Back to Basics:Mortgage Lending

101March 22, 2016

Emily C IngramNMLS #113586

New American Funding

Who is Emily C Ingram?• Local mortgage lender with New

American Funding• 15 years experience • Loan originator, processor, and

underwriter• Bachelor’s degree in mathematics• Board member, Jefferson Co Home

Builders Association• Board member, Real Estate

Professionals for Affordable Housing• Loved by monkeys.

Obligatory Disclosures

• Smart but not infallible.• All lenders are not created equal.• Embrace change.

Objectives

• Recognize categories of lenders & products.• Identify (and sell) “problem” property types.• Utilize products to increase buyers’ purchasing

power.

Types of Mortgage LendersOrigination Underwriting Funding Servicing

Depository Institution X X X XIndependent Mortgage Co X X X XCorrespondent Lender X X X

Mortgage Broker X

Categories of Mortgage Loans

• Conventional ConformingFNMA / FHLMC

• GovernmentFHA / VA / USDA

• Conventional Non-ConformingJumbo Loans / Non-QM / Funky Properties and People

Conventional Conforming• Who is Fannie Mae & Freddie Mac?• Guidelines established by FNMA and FHLMC• Popular vanilla loan choice• Make sure your lender can choose!

The GSEs asset holdings – either through mortgage securitizations or direct portfolio holdings – have increased from approximately 7% of total residential mortgage market originations in 1980 ($78 billion) to 46.7% in 2010 ($5.3 trillion).- Federal Housing Finance Agency

Features & BenefitsConventional Conforming

Minimum Down Payment 5%Up Front Mortgage Ins private MI required with

< 20% downMonthly Mortgage Ins

Income Limits none

Property Type SFR, 2-4 units, manuf, condoOccupancy primary, 2nd, non ownerInterested Party Contribution 2% - 9%Max Loan Amount $417,000Max DTI 45%Credit Score 620FTHB Restriction noHome Buyer Education not required

Specialty ConventionalHomeReady Home Possible Advantage

Minimum Down Payment 3% 3%Up Front Mortgage Ins lower private MI

requirements (25%)lower private MI

requirements (18%)Monthly Mortgage InsIncome Limits $46,320 $57,900

Property Type 1-unit, condo 1 unit, condo

Occupancy primary primaryInterested Party Contribution 3% 3%

Max Loan Amount $417,000 $417,000Max DTI 45-50% 43-45%Credit Score 620 620-660FTHB Restriction no properties owned no properties ownedHome Buyer Education required required if FTHB

Government - FHA

• Who is FHA?• More lenient guidelines• High mortgage insurance premiums

Features & BenefitsFHA

Minimum Down Payment 3.5%Up Front Mortgage Insurance 1.75%Monthly Mortgage Insurance 0.85%Income Limits noneProperty Type SFR, 2-4 units, manuf, condo

Occupancy primaryInterested Party Contribution 6%Max Loan Amount $384,100Max DTI 45%’ishCredit Score 580FTHB Restriction noHome Buyer Education not required

Section 184

• Indian Home Loan• Down Payment = 2.25%• Upfront MI = 1.5%• Monthly MI = 0.15%• Participating lenders

Government - VA

• Who is VA• Eligible veterans (COE)• Ineligible fees• Tougher appraisals

Features & BenefitsVA

Minimum Down Payment 0%Funding Fee (MI) 0 – 3.30%Monthly Mortgage Insurance 0%Income Limits noneProperty Type SFR, 2-4 units, manuf, condo

Occupancy primary

Interested Party Contribution up to 4% for prepaids and funding fee

Max Loan Amount noneMax DTI 45%’ishCredit Score 580FTHB Restriction noHome Buyer Education not required

Government - USDA

• Who is USDA?• Rural properties / income limits• Allow additional time for closing• No income producing properties

Features & BenefitsUSDA

Minimum Down Payment 0%Guarantee Fee (MI) 2.75%Monthly Mortgage Insurance 0.5%Income Limits $75,650Property Type SFR, condo

Occupancy primaryInterested Party Contribution 6%Max Loan Amount noneMax DTI 29/41% (32/44%)Credit Score 620FTHB Restriction no properties owned*Home Buyer Education not required

Conventional Non-Conforming

• Funky products, people, or property

• Lenders determine guidelines

• Lenders determine interest rates

• Fewer options

Non-Conforming Benefits

• Jumbo (> $417,000)• Interest Only• Recent major derogatory credit• Asset dissipation• High debt to income ratio• Stated income• Non-warrantable condos

Condominiums• Condo project must be eligible• No “spot” approvals• FNMA/FHLMC, FHA, and VA all have slightly

different guidelines• If you list a condo, have it pre-approved by

your lender!

Manufactured Homes

• Fewer options• Doublewide• Built after June, 1976• Moved only once• Permanent foundation• Foundation inspection• L&I inspections

Energy Efficient Mortgages

• FHA/VA add-on• Finance

improvements• May require energy

savings estimate• Eliminate baseboard

heaters and crappy metal framed windows

Down Payment Assistance• Available through WSHFC • Second mortgage used for down payment• Some have deferred payments/no interest• Follow standard underwriting guidelines • No FTHB requirement• Must work with an “approved” lender and LO• Income limits• Home buyer education

required• Higher interest rates

Mortgage Credit Certificate

• Tax credit equal to 20% of annual interest• Credit added to qualifying income• Program can be combined with any mortgage• Must work with an “approved” lender and LO• First time home buyer• Income limit $65,000 (1-2 people)• Acquisition limit $235,000• Home buyer education required

Rules & Regulations

• Set appropriate expectations.• Allow ample time.• Fees to escrow two weeks prior to closing.• Encourage buyers to use email.• Electronic disclosures save time!

Why Refer to Emily C Ingram?(AKA shameless self promotion)

• Not focused on volume• Specialization• Don’t give up!• Involved in the process• Post closing support

Contact Me!emily.ingram@nafinc.com

www.facebook.com/emilycaryl

www.linkedin.com/in/emilycaryl

www.slideshare.net/EmilyCIngram1

search “New American Funding Port Townsend”