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Monday Morning Mortgages>
FHA Departing Home Rules, Impounds, Dream Maker
January 30, 2012
FHA Departing Residence Rules
With the low prices and rates, this is a good time for home owners to move on up in the market. But FHA owner occupied financing lenders don’t like to lend on a new purchase when the departing residence is upside down on the mortgage, since the buyer may be anticipating bailing on one’s departing residence after buying the new home. But there are lenders who will do it, provided the reason for moving is acceptable to the lender. These are the most acceptable reasons for buying a new home when one owns and upside down departing residence.
• Buying a larger home due to increase family size
• Buying a home closer to work
• Buying a home closer to better schools
• Buying a home the better fits the changed physical needs of the buyer
Imounds
Impound accounts are set up by lending servicers for mortgages by collecting monthly funds from borrowers and managing the payment of property tax and insurance. This account is also called an escrow account. Having an impound account in place reduces the risk to the lender. It ensures that the primary tax lien will paid on time along with the insurance that protects the home. Impound accounts help manage cash flow for buyers too as they don’t have to come up with tax and insurance payments during the year.
Here are some details about impound accounts.
• Conventional loans require impounds for LTVs > 89%
• FHA & VA always require impounds
• Some lenders add a price to points for waiving impounds
• Factor used for purchase transactions on property tax is 1.25%
• Refi transactions uses current tax roll
• Hazard insurance is based on insurance declaration page
• Loan funding month determines how many months of taxes will be collect. So a loan closing in February might only require 2 months of impounds, whereas a loan closing in September will require 9 months of impounds at closing.
New Down Payment Assistance for Military and Military Employees
The Dream Maker grant program is a down payment assistance program for active military personnel and employees of the military, Homeland Security and the Department of Defense. Dream Maker will match the buyer’s contribution up to 3 times to a maximum of $5,000. So if the buyer contributes $1,500, Dream Maker will contribute $4,500. This is grant, not a loan (no payback required), and is used with FHA or VA financing. Here are the restrictions.
• Must be first time home buyer (not on title in last 3 years)
• Gross household income is limited. For Sonoma County, $44,950 for household of 1, $51,400 household of 2, $57,800 household of 3, and $64,200 household of 4
More information is available at
http://www.pentagonfoundation.org/site/PageServer?pagename=dream_index
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