by Keith Landis on May 8, 2012
FHA Mortgages allow borrowers to use Gift Funds to meet the 3.5% down payment requirement. When using Gift Funds to purchase a home it is important that Gift Funds be documented properly to avoid any issues with the FHA underwriting process. The primary intention of these rules is too make sure that the FHA borrower is not also borrowing their required 3.5% downpayment and that these funds truly are a gift.
Acceptable souces for these gifts
a borrower’s relative
a close friend with a clearly defined and documented interest in the borrower
a charitable organization
a government program that provides down payment assistance
How to accurately document these funds is as follows…
Are already in the borrower’s account
Then the lender must obtain
· a copy of the withdrawal document showing that the withdrawal was from the donor’s account · the borrower’s deposit slip
· bank statement showing the deposit
Are to be provided at closing, and are in the form of a certified check from the donor’s account
obtain · a bank statement showing the withdrawal from the donor’s account, and a copy of the certified check
Are to be provided at closing, and are in the form of a cashier’s check, money order, official check, or other type of bank check · have the donor provide a withdrawal document or cancelled check for the amount of the gift, showing that the funds came from the donor’s personal account
Reference
HUD 4155.1 Chapter 5, Section B 5-B-1
by Keith Landis on April 10, 2012
If you have Mortgage Insurance you CAN Refinance with the HARP program
If you currently have mortgage insurance and would like to refinance with the HARP program make
sure you contact a lender that is able to handle this request. Some potential HARP applicants have been running into roadblocks because they have been told that they cannot refinance with the HARP program if they are currently paying mortgage insurance. This isn’t true. As long as you meet the basic HARP eligibility requirements you can refinance with the HARP program if you have mortgage insurance.
How do I refinance with the HARP program if I have Mortgage Insurance?
The current mortgage insurance policy will transfer to the new mortgage. The loan officer will initiate this transfer for you.
First off, make sure you tell the loan officer that you currently have mortgage insurance on your current loan. This will enable them to take the necessary steps to coordinate with the mortgage insurance company and make sure this transfer occurs quickly and properly. If you know the name of the mortgage insurance company that will help the loan officer get a jump-start on initiating the transfer. If you do not know the name of the mortgage insurance company then we can determine this with a little bit of research.
Are there any additional restrictions I would run into due to having mortgage insurance?
Not as long as the mortgage insurance company agrees to transfer the mortgage insurance policy. So far we have seen no issues with these transfers. From a mortgage insurance company’s perspective, it makes sense for them to transfer the policy. By refinancing with the HARP program you will be improving your mortgage either by lowering the payment or shortening the term or both. This makes the mortgage easier for you to pay and a shorter term pays the balance down faster. These improved terms make the mortgage less likely to ever default and therefore less risky to the mortgage insurance company. It is in their best interest too for you to refinance using the HARP program.
I was told by another bank that I cannot refinance with HARP because I have mortgage insurance.
Many banks and mortgage companies that offer HARP do not offer HARP to borrowers with mortgage insurance. Different lenders have different policies regarding this. Our HARP program allows eligible borrowers with mortgage insurance to refinance.
Ok, what’s next?
If you meet the basic HARP eligibility requirements, then it is time to apply.
An overview of the basic HARP guidelines areas follows…
Overview of HARP Guidelines
- Only for mortgages currently owned or backed by Fannie Mae or
Freddie Mac
Check here to see if you have a Fannie Mae mortgage
Check here to see if you have a Freddie Mac mortgage
- no deliquent mortgage
Pennsylvania HARP Refinance with Mortgage Insurance
payments in the last 6 months and only a
total of one 30 day late payment is allowed in the last 12 months
- no cash out or paying off other debts allowed with this program
- no maximum LTV for new Fixed Rate Mortgages (based on credit score)
- 105% maximum LTV for those seeking a new Adjustable Rate
Mortgage through the HARP program
- first time HARP users only, if you closed a mortgage under previous
HARP editions, you can not apply for this new edition
- current home does not need to be a primary residence as long as the
home was first purchased as a primary residence
- any 2nd mortgages on property will have to be subordinated by the
current 2nd mortgage holder, this depends on the 2nd mortgage
holder agreeing to this
- if the current mortgage has monthly Mortgage Insurance, the new
mortgage must also have the same level of Mortgage Insurance
