Great Choice Mortgage Program

Transcription

1 Great Choice Mortgage Program

2 Great Choice Mortgage Program THDA is changing its down payment assistance (DPA) from a grant to a 0% second mortgage product for a term of 10 years. Currently, THDA increases the interest rate on the first mortgage in order to offer DPA. As the interest rate market has remained extremely competitive this has not always kept THDA competitive.

3 How will this change benefit THDA? It will allow THDA to offer a lower rate on the first mortgage loan to make our program more competitive THDA will have one program, not three THDA will recoup all DPA funds in order to replenish the DPA funds for future homebuyers

4 How will this change benefit the borrower? The change in payment from the existing program at a higher rate and the new program at a lower rate with the second mortgage payment is just a difference of a few dollars, but after the second mortgage is paid off (10 yr term) their payment will drop by approximately $29 dollars and they will save approximately $6,700 in interest over the life of the loan* * (based on THDA s average loan size of $110,000)

5 Basics: As of October 1 st, there will be just one THDA Single Family loan product with one option for DPA The new loan product is called the Great Choice Mortgage Program. There will be the Great Choice first mortgage and the Great Choice Plus second mortgage. * * The Homeownership for the Brave Program will reduce the rate on the Great Choice first mortgage product by.50% for eligible homebuyers.

6 The options for this loan product are: Great Choice 1 st Mortgage at TBD% for 30 years (For those borrowers eligible under THDA s Homeownership for the Brave Program, a 50 basis point rate reduction will apply to the Great Choice, based on current rate at time of loan submission) Great Choice Plus 2 nd Mortgage for 4% of the Purchase Price at 0% interest Rate for 10 years for DPA and/or Closing Costs.

7 What else is changing? One interest rate TBD% (subject to change) For DPA - a 0% interest rate on a 2 nd mortgage 4% of the purchase price This is a mortgage, not a grant

8 Details: Great Choice - 1 st Mortgage Max. Household Income Max. Acquisition Cost Max. LTV Interest Rate Loan Term Loan Types Mortgage Ins. / Guarantee Varies By County Varies By County FHA, VA, and USDA/RD Guidelines. Conventional Loans 78% LTV or less Fixed rate, subject to change 30 years FHA, VA, USDA/RD, (Conventional limited to 78% LTV No PMI) As required by loan type

9 Great Choice Details continued: Underwriting Criteria: Borrower approved by Insurer Guidelines DU/LP Approve/Eligible Manual U/W will only be performed on files with NO Credit Score Meet IRS Tax Code Criteria Min. Credit Score 620 Max. Debt-to-Income 45% Buydowns & Co-Signers Not allowed Assumable Pre-Payment Penalty Subject to Recapture Required Reserve Subject to qualifying No Yes As required by loan type

10 Great Choice Details continued: Minimum investment Closing Costs Down Payment Homebuyer Education Origination Fees Other Closing Fees As required by loan type May come from borrower, seller, a gift, or as required by loan type As required by loan type Required if receiving DPA or loan is a special THDA program i.e., H/O for the Brave Origination Fee - Up to 2% maximum Discount Fee - Up to.25% maximum Application Fee - Up to $850 maximum Normal and Customary

11 Details: Great Choice Plus 2 nd Mortgage Eligible Borrower Max. Household Income Loan Amount Homebuyer obtaining THDA 1 st mortgage Great Choice loan THDA Great Choice Program Limits Apply 4% of Purchase Price Interest Rate 0% Loan Term Lender s Title Policy Amortized over 10 years Not required

12 Great Choice Plus Details continued: Allowable Fees Normal and customary 2 nd mortgage fees Closing Fee Not to exceed $ 100 Underwriting Criteria Min. Credit Score 620 Must include amortizing 2 nd mortgage payment in total housing expense ratio and meet all other THDA Underwriting Guidelines Manual underwriting allowed per THDA guide

13 Great Choice Plus Details continued: Closing Documents Homebuyer Education 2 nd mortgage Note and Deed of Trust in the name of THDA. THDA wires 2 nd mtg. funds to closing. HBE Certificate from THDA approved Counselor required for all loan applicants prior to submission of THDA Great Choice PLUS Pre-Payment No pre-payment penalty 2 nd mortgage loan is due in full upon 1 st mortgage payoff, assumption or refinance No Assumption of 2 nd mortgage allowed No Subordination of 2 nd mortgage allowed Servicing The borrower will be able to combine the payment of the first mortgage and second mortgage into one payment to the servicer.

14 Questions & Answers

15 Q&A Could a borrower apply for DPA only? No. The Great Choice Plus with Down Payment Assistance will only be available to borrowers obtaining The Great Choice 1 st mortgage through THDA. Will the rate on the first mortgage increase if I get a second mortgage for DPA? No. The interest will not increase on the first mortgage if DPA is requested.

16 Q&A Is there a charge for a rate lock? No, THDA does not charge to lock a rate. From date of THDA commitment, rate is locked for 90 days on existing homes and 180 days on new construction. How will I know if my interest rate has been locked? THDA will send the commitment to the lender once the loan is approved via fax or .

