred 2 rates available Mortgage Insurance Options Lower coverage required Financed options No MI program Rate published daily Water test required Income Limits apply MCC available This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

70 NH Housing – rehab options FHA 203Ks 3.5% down 3% grant possible Seller pays closing Up to $35K rehab Available throughout the state Higher monthly m.i. FHA rules apply RD rehab 0% down 3% grant possible Seller pays closing Up to $35K rehab Geographical limitations Lower monthly pmt RD rules apply This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

71 NH Housing – MCC’s Mortgage Credit Certificates Lower income limits apply for MCC Sales price limits apply for MCC Credit is added to borrowers income in qualifying Can be used with flex & home preferred programs Borrowers do need to be 1 st time buyers (except when purchasing in a targeted community) This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

72 NH Housing – MCC’s Income Limits $ 79,700 for 1-2 person households $ 91,600 for 3+ person households Higher limits apply in targeted communities: Laconia ConcordClaremont Berlin PittsfieldSomersworth Lancaster New MarketRochester WhitefieldPortsmouthManchester GoffstownDover This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

73 NH Housing – MCC’s Income Limits $ 95,600 for 1-2 person households $ 111,500 for families of 3+ in targeted communities: Laconia ConcordClaremont Berlin PittsfieldManchester Lancaster New Market Rochester WhitefieldPortsmouthSomersworth GoffstownDover This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

74 NH Housing – MCC’s Mortgage Credit Certificates Purchased at time of closing for an additional fee Tax Credit is equal to the lower of 35% of total interest paid or $2000/year paid out for each year the borrower qualifies $200,000 loan X 5% = approx $10,000 interest paid $10,000 X 35% = $3500 MCC would be for $2000 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

75 Conventional Mortgages defined Conventional Mortgage also known as… Fannie Mae Freddie Mac Conforming Conventional Terms… Fixed Rate or Adjustable 30, 25, 20, 15 or 10 year loans Conventional also encompasses…. Homepath financing My Community Home Possible This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

76 Conventional Mortgages Low up front cost 5% Down Payment on regular conventional financing Seller can pay up to 3- 6% of sales price depending on down pmt Mortgage Insurance required with less than 20% down Mortgage Insurance Mortgage Insurance varies by program, term & down payment Monthly mortgage insurance available Borrower can opt for one-time insurance (no monthly payment) Borrower can opt for lender-paid insurance (no monthly payment) Income Limits apply to Home Possible & My Community This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

77 Conventional My Community & Home Possible Lower Mortgage Insurance County Income Limits Apply Hillsborough 84,700 Merrimack 79,700 Grafton 69,400 Rockingham, Strafford 91,200 Belknap, Carroll, Cheshire, Coos & Sullivan = $69,100 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

78 Conventional My Community & Home Possible No Income Limits in these tracts… Belknap9659.00 Carroll9551.00, 9553.00, 9558.00, 9559.00 Cheshire9716.00, 9717.00 Coos9501.00, 9504.00, 9505.00, 9506.00, 9508.00 Grafton9601.00, 9605.00, 9606.00, 9611.00, 9612.00 Hillsborough0002.04, 0003.00, 0006.00, 0008.00, 0009.01, 0012.00, 0013.00, 0014.00,0015.00, 0016.00, 0017.00, 0018.00, 0019.00, 0020.00, 0021.00, 0024.00,0105.00, 0106.00, 0107.00, 0108.00, 0109.00, 0111.01, 0115.00, 0185.01,2004.00 Merrimack0322.00, 0323.00, 0326.00, 0329.00, 0350.00, 0430.02, 0440.00, 0441. 00,0443.00 Rockingham0035.00, 0550.01, 0570.00, 0630.01, 0630.02, 0650.08, 0675.02, 1003.02,1062.00, 1071.00 Strafford0813.00, 0814.00, 0815.00, 0830.01, 0830.02, 0842.00, 0843.00, 0844.00, 0870.00, 0880.00 Sullivan9758.00, 9759.01, 9759.02 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

