topic just need "clarification" in Mortgage Loans

just need "clarification"

ledzep75 — Sun, 18 Nov 2012 21:04:12 GMT

I plan to apply for FHA 15 yr. fixed in Febuary. Purchase price is $85000 . With the required 3.5% down that would leave the "balance" financed arround $82000. When looking at FHA's required front end and back end ratios % ( .31 and .43), do lenders use the initial purchase price ($85,000) or the amount after the 3.5 is applied ($82,000) ?Thanks

Re: just need "clarification"

beb86 — Sun, 18 Nov 2012 21:08:48 GMT

The use what your payment will be....the are normally only a few bucks off what your actual payment will be

Re: just need "clarification"

ledzep75 — Sun, 18 Nov 2012 21:19:27 GMT

So they will base what my payments will be from the $82,000 (the amount actualy being financed) sounds good. Thanks

Re: just need "clarification"

webhopper — Sun, 18 Nov 2012 21:22:28 GMT

Yes; they will use payment. Remember your payment will have taxes; insurance; and an Fha fee every month... so be sure to include that when you calculate DTI.

Re: just need "clarification"

ledzep75 — Sun, 18 Nov 2012 21:34:19 GMT

I understand about the taxes and insurance in DTI (Iv'e been "playing with the FHA calculator on their website). However this is the first Iv'e heard regarding an FHA "monthly fee " . What exactly is this? Thanks

Re: just need "clarification"

webhopper — Sun, 18 Nov 2012 22:29:53 GMT

ledzep75 wrote:
I understand about the taxes and insurance in DTI (Iv'e been "playing with the FHA calculator on their website). However this is the first Iv'e heard regarding an FHA "monthly fee " . What exactly is this? Thanks

Fha mortgage insurance premium fee that is added to your monthly payment. The other Fha fee is the upfront mortgage insurance premium. Here is a website that may explain it a little better. http://budgeting.thenest.com/calculate-fha-mortgage-insurance-premium-3286.html

Re: just need "clarification"

StartingOver10 — Sun, 18 Nov 2012 22:51:34 GMT

ledzep75 wrote:
I plan to apply for FHA 15 yr. fixed in Febuary. Purchase price is $85000 . With the required 3.5% down that would leave the "balance" financed arround $82000. When looking at FHA's required front end and back end ratios % ( .31 and .43), do lenders use the initial purchase price ($85,000) or the amount after the 3.5 is applied ($82,000) ?Thanks

The lender will not use $82k. It is your purchase price less your down payment amount plus the UFMIP (upfront mortgage insurance premium) then that figure is the one that the amortization is calculated upon.

As to the ratios: it is not 31% and 43%. each lender is different, but I see back end ratio's as high as 55% regularly. Check with your lender to find out what ratios they use and what maximum ratios they will consider.

Re: just need "clarification"

mauve — Sun, 18 Nov 2012 23:54:16 GMT

FHA will charge you PMI until it has both been 5 years and you've paid the balance down to 78% of the value. For my house, it is 78% of the purchase price - my appraisal was about 20k more than the purchase price and my loan was for another 9k on top of that, so I've got a long way to go to get out of my FHA PMI. (The reason the values are all so different is because I have an FHA rehab loan.)

In short, when the balance of your mortgage is at 78% of your purchase price or your appraisal value, whichever is smaller, you can stop paying PMI.

Re: just need "clarification"

MyCreditSucksTheMost — Mon, 19 Nov 2012 03:11:15 GMT

StartingOver10 wrote:
ledzep75 wrote:
I plan to apply for FHA 15 yr. fixed in Febuary. Purchase price is $85000 . With the required 3.5% down that would leave the "balance" financed arround $82000. When looking at FHA's required front end and back end ratios % ( .31 and .43), do lenders use the initial purchase price ($85,000) or the amount after the 3.5 is applied ($82,000) ?Thanks
The lender will not use $82k. It is your purchase price less your down payment amount plus the UFMIP (upfront mortgage insurance premium) then that figure is the one that the amortization is calculated upon.

As to the ratios: it is not 31% and 43%. each lender is different, but I see back end ratio's as high as 55% regularly. Check with your lender to find out what ratios they use and what maximum ratios they will consider.

This is all correct, each lenders overlay will vary, If you stay under 45% on the back end you should be safe with any lender, but as stated some will allow higher ratios.

To calculate the UFMIP mutiply the amount of the loan(if you pay just 3.5% down) 79,130 X .015 = 1189.95 so your total loan amount will be 80,316.95. If you can swing a larger down payment to bring the LTV below 80% you can skip on paying the mortgage insurance monthly, which is rather pricey. (about $60 a month if you go with a 30 year note)