Hud Worksheet: Fill & Download for Free

Talk to your real estate agent about this. In many instances this is ignored by buyers and their banks, so it is not an issue.Then in those odd cases, you may have to pay a penalty or fine, or get the work inspected. Yeah, it can be a mess.The main thing on remodels is keeping the upgrades up to code, if not the house could fail the banks lending inspection. Banks have gotten better about this, so be forewarned. Look up HUD 1 Inspection Worksheets to see what is about to happen to you.

First, just to be accurate, FHA loans do not carry PMI, which means Private Mortgage Insurance. FHA loans do have mortgage insurance, but it is properly called Mutual Mortgage Insurance (MMI). This because FHA loans are self-insured. The insurance program is commonly referred to as MIP, for Mortgage Insurance Premium. There is an insurance pool which by law must be maintained at 2% of the value of the portfolio of FHA loans. As of November, 2018, the reserves in the fund were at 2.77% of the portfolio. The year before, the fund was at 2.32%.PMI refers to the type of mortgage insurance require on conventional loans where the loan is for more than 80% of the home’s value.[Minor digression ahead]The FHA insurance reserves were badly depleted after the crisis of 2008 and ensuing recession. The premium for FHA mortgage insurance was increased several times, until it reached 1.75% up-front premium (financed into the base loan) and 1.35% paid monthly.As the economy (and real estate) recovered, so did the insurance fund. Then-Secretary of HUD, Julian Castro, ordered a reduction of the monthly MIP to .85% in 2015. This .50% reduction had the same effect on the monthly payment as a .50% reduction in interest rate. FHA originations increased sharply as a result.As the insurance pool continued to grow, Secretary Castro ordered a second reduction in the monthly premium—to .60%. It was to take effect on January 27, 2017—one week after the new Administration took office.On Inauguration Day, January 20, 2017, Donald Trump signed an Executive Order rescinding the reduction in the premium, claiming that it needed “more study.” Reversing the proposed premium reduction was his second official act after being sworn in as president. To date, no studies have been aired and the premium remains the same as it was before. The reduction would have reduced the monthly payment for a newly-purchase $300,000 home by over $60.00.[End of digression]Mortgage insurance for most FHA loans must remain in place for the life of the loan, so refinancing into a conventional loan is a logical step to consider. Making the decision to refinance (or not) is fairly straightforward.First, understand what mortgage insurance is. When a lender extends credit to a borrower to buy a home, it is keenly aware of risk. They must consider the likelihood to sustaining a loss if the borrower were to default and they had to foreclose and sell the property to recover their money, plus the costs of foreclosure. 20% is widely considered to be adequate protection for the lender by itself.If the buyer wants to put less money down than 20%, lenders require some additional protection from loss if they had to foreclose. That’s where mortgage insurance comes in.Lenders carrying conventional loans will allow borrowers to drop MI once they can document that the outstanding loan balance is 80% of the home’s current value, as shown by a third-party appraisal.In order to refinance an FHA loan into a conventional loan, the borrower should be reasonably certain there is at least 20% equity in the property—in other words, that the loan balance is 80% of the home’s value or less. Assuming that it is, the question is whether a refinance makes economic sense.You can consider that the cost of the monthly MIP is an addition to the interest rate of your loan. If your present FHA loan has a rate of 5.25%, your effective rate is 6.10%.If you can get a new conventional loan at 4.75%, you would likely save some money, because your new loan would be 1.35% lower than your present effective rate.You should get an estimate of your likely closing costs. You can get this from your loan officer in the form of a closing cost worksheet. (Protip: don’t ask for a Good Faith Estimate. This is a document that no longer exists. It has been replaced by the Loan Estimate, which is a legally binding document).Once you know the closing costs (title, escrow, lender underwriting and document preparation fees, etc.), you should determine how long it will take to recover them. Multiply the reduction in interest rate (1.35% in this example) by your current loan balance. That will give you the amount of interest you’ll save each year. If your balance today is $300,000, you’d reduce your interest expense by $4,050. This means that if your closing costs amount to, say, $4,500, you’ll break even in slightly more than a year.If your appraisal were to come in low and you didn’t have 20% equity, you may still have some viable choices.Your balance is $300,000 and your FHA loan has a rate of 5.25%, so refinancing to get rid of the MI appears to be a realistic objective. If the home appraises for $385,000, you’ll be able to get an 80% loan and finance closing costs into your loan.At least, that was the plan.Your appraisal comes in at $360,000, so your new loan of $304,500 (closing costs included) would be almost 85% of your home’s value.This is not the disaster it might appear. You will have to have PMI—but with a conventional loan, you have some choices.Depending on your credit score, your mortgage insurance would be as low as $48 per month—and you’d be able to cancel it later. Alternatively, you could get a type of mortgage insurance called single premium PMI where you pay once and avoid monthly premiums altogether. For this example, your single premium would be about $1,400, financed into your loan along with the other closing costs.To answer your question succinctly, yes: refinancing into a conventional loan from an FHA loan can be a very smart move—but you should go through the process I have outlined here to determine whether refinancing gives you an economic advantage.I hope this is helpful. Good luck!