79 Conventional My Community & Home Possible Is your listing eligible for This great opportunity? http://www.ffiec.gov/Geocode/default.aspx Go to this site and enter property address If property is eligible, you have a bigger market! This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

80 Open up more buyers for your listings Comparison Based on $300K sales price; $6000 taxes My Community/Home Possible 5% down $15,000 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $26,000 At a Rate of 5% P&I =$1529.94 T&I =$ 575 MI =$ 171 PITI = $2275.94 Conventional 5% down $15,000 Est Closing Costs$ 5800 Est Prepaid Items$5200 Total Cash Needed $26,000 At a Rate of 5% P&I =$1529.84 T&I =$ 575 MI =$223.25 PITI = $2328.19 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. MC/HP is $52.25 less /month & qualifying is more lenient

81 Same Payment – higher sales price! Comparison Based on 5% down loan My Community/Home Possible $300,000 sales price $6000 taxes *You can negotiate for up to 3% Seller Concession At a Rate of 5% - APR 5.724 PITI = $2275.94 Conventional $289,500 sales price $6000 taxes *You can negotiate for up to 3% Seller Concession At a Rate of 5% - APR 5.724 PITI = $2275.84 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Same Payment equates to different sales prices with different programs. This is a hypothetical example for demonstration purposes only.

82 FHA requires less upfront cash Comparison Based on $300K sales price; $6000 taxes My Community Down Payment $15,000 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $26,000 -Max concession - $ 9000 Min from Buyer = $17,000 At a Rate of 5% PITI = $2275.94 FHA Down Payment $10,500 Est Closing Costs$ 5800 Est Prepaid Items$5200 Total Cash Needed $21,500 - Max concession - $10,000 Min from Buyer =$10,500 At a Rate of 4.5% PITI = $2398.91 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Difference is $122.97

83 FHA requires less cash… Comparison Based on $300K sales price; $6000 taxes Conventional 5% down Down Payment $15,000 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $26,000 -Max concession - $ 9000 Min from Buyer = $17,000 At a Rate of 5% PITI = $2328.19 FHA Down Payment $10,500 Est Closing Costs$ 5800 Est Prepaid Items$5200 Total Cash Needed $21,500 - Max concession - $10,000 Min from Buyer =$10,500 At a Rate of 4.5% PITI = $2398.91 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Difference is $70.72

84 Conventional Mortgages Comparison Based on $300K sales price; $6000 taxes Conventional lender paid MI 5% down $15,000 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $26,000 At a Rate of 5.75% P&I =$1663.18 T&I =$ 575 MI =$ 0 PITI = $2238.13 Conventional with monthly MI 5% down $15,000 Est Closing Costs$ 5800 Est Prepaid Items$5200 Total Cash Needed $26,000 At a Rate of 5.125% P&I =$1551.79 T&I =$ 575 MI =$223.25 PITI = $2350.04 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

85 Mortgage Insurance Often required when borrower puts less than 20% down Insures the lender against losses if there is a short sale or foreclosure in the future Enables buyers to buy with less than 20% down VA, FHA, & RD have their own forms of mortgage insurance Conventional loans have PMI (private mortgage insurance) Several Major insurers exist; rates & guidelines can vary This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

86 Mortgage Insurance Cancellation Termination of private mortgage insurance on conventional loans Automatically occurs at the midpoint of the loan if borrower is current If property is a single unit or condo borrower can initiate MI cancellation - borrower submits written request - borrower has 22% equity based on either original value or current appraisal -borrower cannot have been 60 days late in past 24 months - cannot have been 30 days late in the past 12 months - no second liens can be in place This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

87 Mortgage Insurance Options upfront MI Mortgage Insurance can be paid in a one-time fee Financed Paid by Lender (rolled into rate) Upfront MI cannot be cancelled Costs vary by Down Payment Property type Credit Score Required Coverage monthly MI Mortgage insurance can be paid monthly… Monthly MI can be cancelled Costs vary by Down Payment Property type Credit Score Required Coverage This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

