Gift Funds Yet To Be Received:

1. Provide executed gift letter. If you have applied for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower's signature.

2. The gift must be in the form of a cashier's check or certified check. The donor's name must be printed on the check (example - Donor: John Doe). A Cashier's check is preferred. None of the gift money 3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account. Within three weeks of settlement, please send us a full copy of your bank statement showing the gift deposit. If it is unlikely that you will receive your statement in time please provide a letter from your bank (on bank letterhead and signed by bank official) stating the following:

- deposit amount - account number

- deposit date - new account balance amount

4. FHA ONLY - Donor's ability must be verified by receipt of a copy of their most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru and unsecured loan.

Gift Funds Already Received:

1. Provide executed gift letter. If you are applying for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower's signature.

2. Provide, from the gift donor, a copy of the front and back of the canceled gift check or a copy of the gift donor's full bank statement evidencing the withdrawal amount matching the actual gift amount.

3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account. Within three weeks of settlement, please send us a full copy of your bank statement showing the gift deposit. If it is unlikely that you will receive your statement in time please provide a letter from your bank (on bank letterhead and signed by bank official) stating the following:

- deposit amount - account number

- deposit date - new account balance amount

4. FHA ONLY - Donor's ability must be verified by receipt of a copy of their most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru and unsecured loan can be received in cash from the gift donor.

A credit report is required on a non-purchasing spouse residing in a community property state or when a property to be insured is located in a community property state. A valid and reliable verified credit profile of the non-purchasing spouse must be established and their debts included in the borrower's ratio unless the lender can document, as regulated by state law, that the obligations may be excluded.

Although the non-purchasing spouse's credit history is not to be considered a reason for denial, it must be obtained in order to determine the debt-to-income ratio of the borrower. If there is an indication or discrepancy regarding the non-purchasing spouse's social security number or credit status the lender, remains responsible to exhaust all possible means to resolve the issue through direct contract with the Social Security Administration, a service provider with direct access to the Social Security Administration and/or the credit reporting agency.

The spouse's release to order and receive a credit report must be obtained by the lender. If the non-purchasing spouse refuses to provide authorization for the credit report, the lender would be unable to establish the borrower's liabilities, thereby making the loan uninsurable if it is not closed in accordance to FHA's rules, regulations, policies, procedures, and guidelines.

Here's a snap shot of a local deal this week.

Sales Price:  230,000

Down Payment: 46,000 (20%)

Loan Amount: 184,000

Credit Score: 796

Program:  7/1 LIBOR ARM 5/2/5 Caps

Rate: 3.25% with 1% Loan Fee

APR: 3.367

More than likely this roof will need to be cleaned prior to closing.  Not only will the homeowner/seller incur the cost of the cleaning the roof, but also a re-inspection fee to verify the work has been completed.  Re-inspection fees generally run around $75-$100.  Plus treating moss will extend the life of the roof.

Conventional Loans 

The Homeowner's Protection Act (HPA) of 1998  

What Loans Are Covered? 

Generally, the HPA applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. This new law does not cover VA and FHA government-guaranteed loans. - see below 

How Do You Cancel or Terminate PMI?

Cancellation

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Automatic Termination

Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

FHA Loans:

Canceling FHA's Annual Mortgage Insurance Premiums

Cancellation based on Initial Amortization Schedule:  Effective for all loans closed on or after January 1, 2001, FHA's annual mortgage insurance premium will automatically be canceled-once the unpaid principal balance, excluding the upfront MIP, reaches 78 percent of the lower of the initial sales price or appraised value based on the initial amortization schedule and pursuant to instructions contained in ML 00-38.  Although the annual mortgage insurance premium will be canceled as described, the contract of insurance will remain in force for the loan's full term.  This mortgage insurance premium cancellation provision applies only to loans insured under the Mutual Mortgage Insurance (MMI) fund.  The MMI fund does not include mortgages on condominiums or Section 203(k) rehabilitation loans, among others. 