Wow. A lot. But let's make it simple:The best entity for a mortgage is a Mortgage Broker. This person:• Is known through advertising and client referrals;• Works for an independent brokerage and works to the benefit of the Buyer only;• Has access to a very large number of Mortgage products and is the “go between” between the Borrower and all the Lenders;• Has numerous options if a Mortgage application is Denied - if this occurs the Mortgage Broker can move the loan to multiple sources until the loan is approved;• Does both Conventional and Government loans as well as specialty Mortgage loans, like loans for people Self-Employed for only a short time or people who need Jumbo loans;• Brokers loans to a large number of lending sources.The other entity involved in Purchasing a home is the Real Estate Agent. If a Real Estate Agent is used (which is not required in any state), that Buyer’s Agent will work for the Buyer and will help him/her find a home to purchase.The Buyer’s Agent should be just that - the Agent for the Buyer. Avoid DualAgency, which is a Real Estate Agent acting as an Intermediary, representing both the Buyer and the Seller. Nice in theory but totally unrealistic and unethical in practice.The Buyer’s Agent should do the following for the Buyer:• Visit with the Buyer to understand the Buyer’s needs and preferences in a new home;• Search through databases (like MLS), newspapers and websites for properties the Buyer may like;• Preview properties to make certain that they meet the Buyer’s needs and preferences;• Accompany the Buyer to view numerous properties until the Buyer finds one that interests them;• Provide school district, neighborhood and other information about the house that interests the Buyer;• Assist the Buyer in preparing an Offer;• Work with the mortgage broker on the financial items contained in the Offer (don't use the Real Estate Agent's pet mortgage broker - instead use a company like The Mortgage Professor or HomeStart Landing Page to find a good mortgage broker);• Present the Offer and the Prequalification letter to the Seller or Seller’s Agent;• Assist in negotiations to move the Offer to an executed Contract;• In states that use Surveys, obtain the Seller’s existing Survey for the loan originator;• Meet the Home Inspector at the property;• Advise the Buyer of contractual dates (like the end of the Inspection period) throughout the Purchase process;• Meet the Appraiser at the property;• Review the Survey (if applicable) to make sure there are no boundary, Building Line, Setback, Easement, Ingress or Egress issues;• Review the Title Commitment for any Mortgage Lien, Tax Lien, Mechanics Lien or other Title issues;• Keep in contact with the mortgage broker to be aware of when a Closing is likely;• Do a final Walk Through with the Buyer;• Attend the Closing;• Secure the property keys for the Buyer; and• Provide referrals to a locksmith, handymen, etc.There is no requirement in any state for a Buyer to use a Real Estate Agent. If the Buyer wishes to do the agent's work, anyone can assist you in the negotiation of a contract for a house you found yourself, as long as they don't receive compensation for doing so;Now that you know who the players are, it’s important that you understand:• What a Mortgage is;• A few basic Mortgage terms;• What all the costs are;• What kind of funds can be used in the Purchase;• What is involved in the Purchase process;• What is involved in the Mortgage process; and• How to prepare in order to obtain a Mortgage loan.A Mortgage is a Lien that encumbers the property. A Mortgage Lien is like an IOU, attached to the Title of the property making the property the Collateral for the amount of the loan that was extended to the Buyer.Title basically proves who owns the property, shows the current Liens against the property, declares any oddities about the property to which the Title Insurance Company may take exception and sometimes shows a record of all the transactions that have taken place against the property.There are both First Mortgages and Second Mortgages. These different Mortgages are attached to the Title of a property in an order; the First Mortgage being the most superior and subordinate Mortgagesbeing inferior. The vast majority of Mortgages are First Mortgages, however, it can sometimes be advantageous for a Buyer to do a Combo Loan that gives him/her a First Mortgage followed by a Second Mortgage in the same transaction.Mortgages are either Amortized or not. Amortized loans are fixed Rate Mortgages, Adjustable Rate Mortgages and Balloons. Non-Amortized loans are Interest-Only loans where the payments do not pay the loan off, but only the Interest that accrues monthly.Fixed Rate Mortgages are generally used when Interest Rates are low. Adjustable Rate Mortgages are generally used when Interest Rates are high or when the Buyer does not expect to keep the property for very long. Balloons are also used when Interest Rates are high or when the Buyer does not expect to keep the property for very long. Interest-Only loans are used when the Buyer demonstrates a need to keep the payments as low as possible.When a Buyer Purchases a home, the Mortgage Lender will loan a percentage of the Purchase Price.This loan percentage can be as high as 97% of the Purchase Price. Any left over percentage is the Down Payment. The Buyer will pay the following items to Purchase a home:• The Earnest Money/Deposit on the Real Estate Contract;• The Option Fee (or Inspection period fee) on the Real