17 Q&A Will the O/A disclose for the second mortgage at application? Yes, the O/A will disclose at application for the first mortgage and the second mortgage. What disclosures will the O/A have to generate? The O/A will have to generate: * Truth in Lending * Hud-1 (separate from first) * Good Faith Estimate * 1003 (Loan Application) This is very similar to the process used when THDA offered the Stimulus Loan

18 Q&A Will there be two payments required from the borrower? The borrower will be able to combine the payment on the first mortgage and second mortgage into one payment to the servicer.

19 Q&A Who will prepare the Note and Deed of Trust for the Great Choice Plus second Mortgage? The Note and Deed of Trust for the Great Choice Plus second mortgage will be prepared by the O/A along with the Great Choice first mortgage Note and Deed of Trust. These documents can be downloaded from the loan documents section of the THDA website.

20 Things to remember about THDA loans Not everyone has to be a true first time homebuyer to obtain a THDA mortgage loan. * If you are a veteran, spouse of a veteran or active duty military person that meet the eligibility requirements the first time homebuyer rule is waived. * If you are purchasing a home in a targeted county the first time homebuyer rule is waived. * If you are purchasing a home in a targeted census tract the first time homebuyer rule is waived. * If you own a home but have not occupied as your primary residence for the past three years you are considered a first time homebuyer when purchasing your next home.

21 There are 58 targeted counties in the state of Tennessee * If you purchase a home in one of these counties you do not have to meet the first time homebuyer rule!

22 TARGETED COUNTIES IN ALPHABETIC ORDER Bledsoe Campbell Cannon Carroll Chester Claiborne Clay Cocke Crockett DeKalb Dyer Fayette Fentress Franklin Gibson Giles Grainger Greene Grundy Hancock Hardeman Hardin Hawkins Haywood Henderson Hickman Houston Jackson Jefferson Johnson Lake Lauderdale Lawrence Lincoln Loudon Macon Madison Marion Maury McNairy Meigs Monroe Morgan Obion Overton Pickett Polk Rhea Scott Sequatchie Stewart Tipton Trousdale Unicoi Union Van Buren Wayne White

23 TARGETED COUNTIES

24 Has your borrower served our country?

25 HOMEOWNERHIP FOR THE BRAVE What is HOMEOWNERHIP FOR THE BRAVE? It is a ½ percent reduction off THDA s 30 year fixed mortgage interest rates available for THDA approved veterans. Who is eligible? Active duty service members and National Guard, veterans discharged under conditions other than dishonorable, Reservists with at least 180 days of active duty service, spouses of service members as well as surviving spouses of service members and qualified veterans. What kind of loan can I use? FHA, VA, RD and Conventional-78% LTV (meeting THDA guidelines)

26 Helpful Hints from Underwriting

27 Bankruptcy, Foreclosure, Tax Liens Chapter 13 Bankruptcy is 1 year after discharged, with re-established credit Chapter 7 Bankruptcy is 2 years after discharged, with re-established credit 4 Years from date of sale from the courthouse for foreclosures THDA foreclosures are not eligible for financing through THDA again We do not allow payment arrangements on tax liens, they must be paid in full and released Child support Unlike a typical mortgage, THDA will consider child support in the HH income if court ordered, regardless if it is received or not.

28 Household income vs. Qualifying income We have to have the income for all household members over the age of 18 to calculate the household income. This information is not used for qualifying for the loan, but to verify the total household income is under the limit for the county. Non-qualifying spouse/occupants over 18 Non-qualifying spouse must also sign on the application affidavit, occupants do not. Income information for NQS & occupants over 18 yrs old must be provided. This includes: full written VOE, current paystub and most recent tax returns w/ w2s. Any prior employment for the previous year must be verified with a VVOE.

29 Overtime and Bonus We are calculating income for current Household Limits We will count overtime & bonus in the household income, regardless of the length of time it has been received. Allowance vs. Reimbursement Allowances are counted in household income, reimbursements are excluded Co-signers are prohibited THDA does not allow co-signers on any loans

30 Bank Statements reviewed for deposits All deposits over $100 will be reviewed and questioned. Bank statements are reviewed for additional income/jobs, not to source funds to close. Appraisal requirements Site Value not to exceed 35% Acreage not to exceed 2 acres Multiple kitchens/mother-in-law suite - property cannot be income producing or have the potential to be income producing Other Real Estate Owned Rental income is included in household limits. We count 75% of rental income.

31 Changes to THDA forms

32 Underwriting Submission Checklist New Submission Checklist (Form HO-0459) should be used for any loan submission with an application date of October 1 st or later

33 Down Payment Assistance Award Letter New Down Payment Assistance Award Letter (Form # HO-0476) should be used for any new loan submission with an application date of October 1 st or after.

34 Questions For any questions regarding submissions or submission issues, please contact our Single Family Division at (615) or via at