Gift Funds | NC FHA Expert

Using Grants and Gift Funds To Buy A House In NC

April 15, 2012 By Eleanor Leave a Comment

Dreaming of a new home?? Are you a First Time Homebuyer, dreaming of the day when you can sit among your boxes, in your new home?

HUNDREDS of first time home buyers in Cary, Apex, Holly Springs are doing just that, and taking advantage of the now “famous” $8000 Downpayment Assistance program available through NC Housing Financing!

These same people are purchasing wonderful $300,000 plus priced homes using FHA Financing!

The North Carolina Housing Finance Agency, is advancing up to $8000 as a credit to buyers for their 3.5% downpayment. (of course there are some income qualifications, etc)

Here are some other ways you CAN obtain the 3.5% downpayment for FHA loans

Save it! if you have enough money in your IRA account, you might be able to borrow against the account (check with your employer) for your home purchase!
Tax Return Refund: If you are getting a refund from your taxes – use it to buy a house!
Gift: You can get a gift of the entire amount from family and friends, you can even use a BRIDAL REGISTRY to show who gave you the individual amounts!
Grant from your Employer: there are some pretty specific guidelines about this – but many businesses, and municipalities offer these programs!
Sale of an Asset: would you rather have a Bass Boat or a house? For some guys, it comes down to this!! (If you are thinking of this, please call us for details of how to document it!)

As you might know, you do NOT have to be a First Time Homebuyer to use FHA financing… but if you want to take advantage of the $8000 Down Payment Assistance from NCHFA, you need to be either a First Time Home Buyer, or you must not have owned a home in the last 3 years.

FHA does NOT have a maximum income requirement (like USDA), they do NOT have a geographical footprint (meaning you can only purchase some addresses, they only cap the maximum loan in each county)… Unlike VA loans, FHA does not require that the borrowers are married!!

Need more ideas?? You can also buy a HUD Foreclosed home for just $100 downpayment! There are TONS of options available. Don’t let the image of a very small piggy bank hold you back from owing a home!

If you have questions about purchasing a home in Cary, Apex or Holly Springs using a FHA mortgage, please call Steve and Eleanor Thorne, River Community Bank, 919-649-5058

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Filed Under: FHA Mortgage Loans, First Time Home Buyer Tagged With: $8000 tax credit, 8000 downpayment assistance, gift funds, gift registry at wedding, grant to buy a home, money from parents to buy a home, nc housing finance agency, nchfa

How to Buy Down A Mortgage Interest Rate

April 14, 2012 By Eleanor 2 Comments

With any mortgage program, you can pay discount points to have a lower “starting point” (interest rate) for your mortgage. This process is called “Buying the Rate down” and is often referred to as a Permanent Buydown. Although the formula varies, one discount point might buy the rate down 1/8 of 1 percent – two points (using this example) could buy your interest rate down by 1/4%.

Another way to buy your rate down is called a Temporary Buydown. With this scenario, a lump sum of money is placed into an escrow account for you at closing. A portion of the money is then drawn out by the mortgage holder each month and added to your monthly payments. The most common program to use the Temporary Buydown with is the FHA Mortgage Loan.

If your fixed rate mortgage is at 4.5% (for instance); you might opt to put an amount equal to approximately 2.6% of the mortgage aside. By establishing this “savings account” you could make monthly payments your first year based on a 2.5% interest rate, and the second year at a 3.5% interest rate. As you make your 2.5% payment, the mortgage holder takes the money out of your “savings account” equal to the other 2% of interest and applies it to your 4.5% mortgage payment. This account would be drawn down to zero at the end of the two years, and the payments would be at 4.5% for the remainder of the loan.

So, with interest rates at 4 and 4.5% (or less) in 2012 – you might not think this is a program most people are talking about… and you’d be right. Traditionally, we use this program when mortgage interest rates are at 6.5% and higher. But if you are a student just graduating from college, or a couple who is getting married, and buying your first house – you might be in a situation where you have some additional “gift funds” that could be used to make a mortgage payment a little easier to handle those first few years!

Added Benefit?? While we are not Accountants (read: Check with your Tax Preparing Professional), we understand even though the Seller, or whoever, is paying this “buydown” on your behalf – you get to claim it on your taxes. It’s Pre-Paid Interest on a House… so an extra $4500 deduction, could be N-I-C-E!

Bottom line, a Temporary Buydown is most popular if a buyer has extra fund for closing costs. For instance, if the seller is willing to pay some of the costs, and your company is paying part of the cost for relocation – the additional funds could be applied to a temporary buydown. With this option, you make lower payments during the first years of the mortgage, without the uncertainty of an Adjustable Rate Mortgage (ARM).

If you have questions about how a Temporary Buydown (or a permanent buydown) might help you buy a house in Raleigh – call Steve and Eleanor Thorne 919 649 5058 – we have the best rates, and we help people every day who want to buy a home! It only takes 15 or 20 minutes to get pre-qualified!

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Filed Under: First Time Home Buyer, Housing News Tagged With: 2-1 buydown, discount points, fha mortgage guidelines, first time homebuyers, gift funds, How to buy down a mortgage, mortgage buydowns, temporary buydown

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!