Estate Contract (in states that use Option Fees);• The Inspection fee(s) of the actual Home Inspection at the time the Inspection is done;• The Termite examination and any appropriate treatment;• The Down Payment on the property;• The Closing Costs on the loan; and• The Prepaids on the loan.There are a large number of people or entities involved in a Mortgage loan. Closing Costs are the charges and fees associated with these parties. Closing Costs include Origination charges, Lender charges, the Appraisal fee, the Credit Report fee, Title/Escrow Company fees, etc. Closing Costs areitemized on a Good Faith Estimate and a Fee Worksheet provided by the loan originator and then again, at Closing (on a HUD-1 Settlement Statement), by the Title/Escrow Company or Closing Attorney who is Closing the loan. Sometimes, the Buyer’s Agent and the loan originator will secure money from the Seller to pay some or all of the Closing Costs for the Buyer. These monies are called Seller Concessions or Contributions. Prepaid Items (Prepaids) are not Closing Costs. Prepaids are loan Interest, the Homeowner’s Insurance first year premium and Escrow Reserves.Not all funds may be used for the Down Payment, Closing Costs and Prepaids. Funds paying for these items must be Seasoned (in the Buyer’s account) for at least 60 days, must be Sourced (from anacceptable source like a paycheck or a tax refund) or must be a Gift (donated funds from an approved source) on a loan that allows Gifts.The Purchasing process is as follows:• Gather your financial documents to prepare for your Mortgage financing;• Choose a Mortgage Broker;• Obtain a Prequalification letter;• Get started on the Mortgage loan. Arranging the Mortgage financing before you look for property may seem;backward, but it allows the prospective Buyer to know how much he/she can qualify for, and whether or not he/she is comfortable with the payments, etc. before looking for a property;• Find a Buyer’s Agent and an attorney (if an attorney is required in your state). Keep in mind that there is no requirement to have a Buyer’s Agent;• Enter into a Contract including delivering the Earnest Money/Deposit check and Option Fee check (if applicable) to the appropriate party or parties (Real Estate Agency, Title/Escrow Company or Closing Attorney’s law firm);• Perform Home Inspection, including Termite (if desired, required on an FHA loan);• Perform other Inspections (Septic or Well, if applicable, or Foundation if Home Inspector has concerns);• Order or obtain Survey from Seller (in states that use Surveys);• Perform Appraisal;• Arrange Homeowner’s Insurance coverage for the home;• Complete Mortgage financing, including deciding if using a Power Of Attorney;• Obtain Closing check. This check must be a cashier’s check so that the funds are immediately negotiable (can be immediately cashed); however, a wire from the Borrower’s bank account to the Title/Escrow Company’s bank account (or Closing Attorney’s trust account) will also work. If a Borrower is wiring funds to the Title/Escrow Company, the Borrower first needs to obtain the Title/Escrow Company’s wiring instructions so that the funds are applied to the Borrower’s transaction. The same is true for wiring funds to a Closing Attorney’s law firm;• Attend Closing. Usually the only items the Buyer should bring to Closing are a photo identification, the Closing check and a checkbook (if the Closing check was not for the exact amount due); however, the Mortgage Lendermay ask the Buyer to bring originals of Letters of Explanation or other items to Closing.The Mortgage process is as follows:• Mortgage Interview;• Loan Application;• Financial document gathering and delivery;• Processing;• Property Appraisal;• Underwriting;• Conditional Approval;• Gathering Conditions;• Document Preparation; and• Closing.It is always best if the Buyer prepares for obtaining a Purchase Mortgage loan. Preparation for obtaining a Purchase Mortgage includes:• Finding Income Tax Return copies for last two years;• Finding W2 forms for last three calendar years;• Finding business (C-Corporations, S-Corporations, Limited Liability Companies, Partnerships) Income Tax copies (if Self-Employed) for last two years;• Finding K-1 forms for last three calendar years (if Self-Employed);• Gathering pay documents (one month’s worth of paycheck stubs, a Social Security, Pension, Annuity Award Letters, adoption stipend stubs and/or county printout of child support payments received);• Gathering asset documents (two months most current bank statements for all checking, savings, and money market accounts, last two statements received for all IRAs, 401Ks, Stock accounts, and Annuities, Settlement Statements from recent property sales) Note that state, county and federal retirement accounts for current employees do not count as assets;• Gathering situational documents (Divorce Decree, Bankruptcy discharge letter and list of creditors, leases for Rental Properties, Tax Appraisal notices for Rental Properties, Homeowner’s Insurance Declarations Pages forRental Properties, proof of payment for Judgments, Tax Liens or collections);• Obtaining a statement of Whole Life Cash Value (if applicable);• Finding the Survey (if Refinancing and in a state that uses surveys);• Finding the Homeowner’s Insurance Declarations Page;• Writing down the names, addresses and telephone numbers of all landlords for the past two years; and• Writing down the name, address and telephone number of all Human Resources departments for all jobs.