88 Conventional Mortgages Comparison Based on $300K sales price; $6000 taxes Conventional financed MI 10% down $30,000 Est Closing Costs $ 5800 Est Prepaid Items $ 5200 Total Cash Needed $41,000 At a Rate of 5% P&I =$1515.84 T&I =$ 575 MI =$ 0 PITI = $2090.84 Conventional with monthly MI 10% down $30,000 Est Closing Costs$ 5800 Est Prepaid Items$5200 Total Cash Needed $41,000 At a Rate of 5% P&I =$1470.11 T&I =$ 575 MI =$189 PITI = $2234.11 This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. Difference is $143.27

89 Impact of Credit Score on Rate For a Fixed Rate ScorePoints Paid to Get Rate 740 0 0 720.25% $712.50 700.75% $2137.50 6801% $2850 6602.5% $7125 6403% $8577 620Score does not meet minimum program requirements Based on a 5% down payment loan, $285,000 loan This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

90 Impact of Credit Score on Rate Score Rate APR 740 5% 5.25% 700-739 5.125% 5.375% 680-699 5.25% 5.5% 660-679 5.5% 5.75% 620-659 5.625% 5.875% Based on a $300,000 sales price with 20% down payment $240,000 conventional loan with 30-year term. This is a hypothetical example for demonstrations purposes This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

91 Credit Score effects MICost For a Fixed Rate ScoreMI RateMonthly Mortg Ins Payment 720+.65$154.38 680+.89$211.38 6601.13$268.38 6401.22$289.75 620 Score does not meet minimum program requirements for a 5% down loan Rates came from United Guarantee Mortgage Insurance Company Based on a $300,000 sales price & 5% down payment - $285,000 loan This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

92 Conventional Mortgages Fannie Mae HomePath 5% down payment No Mortgage Insurance No Appraisal For Fannie Mae owned properties only Program being discontinued This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

93 Nonconforming Mortgages Portfolio Loans Credit Union Product Bank Product JUMBO loans Land Loans Construction Loans HELOCs This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

94 Condominiums Conventional – limited review Investor Ratio Single investor can’t own more than 10% of units Condo fee delinquencies cannot exceed 15% of total Reserves must equal at least 10% of total fees collected in year FHA & VA Both FHA & VA have approved condo lists online Approved condos still need to have updated info reviewed For condos not on the approved list Lender or management company to submit packet for approval Process for approval takes 4 weeks from time of receipt of all info RD Accepts FHA & VA approved condos Accepts condos meeting Fannie Mae/Freddie Mac limited review This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

95 Listing Condominiums RIGHT TO INFORMATION: In accordance with RSA 356- B:58, a party interested in purchasing a condominium unit has the right to obtain from the Condominium Unit Owner’s Association the following information: a copy of the condominium declaration, by-laws, any formal rules of the association a statement of monthly and annual fees and any special assessments made within the last 3 years. This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

96 Listing Condominiums 1.Seller and Property Address: 2. Association Name (if applicable): 3. Property Manager/Agent: Phone: 4. GENERAL AND LEGAL a. Are there any Association approvals required for transfer of Ownership? b. Is there a time share operation? c. Is there a vacation rental operation or other organized rental program? d. Number of allocated parking spaces available: e. Is there any pending or existing litigation? If Yes, please explain: f. Are the minutes of the Condominium Association annual meeting available? This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

97 Listing Condominiums MASTER INSURANCE POLICY a. Name of Company: b. Name of Agent Phone: This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

98 Listing Condominiums FINANCIAL a. Monthly maintenance fee(s): $ b. What do the monthly fees include?  Air Conditioning  Hot Water  Road Maintenance  Cable TV Signal  Lot Rent  Sewer  Electricity  Real Property Tax  Snow Removal  Garage/Parking  Recreation/Community Association Dues  Trash Removal  Gas  Water  Other:________________ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

99 Listing Condominiums FINANCIAL c. Are there any additional fees? If so, please specify: d. Are you aware of any special assessments or loans in effect at this time?  Yes  No If Yes, explain: ______________________________________ ______________________________________ ___________ AdditionalComments:____________________ ______________________________________ __________________ This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

100 Listing Condominiums This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. ACKNOWLEDGEMENTS: SELLER ACKNOWLEDGES THAT HE/SHE HAS PROVIDED THE ABOVE INFORMATION AND THAT SUCH INFORMATION IS ACCURATE, TRUE AND COMPLETE TO THE BEST OF HIS/HER KNOWLEDGE. SELLER AUTHORIZES THE LISTING BROKER TO DISCLOSE THE INFORMATION CONTAINED HEREIN TO OTHER BROKERS AND PROSPECTIVE PURCHASERS.