Once the mortgage amortizes to a loan-to-value ratio of 78 percent, collection of the annual MIP will cease.  FHA will determine when the mortgage reaches the amortized 78 percent loan-to-value threshold based on the contract interest rate (initial note rate on adjustable rate mortgages) and the loan-to-value information provided to CHUMS by the originating lender, and will cease billing the servicing lender accordingly.  FHA's calculation of the 78 percent threshold will be predicated on the loan amount excluding the upfront MIP. 

Effective May 1, 2001, FHA will provide the date at which the annual MIP will end.  The cancellation date will be available to lenders via the Case Query Screen located in the FHA Connection Single, Family Origination section and the Portfolio and Advance Notice reports located in the FHA connection SF Servicing section.  Lenders utilizing HUD's Frame Relay will be able to obtain the same information through the Portfolio Report and Advance Notice applications. 

Borrower Initiated Cancellation:  In addition to mortgages that reach the 78 percent loan-to-value ratio threshold through initial scheduled amortization, borrowers can also request through their lenders cancellation of the collection of the annual mortgage insurance premium for those mortgages that reach the 78 percent threshold in advance due to prepayments (principal curtailment).  Those loans reaching the 78 percent loan to value threshold sooner than projected (but not sooner than five years from the date of origination except for 15-year term mortgages) due to advanced payments of principal will have the annual premium collections canceled upon the servicing lender submitting supporting information to FHA following the borrower's request provided that the borrower has not been more than 30 days delinquent on the mortgage during the previous twelve months.  As part of their annual disclosures to homeowners, servicers are to notify borrowers of their option to cancel the annual MIP in advance of the projected date by making additional payments of mortgage principal.  As stated in ML 00-38, the 78 percent threshold will be predicated only upon the initial sales price or appraised value, whichever was less.

 Effective May 1, 2001, FHA will also provide the amount the loan balance must reach in order to cancel the annual MIP.  FHA will determine the loan balance at which the 78 percent threshold is met by excluding the upfront MIP.  The required loan balance data will be available to lenders via the Case Query Screen located in the FHA Connection Single Family Origination section and the Portfolio and Advance Notice reports located in the FHA connection SF Servicing section.  Lenders utilizing HUD's Frame Relay will be able to obtain the same information through the Portfolio Report and Advance Notice applications.  Servicing lenders should use the formula provided by SFPCS-Periodic described in Mortgagee Letter 98-22.                                           ​                                                  ​                                                  ​    

HUD will increase the annual portion of the FHA Mortgage Insurance Premium for case numbers assigned on or after April 18th, 2011.

In this example of a $163,000 purchase, the monthly payment increase is $33.00 per month.  Now is a great time to buy...  More inventory, great mortgage rates, and lower FHA mortgage insurance rates! 

2011 Property tax rates for Pierce County are now available online.  Did your property taxes go up or down?

 Click here to find out:  http://epip.co.pierce.wa.us/CFApps/atr/ePIP/search.cfm

When applying for a home loan, one item that will be requested is a copy of your one or two most recent bank statements.  Ever wonder what the underwriter (person who says yes or no on your loan) looks for on your bank statement?  First they will make sure it's the actual bank statement.  Not an Internet print out.  The statement should have your name, account number and the bank logo on it.  Also if there are four pages to your statement, you will need to provide all four pages, even if page 4 is blank. 

Once the underwriters is comfortable it's the actual statement, they will look at the ending balances from the previous statement and compare it to the new ending balance.  Is there a large difference between the balances?  If so, be prepared to document and explain any large deposits.

A good idea is to scan through all the deposits and see if they can be explained by the notations.  Like a payroll deposit, or social security deposit etc.  In this example, you will see a deposit of $1,250.00 on 4/15 which is a direct deposit.  By providing a copy of your recent paycheck stub to match the deposit will provide proof of it's origin.  If you see a transfer in from another account, be prepared to provide that statement as well.  If you see any deposit that's not explained, be prepared to verify and document the source. 

If you are planning to purchase a home in Tacoma, WA in 2011, we can help with your mortgage pre-approval.  Visit us online at http://www.alltechmortgage.com