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FHA guidelines for loan qualification are the most flexible of all mortgage loans that require 3% down payment.

These are the basic FHA guidelines

.  Two years of steady employment

.  Last two years income should be the same or incrasing

.  Middle Fico credit score must be at least 580

.  Bancruptcy must be at least 3years old, with good credit since

.  Foreclosure must be at least 3 yrs. old with good credit since.

Fico score is a credit score that lenders use to determine whether or not you will pay your debts. Each of the three major credit bureaus will assing you a Fico score number based on your credit history such as:    

1. Late payments
2. The amount of time credit has been established
3. The amount of credit used versus the amount of credit available
4. The length of time at your present residence
5. Employment history
6. Negative information: bankruptcies, charge-offs, collections, judgements.

How do I increase my credit score?

1. Pay your bills on time. Recent lates have a big impact on your credit score.
2. Do not apply for credit frequently. A large number of inquiries on your report can worsen your score.
3. Reduce your credit card balances.

The three major credit bureaus are:

1. Equifax www.econsumer.equifax.com 1-800-685-1111
2. TransUnion www.transunion.com        1-800-916-8800
3. Experian www.experian.com               1-888-397-3742

Remember you are entitled to one credit report per year, with a small fee the bureus will include your credit score.

Escrow is a service which provides the public with a means of protection in the handling of funds and/or documents.

As a buyer or borrower, you want assurance that no funds or property will change hands untill all instructions have been followed.  With the increasing complexity of business, law and tax structures, it takes a trained professional to supervise the transaction.

Escrow functions are:

1. Prepare escrow instructions
2. Serve as the communication link to all transaction parties
3. Request preliminary title reports
4. Request pay-off demand from existing financing
5. Receive purchase funds from buyer
6. Comply with lender's requirements
7. Prepare or secure the transfer deeds
8. Disburse funds
9. Prepare final accounting to all parties
10. Make sure a sale, refinance, or purchase transaction is recorded and instructions have been carried out.

Your Real Estate Professional or Lender will recommend an escrow holder that is competent and experienced in handling the type of escrow at hand.

A Policy of title insurance is required by most lenders on most mortgage loans. These organizations invest their money that belongs to their customers, and so they must be concerned with the safety of their mortgage investment. 

The lender's title insurance policy guaranteees the lending institution that the person to whom it is making a mortgage loan has title to the real estate that is pledged as security. The lender needs assurance that it has a valid and enforceable lien and that no other claimant has a prior claim.

PMI or Private Mortage Insurance is insurance purchased by the borrower to protect lenders and investors against loss if the borrower stops making mortgage payments.

Real Estate lenders traditionally require a 20% down payment ro a real estate loan which allows them to recoup their investment in the event that the borrower defaults on the loan.

PMI was developed to make it possible to buy a home with a little three percent down because the pmi will guarantee payments on the balance of the loan that may not be covered if the buyer defaults on the mortgage payments and the foreclosed property is sold.

The cost of the PMI depends upon several factors:

1. The size of the down payment 3%, 5%,10%, 15% etc
2. The type of mortgage you are getting.
3. The amount of coverage the lender requires on your loan.

A federal law includes the following basic consume protections for loan closed after 7/29/1999.

1. Your lender must inform you about your right to request pmi cancellation when your mortgage balance reached 80% of the original value of your house.
2. Your lender will automatically cancel PMI when the mortgage reaches 78% of the home's original value.

The government has some Mortgage Insurance Programs run by the Federal Housing Administration (FHA). This is a more restrictive type of insurance.

OWNERSHIP OF REAL PROPERTY. Real Property can be owned by a sole owner, or it may be owned jointly by two or more persons.  A person who is the sole owner of a parcel of real property is said to be the owner thereof in severalty. Concurrent ownership means simultaneous ownership of a given piece of property by two or more persons. The typs of concurrent ownership are:

      TENANTS IN COMMON. It is created when an interest in real property is conveyed to two or more persons. Interest may be any fraction of a whole, thus one party may own one tenth, another three-tenths, and  a third party may own the remaining three-fifths. There is no right of survivorship; each tenant owns an interest which on his death vests in his heirs or devisees.

     JOINT TENANTCY. Joint tenancy exists when two or more persons are joint and equal owners of the same undivided interest in specified property. Right of survivorship exists.  When a joint tenant dies, his interest in the property is terminated and the estate continues in the survivor or survivors.

     COMMUNITY PROPERTY. In California Community Property represents the earnings and accumulations of the marriage. Each spouse owns 50% which on the death of either spouse, his/her interest vests in his/hers heirs or devisess. Persons who are not married to each other cannot hold community property together

     COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP.  Starting July 1st., 2001, married couples in California can vest personal or real property in this new form of holding title. Community property of a husband and wife, when expressly declared in the transfer document to be community property with right of survivorship shall pass to the surviving spouse without having to first pass through the administration of the estate (probate).

