Category Archives: Down Payment Assistance

The New FHA Reverse Mortgage For Purchase – January 2009

Reverse Mortgage For Purchase

Reverse Mortgage For Purchase

January 2009 HUD instituted a new program for Seniors (Age 62 or older) to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing.

The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc

A Reverse Mortgage main concept is to have NO MORTGAGE PAYMENT.  Now HUD is saying that Senior Citizens can buy homes or downgrade to a smaller home without ever making another mortgage payment as long as they live.

The Benefits

  • The Housing and Economic Recovery Act of 2008 gives Unprecedented Consumer Safeguards With No Credit or Income Qualifications.
  • Lower Fees than before
  • Never Give Up Title to Home!
  • Never Owe More than Home’s Value!
  • Never Have to Move
  • Never Make a Payment aslong as you live or sell/move the house!

An Example

Senior has $125,000 in equity but wishes to move.  REALTOR lists and sells departure home.  REALTOR writes contract on new $350,000 home by combining $125,000 down payment with $225,000 reverse mortgage purchase money:


SENIOR HAS NO MONTHLY PAYMENT!!!


Reverse Mortgages are now becoming more and more suitable for Seniors and with the New Reverse Mortgage for Purchase, A Senior Citizen doesn’t ever have to worry about losing the house or making another mortgage payment.

FHA Sweat Equity – Alternative to FHA Down Payment Assistance 411

FHA Sweat Equity

FHA Sweat Equity

Labor performed or materials furnished by borrower before closing may be considered as the equivalent of a cash investment.
Believe it or not FHA Sweat Equity Program has been around forever.  The idea behind Sweat Equity is a way to have the Seller Credit for Purchaser’s Down Payment through Labor or Materials being put forth into the house.
Sweat equity may be gifted subject to both gift requirements and additional requirements. 
  • Existing construction – only the repairs or improvements listed on the appraisal are eligible for sweat equity. Any work completed or materials provided prior to the appraisal are not eligible.
  • Proposed construction – the sales contract must indicate the tasks to be performed by the borrower during construction.
  • Borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his/her ability to complete the work in a satisfactory manner.
  • Lender must document the value of the labor through either the appraiser’s estimate or through a cost estimating service. 
  • Delayed work (on-site escrow), clean up, debris removal, and other general maintenance cannot be included as sweat equity.
  • There can be no cash back to the borrower in sweat equity transactions.
  • Sweat equity on a property other than the subject property being purchase is not acceptable. Compensation for work performed on other properties must be in cash and properly documented.
  • Sweat equity credit cannot exceed the estimated cost of the work or the materials.
  • Verification of source of funds used to purchase materials and market value of materials must be provided on any materials furnished by borrower.
  • Paid receipts for the materials should be obtained. 
  1. Buyers to get with the Contractors after an appraisal is done to lend “LABOR” to compensate for “Credit” towards down-payment.
  2. Buyers to paint the house or do some side jobs to help earn “Credit” for the “Labor”
  3. The Sellers will pay for the credit and can raise the sales price in order to compensate for the credit.
 

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411

 

FHA Cash to Close Savings Plan

FHA Cash to Close Savings Plan

 

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411
Borrowers are eligible to save cash to close during the construction period. The following criteria and documentation must be adhered to:
  • Borrowers must provide a written statement as to how they intend to save the funds to close.
  • A monthly savings plan that identifies the borrower’s savings plan for the funds needed for closing must be completed in its entirety.
  • This form must be included in the file submitted to Underwriting. The underwriter has the final decision of the borrower’s eligibility for this program.
  • The funds saved must be held by a disinterested 3rd party. The funds cannot be held by Wells Fargo, but can be held by Wells Fargo Bank.
  • Credit approval will be subject to the completion and verification of the approved savings plan.
  • Gift funds are not allowed after Underwriting has issued a credit approval; however, exceptions to this may be allowed on a case-by-case basis.
  • The underwriter must document the file accordingly. All funds must be saved in accordance with the approved savings plan.
The Cash to Close 411!
The FHA cash to close savings plan is a way to get pre-approved for a Construction loan being built without having the liquid assets at the time of application.  This is a great way to Buy Now & Save Later.

FHA Bridal Registry Account – Alternative to Down Payment Assistance 411

FHA BRIDAL REGISTRY

HUD allows couples who are planning to get married to establish a bridal registry savings account to help them accumulate the down payment necessary to purchase first home together.
Bridal Registry Account is also available for other situations where an individual or individuals typically receive gifts.
The following documentation and procedures should be adhered to when using bridal registry funds to document assets:
*The borrowers must open an interest bearing savings account with a financial institution supervised by a federal or state agency
*The borrowers are responsible for providing information regarding the bridal registry account and how it works to friends and family
*The borrowers must provide a register showing the names of all donors and the dollar amount that has been deposited into the bridal registry account

*There is no requirement that the bridal couple be married prior to closing the mortgage loan
*The borrower must provide bank statements verifying all deposits into the bridal registry account
*All donations were from friends and relatives that they do not have a financial interest in the transaction; and No donations made from participants with a financial interest in the transaction. (Participants include the seller, Home Mortgage Consultant, builder, real estate agent, etc.)
THE FHA 411
This is just another creative way to find financial assistance to the downpayment of future homebuyers.  What better way to ask for a donation towards your new house rather than getting another Blender or Toaster that you won’t need!  Perfect for First Time Home Buyers!