101 Listing Condominiums This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. BUYER ACKNOWLEDGES RECEIPT OF THIS PROPERTY DISCLOSURE RIDER AND HEREBY UNDERSTANDS THE PRECEDING INFORMATION WAS PROVIDED BY SELLER AND IS NOT GUARANTEED BY BROKER/AGENT.

102 Listing Condominiums This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. THIS DISCLOSURE STATEMENT IS NOT A REPRESENTATION, WARRANTY OR GUARANTY AS TO THE CONDITION OF THE PROPERTY BY EITHER SELLER OR BROKER. BUYER IS ENCOURAGED TO UNDERTAKE HIS/HER OWN INSPECTIONS AND INVESTIGATIONS VIA LEGAL COUNSEL, HOME, STRUCTURAL AND OTHER ADVISORS.

103 Listing Condominiums Complete the Condo Rider Obtain Condo docs Obtain Budget & Balance Sheet Obtain Minutes from last meeting This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

104 Listing Condominiums 1/20/14 Survey random sample of 32 condos listed on MLS only 18 of 32 had the condo rider completed only 4 of 32 had the condo docs available online None had the Budget or Balance Sheet None had minutes from last meeting This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

105 Obtaining Condo Info This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval. CompanyFee for QuestionnaireFee for Condo Docs Harvard Mgmt $50 - $75$50 + $5 to mail Evergreen Mgmt $125$75 Foxfire Mgmt $0$0 (pdf) Cityside Mgmt $75$40 Condo Questionnaires What is management company or association’s policy on obtaining condo questionnaires? What is the cost? Will seller pay this expense upfront if requested?

106 Strategies For the Listing Agents Applies to all property types… Address Property Issues Upfront- remove obstacles Determine possible financing types and limitations Discuss seller concessions upfront Seller can pay up to 6% Most common Seller concession is 4% of the sales price Will seller approve a specific seller concession at full price? Create a compliant advertisement with all the correct verbiage required by state & federal regulations This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

107 For the Seller’s Agent Advertising Requirements Under TILA and Regulation Z You cannot advertise terms (interest rates, down payments, etc) that are not available. Deceptive and misleading ads are prohibited. Regulation Z requires full disclosure of terms whenever a trigger term is used in an advertisement. All terms must be equally prominent so that consumers will not have to read the fine print to understand the terms being advertised. This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

108 For the Seller’s Agent Advertising Requirements Under TILA and Regulation Z If a rate is quoted, the APR “annual percentage rate” must also be disclosed in a manner that is equally conspicuous as the rate quoted. If the rate is subject to an increase, that must also be clearly stated in the ad. If the payment does not include tax & insurance, that must be clearly identified This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

109 For the Seller’s Agent Advertising Requirements Under TILA and Regulation Z Things you cannot do when advertising mortgage terms…. Advertise fixed rates when the rate or payment can really go up – unless there is equally visible full disclosure of these terms. Advertise savings or other misleading comparisons to other terms that could be offered Make misrepresentations about government endorsements Use the term counselor when you are in it for profit Advertise favorable terms in English and then switch languages for the full disclosure of the terms. This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

110 For the Buyer’s Agent Writing the offer Seller can pay some or all of buyer’s closing costs Get specific – don’t leave cash on the table Buyer should be communicating with lender re: needed concessions Commitment & Closing dates Time frames may vary by loan type Lender approval vs RD commitment Commitment comes before appraisal is received Required Inspections Water Pest This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.

111 Thank you for your time and attention This is not an offer to extend credit or intended to be distributed to consumers. Program, rates, and terms are subject to change and underwriting approval.


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