PROPERTY OF MARRIED PERSONS WHICH ARE NOT THEIR COMMUNITY PROPERTY ARE THE SEPARATE PROPERTY  OF ONE OR THE OTHER:

1. Property owned before marriage.

2. Proceeds of separate property, such as dividends, rents, profits.

3. Gifts and inheritances received  after marriage.

4. Property agreed between the spouses to be separate property.

5. Earnings of the wife when she is living separate and apart from the husband.

6. Earnings of the husband when he is living separate and apart from the wife.

On March 24th 2009, the Obama Administration released detailed guidelines for homeowners to help them determine if they qualify for the new MAKING HOME AFFORDABLE PLAN.

The Plan has two primary goals:

1. To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today's interest rates.  This is for homeowners who have lost appreciation in their home due to the decline in home prices, but still have equity in their home, just not the required percentage to get a refinance, under this plan, Fannie and Freddie will allowed to refinance qualified homeowners up to 105% loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure.  The administration is offering government assistance to loan servicers and investors to help offset the cost of modifying qualified homeowners into affordable mortgages.  This may be done by reduing the mortgage interest rate, extending the term of the loan, principal forberance, and/or principal cramdown.  This program is voluntary and the Loan Servicers or Investors (who you make the mortgage payments to) must agree to contract with the Treasury to participate.

The key words here are: QUALIFIED HOMEOWNERS AND 105% LOAN TO VALUE OF THE CURRENT VALUE OF THE HOME.

BEWARE OF FORECLOSURE RESCUE SCAMS. There should never be a fee charged for information or assistance regarding this program.

Beware of anyone who says they can SAVE your home if you sign or transfer over the deed to your home.  DO NOT sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

Never make your mortgage payment to anyone other than your mortgage company without their approval.

DO I QUALIFY FOR THE MAKING YOUR HOME AFFORDABLE REFINANCE?

1. Is your home your primary residence 

2. Are you current in your payment and you have never been more than 30 days late in the last 12 months?     

3. Do you have a Fannie or Freddie Mac loan? if you do not know, contact:  

1-800-FREDDIE OR www.freddiemac.com/avoidforeclosure/  

1-800-FANNIE OR www.fanniemae.com/homeaffordable 

4. Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your home? Example: current value is $300,000 and you owe less than $300,000 or between 300,000-315,000.

TO QUALIFY FOR A REFINANCE YOU MUST ANSWER YES TO ALL QUESTIONS IF NO ANY, THEN YOUR NEXT OPTION IS TO SEE IF YOU QUALIFY TO MODIFY UNDER THE PLAN.

If YES, the next step it to gather the information you will need to provide to your lender or servicer:

1. Information about your monthly gross income of your household, including recent pay stubs or documentation of income you receive from other sources.

2. Your most recent income tax returns.

3. Information about any second mortgage on your house

4. Account balances and minimum monthly payments due on all credit cards, student loans, and car loans.

5. Call your mortgage servicer or lender and ask about the Home Affordable Refinance application process.

DO I QUALIFY FOR MAKING HOME AFFORDABLE MODIFICATION?

1. Is your home your primary residence?

2. Is the amount you owe on your first mortgage equal to less or less than $729,750?

3. Are you having trouble paying your mortgage? Have you had a significant increase in your mortgage payment? OR reduction in your income? OR suffered hardship that has increased your expenses (like medical bills?

4. Di you get your current mortgage before January 1st., 2009?

5. Are you current? OR have you missed one or more payments?

TO QUALIFY FOR LOAN MODIFICATION YOU MUST ANSWER YES TO ALL THE QUESTIONS ABOVE.

Then your next step is to gather the same information as above for a refinance and to contact your servicer or lender.

IF YOU ANSWER NO, THN YOUR NEXT OPTIONS TO KEEP YOUR HOME MAY INCLUDE:

1. Forberance

2. Repayment plan

Keep in mind that the plan will NOT help everyone. For example, it is not designed to reduce mortgage balances for borrowers who have sufficient income to make their mortgage payments but owe more than their homes are worth.  It also will NOT help investors OR borrowers who have no income and cannot make any mortgage payments.

The making the Home Affordable Refinance and Modification Options are designed specifically to allow existing homeowners to keep their homes my making mortgage payments affordable.

The first participants in the Treasury Department's program to help homeowners avoid foreclosure include some of the nation's largest banks:

JP Morgan Chase  $3.6 Billion

Wells Fargo           $2.9 Billion

Citigroup               $2.0 Billion

GMAC                $633 Million

Saxon Mortgage Services     $407 Million

Select Portfolio Servicing      $376 Million

These institutions will start processing applications soon. Please follow instructions listed on the Making Home Affordable section and contact your lender.

$7,500 Tax Credit.  This credit is allowed if you purchase a principal residence after April 8th, 2008 and December 31, 2008. This is really an interest free loan and must be repaid in 15 yrs. A payment of $500 per year is required. To qualify, the taxpayer (and his or her spouse if married) must not have had a preset ownership interest in a principal residence in the prior three years.  The credit is $7,500 ($3,750 if married filing separately or single). Contact your tax preparer for more information and gross income requirements.

$8,000 Credit. You can take this credit if you buy or bought a main home during the time period from January 1st., 2009-December 1st., 2009 and you did not own a home three years before its purchase. Because this is NOT a loan, it does not need to be repaid. You can take the credit on either the 2008 or 2009 return.  Again contact your CPA or Tax preparer for other restrictions.