Fha Downpayment | NC FHA Expert

What Exactly Are Closing Cost?

October 25, 2009 By Eleanor Leave a Comment

If you are considering the purchase of a home, you know that there could be

Trying to Have Money Left Over After Closing?

a downpayment requirement (unless you are a Veteran, or you are purchasing in a rural area that qualifies for USDA Home Loan Mortgages)… and you might be aware that there will be “Closing Costs.” Your REALTOR might have mentioned that you are going to ask the Seller to pay some or all of those costs… but WHAT ARE THEY?

The Federal Reserve Board refers to them as “Settlement Fees.” They are, in fact the fees you pay to the various agencies and service providers who work to get the title of the home transferred into your name.

So, obviously there’s a credit report, and you pay for that. There’s an appraisal on the property, and a fee of @$375 for that (today). For a comprehensive list of the types of fees, click here.

IN GENERAL (this is just MY rule of thumb)… You will need to budget 3% of your home’s value in closing costs. You might have less – but you will generally have 6 months of taxes in escrow, and you have to pay your homeowner’s insurance a year in advance.

You might not need that much, but if you are a first time homebuyer counting pennies – I would rather come up with a few extra dollars at the end!

If you want to get Pre-Qualified for a mortgage in NC, call Steve and Eleanor Thorne, Professional Mortgage Planners! 919-649-5058

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Using 401K Funds for Downpayment on FHA

August 30, 2009 By Eleanor 1 Comment

FHA Home Loans require a 3.5% downpayment. There are not requirements that you purchase in a specific spot (like there are for USDA Home Loans) and you do not have to be a Veteran (like VA Homes Loans), but again, FHA requires you make a 3.5% downpayment.

If you want to use your 401K Account to access the money for your downpayment consider this:

401K Funds

With FHA, you can use 401K funds in the form of a loan or a withdrawal for required funds to close. We also use them quite often to simply document reserves with no intent to withdraw the funds. It can sometimes make a difference if your debt-to-income ratio is a little higher than the guidelines. If we use 401K funds for either source of funds to close or for reserves we still need to obtain proof of the terms under which funds may be withdrawn. Like the bank statements, provide all pages of the most recent statement that clearly shows your name, employer, statement period, any outstanding loans you have, vested balance, and the specific type of assets held in the account. I know this may sound like common sense but you would not believe how many people have sent me just a screen print snapshot from accessing their account online that has nothing on it to clearly identify who it belongs to.

When withdrawing funds to close, the proceeds check must evidence sufficient net proceeds (after penalty for early withdrawal and federal taxation) to close the loan when combined with other verified liquid assets.

When borrowing against an employment savings plan, a copy of the loan agreement and proceeds check are required. Also, it is important to note that loans against 401k or similar employment savings plans are not counted as an obligation in calculating debt ratio for an FHA loan

If you have questions about purchasing a home in Cary, NC using the FHA Mortgage Loan Program, please call Steve and Eleanor Thorne, Mortgage Planners, Cary, NC 919-649-5058. We have the Best Mortgage Rates!

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Filed Under: FHA Mortgage Loans Tagged With: best mortgages rates, borrowing from retirement funds, fha downpayment, fha home loans, first time home buyer, gift funds

Calculating Downpayment on FHA

September 24, 2008 By Eleanor Leave a Comment

For many years we calculated FHA downpayment by way of Acquisiton Cost. Now… that’s “out the window.” With the new “revisions” we calculated a “straight” 3.5% as reflected in the Mortgagee Letter below:

· Closing costs: Closing costs may not be used to help meet the minimum 3.5% downpayment requirement. Closing costs are not considered in the mortgage amount/downpayment calculation for purchase money mortgages.

This is a huge difference – and if you are working with a loan officer who is not familiar with FHA – you could end up at the closing table needing more money. Be careful!