Focus On Financing

MyCommunity® Mortgage, The FHA Alternative…

Update: The down payment requirement has been reduced to 3%. With this option, at least one of the borrowers has to be a first time homebuyer (has not owned a home in the last 3 years). If a refinance, the mortgage being refinanced has to be owned by Fannie Mae. 

 

FHA has been and will always come to mind when thinking about home financing for first-time homebuyers. When HUD decided to change the MIP rules for FHA loans, the sought after program suddenly became less attractive. Soon after, Fannie Mae remerged with a competitive program designed to be used by first-time homebuyers to purchase a home and also for current homeowners to use to refinance. 

FannieMae-Logo

 

 

MyCommunity Mortgage Described

MyCommunityMortgage® (MCM®) is a conventional community lending mortgage that offers underwriting flexibilities to qualified borrowers who meet specific income criteria. Fannie Mae designed this program to provide lower rates due to lower risk-based price adjusments, and reduced mortgage insurance costs as explained below. 

Fannie Mae has made this program ideal for the home buyer who has a credit score of 700 or less, limited funds who will need to utilize a gift from a third party for their down payment, or if they want to use a form of an approved down payment assistance such as CalHFA’s CHDAP program.

Low Interest Rates Due to Low Risk-Based-Price -Adjustments

Interest rates remain low with this program due to minimal Loan-Level Price Adjustments (LLPA). LLPAs are the reason why an interest rate can differ from one borrower to another. For a standard conventional loan there can be price adjustments for certain risk factors such as credit scores and/or loan-to-value (LTV). MyCommunity® implemented a cap on these adjustments at .75% compared to 2% or even higher based on certain scenarios. 

Affordable Private Mortgage Insurance (PMI)

PMI is required for loans that have a LTV of 80.1% or higher (less than 20% down payment). When PMI is called on a loan the amount of coverage and the amount of the premium will be based on many factors, similar to the LLPAs explained above. MyCommunity® coverage requirements have been significantly reduced which will have a drastic effect on the cost of it. Reference below to the coverage amounts required by MyCommunity®.

MyCommunity® PMI Coverage Comparison

  • 90.01% – 95% LTV = 16% | Standard Coverage = 30%
  • 85.10% – 90% LTV = 12% | Standard Coverage = 25%
  • 80.01% – 85% LTV = 6%   | Standard Coverage = 12%

Loan comparison shown towards the bottom of the page.

Lower Down Payment Options

A common reason people don’t buy a home of their own is because they don’t have the money for the down payment. This program offers flexibility regarding where you can get the money from. You may get a gift for up to 100% of the down payment from a family member, employer or someone that you have a long term relationship with. MyCommunity® also offers the ability to combine an approved down payment assistance program such as CalHFA’s CHDAP program.

The following are the basic guidelines and notable features of this program:

  • 620 minimum FICO score (Mid score of all three or the lower if only two)
  • 45% Debt-to-income (DTI)
  • 100% of the down payment can come from a gift (family member, employer or Community 2nd)
  • Boarder income (income from roommates) can be used to qualify
  • The borrower’s income can not exceed 140% of the Average Median Income (AMI) in California (Surrounding Counties listed below)

Local County Income Limits:

  • San Bernardino – $84,980
  • Riverside – $84,980
  • Orange – $91,980
  • Los Angeles – $91,980
  • San Diego – $101,780

MCM Loan Comparison

 

 

 

 

 

 

Many banks do not offer this program and many Loan Officers don’t take the time to present and educate clients about all their options. If you want to work with a mortgage advisor who is always transparent and will not push you toward a couple of programs that they are familiar with or understand, contact me at (951) 662-3389.

Get a head start and fill out a loan application, click here to access my secured online application.

October 20, 2014 by · Leave a Comment

About Steve

Steve is an experienced Sr. Loan Officer & Mortgage Planner located in Rancho Cucamonga and serving the Inland Empire and surrounding areas. Steve prides himself at being transparent with all his clients using sophisticated tools and concepts to make sure the right program is chosen. Call Steve Chavarria at 951-662-3389.

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