FHA Mortgage loan COMPENSATING FACTORS

Compensating factors are factors that give your FHA home loan request that extra push needed for approval.

For the  home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the FHA loan program include:

Minimal Down Payment and Closing costs.

Down payment less than 3% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. 100% Financing available No reserves required. FHA regulated closing costs.

Easier Credit Qualifying Guidelines such as:

  No minimum FICO score or credit score requirements. FHA will allow a home purchase 1 year after a Bankruptcy. FHA will allow a home purchase2 years after a Foreclosure.

http://www.fhamortgagefhaloan.com/

Compensating Factors

On FHA home loans where the ratio exceeds FHA guidelines (other that Approved/Eligible findings), the underwriter must list on the MCAW the compensating factors that lead to the approval of the FHA home loan. Any compensating factor used to justify mortgage approval must be supported by documentation. The following are a list of eligible factors per FHA home loan approvals:

 A. The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense for the new mortgage over the past 12-24 months.

 B. The borrower makes a large down payment (ten percent or more toward the purchase of the property.

 C. The borrower has demonstrated an ability to accumulate savings and a  conservative attitude toward the use of credit.

 D. Previous credit history shows that the borrower has the ability to devote a greater portion of income to housing expenses. 

E. The borrower receives documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage, including food stamps and similar public benefits.

 F. There is only a minimal increase in the borrower(s)housing expense.

 G. The borrower has substantial documented cash reserves (at least three months= worth or payments) after closing. In determining if an asset can be included as cash reserves or cash to close, the lender must judge whether or not the asset is liquid or readily convertible to cash and can be done so absent retirement or job termination.

  H. The borrower has substantial nontaxable income (if no adjustment was made previously in the ratio computations).

 I. The borrower has a potential for increased earnings, as indicated by job training or education in the borrower=s profession.

 J. The home is being purchased as a result of relocation of the primary wage earner, and the secondary wage-earner has an established history of employment, is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area. The underwriter must document the availability of such possible employment.

You have decided to purchase your first home – together. This is a very exciting time, but it is not without pitfalls. Communication is the key. What do you need from your home? What do you want in your new home? How much can you afford to pay? Are you going to use a realtor? Where do you want the new house to be located? Where can you find furnishings for your new place? These are all important questions you should discuss prior to looking for a new home.

Wants vs. needs

The decision is made that a new home is to be bought, but what features are wants and which ones are needs? How many bathrooms do you need? Are you planning to stay in the house for 30 years or only 5 years? Will you need room for your family to grow? Will your new house have a pool? How about a hot tub? Do you need a large yard or a small yard? The number of bedrooms and bathrooms is an important consideration.

Obviously, the number of bedrooms and bathrooms greatly influence the amount the final price will be, but if you will be enlarging your family, make sure you buy as much house as you can afford. As you tour the various houses, it is important to also envision your furniture or your prospective furniture to ensure there is plenty of space. Make sure you talk about closet space, furniture placement, color for the walls, and future renovations. Dream together and paint the picture of your future. Remember, this can be more fun that exasperating.

Will you be able to afford a house with a pool or hot tub? Do you need outdoor furniture? A pool/hot tub is usually considered a want and may need to be forfeited to obtain the number of bedrooms and/or bathrooms you desire. Make sure you have discussed this in advance to ensure you are in agreement.

Can We Afford a New House?

Before you start looking for a new house, you may need to be pre-approved for a loan. The financial institution you have decided to use can help you determine how much house you can afford to buy. Try to remain well below the upper amount of the range given to ensure you are able to afford to also furnish your new home and do any upgrades you would like to do in the future.

Is a realtor important?

You may want to consider using a realtor especially for your first house purchase. A realtor is priceless for finding a house in a good location and for negotiating all the paperwork for a purchase. (Of course, it helps to have a lawyer to have around for the closing). Realtors know the areas that they sell. They are usually versed on which schools are good and where various entertainment venues are.

Closing

Closing is the best and worst part of buying a house. You will likely wish to have a lawyer available to look over all the paperwork before you sign anything. Make sure you have a clean title and all the necessary papers are in order. You will be signing until you think your wrists will break. When all the signing is done, you will be handed your keys for your new house. Congratulations as you have survived the process of buying a new home. Now the fun begins.

Home at last

Once you have gotten your new key, you will need to move in. During the moving process, take time to reflect on your dreams for the future. Don’t forget to have a house warming party once you have settled in and invite all your friends to your lovely new home.

Need some help paying for that new home or what goes in it? Take a look at www.MyDreamHomeRegistry.com, the gift registry for everything home.

More and more homeowners and businesses are creating that warm, easy-to-live-in feeling by taking advantage of their facilities’ largest single surface, their floor. They are using new materials, including artistic stains, to give their concrete floors great individualized looks as well as the easy maintenance qualities of a Class III laboratory.

A recent example is provided by a project Durall Industrial Flooring undertook for John Engstrom Photography (www.engstromphotography.com) near Minneapolis, Minnesota. The goal of the flooring redevelopment work was to enhance the coffee house atmosphere of the photo studio.

Before the development began, Durall created a custom kit of materials tailored for this specific project. The first step was to use Durall’s adhesive remover to remove the glue that remained from the carpeting and tile that formerly covered the warehouse-type facility floor. Because cement is so porous, even floors that look almost free of glue will yield great quantities of adhesive under the leaching action of the chemical removers, preventing future interference with the bonding of the new coatings.

A high-alkaline cleaner was then applied using a rotary scrubber with a stiff nilo grit brush. The high-alkaline degreaser brings the pH of the floor up to nearly 12 as it removes the leftover adhesive and contaminants. Following up with another scrubbing using Dura Klean, an acidic cleaner with water softeners, detergents, and rinse agents, shocks the floor with a pH of 3.5, thereby forcing contaminants and vulnerable cement particles to release from the floor. The acidic cleaner also opens the floor up, allowing the epoxy top coats to create a strong, long-lasting bond. A final scrub rinse and drying left the floor ready to accept repairs and artistic coloring.

The new look for the studio floors was produced using black and red stains shot downward with weed sprayers to give an alternating color look. Before staining began, masking tape was used to simulate a grid pattern, holding stain off mock grout lines. The pattern was laid diagonally across the floor to heighten dimension and interest. Two people, two sprayers, two colors—but just one artist—as the red was laid with the artist’s eye and the helper followed, filling in unsprayed areas with black. Once dry, the tape was removed and two top coats of clear, flat catalyst epoxy were applied, leaving a soft, non-glare surface that is easy to keep clean and lets light softly dissipate.

The resulting floor brings together beautifully the grand wood, soft leather, and natural greenery of a studio that is functional, easy to keep up, and comfortable for those long hours of artistic development.

Durall Industrial Flooring supplies kits of materials that are customized to owner specification and delivered directly to the job site. Kits include full directions and 24/7 help lines staffed by seasoned flooring experts, so professionals and amateurs alike can successfully install a quality floor.

Web visitors can obtain free, job-specific quotes on materials or nationwide turnkey installations by completing a simple questionnaire at http://www.concrete-floor-coatings.com.

For a high-resolution photo example, visit: http://www.concrete-floor-coatings.com/photos/artistic

For more information, contact Harvey Chichester at: harvey@concrete-floor-coatings.com

Phone: 1-800-466-8910 or 952-888-1488 (24/7)

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