Posts Tagged “FHA gift”

If you’re getting married and plan on a Bridal Registry, there’s good news for you.
You can set up a ‘Downpayment Registry’ and have family and friends dump some cash in there for you which can later be used towards the FHA required Downpayment on a Home! This isn’t a new program at all; . ..it’s been around since 1996
But homebuyers are taking advantage of it m

ore these days due to the difficulties involved with putting enough money away for a home purchase in this tougher economy. In fact in 1997 HUD came forward with further clarification which streamlined the program.
Here are the essentials:
(i) Open a ‘Downpayment Bridal Registry’ called a ‘Bridal Registry Account’ Bank account. This account is a custodial savings account where all deposits made are used to fund the down-payment on a home.
(ii) Give your family & friends the account information.
(iii) Even cash deposits into that account are acceptable!
(iv) You don’t have to use ALL the money that ends up in the account towards your home purchase.
(v) You don’t even need to be married before you close on your home to use the money that accumulates in that account.
(vi) The typical FHA restriction of sourcing of funds whereby the relationship between the homebuyers and the Gift-Giver, proof of where the funds came from and other annoying procedures, are bypassed. All that’s needed is a Lender & Borrower certification! Cash is fine too!
(vii) The only folks excluded from being able to deposit money into that account are those that are party to the transaction.
(viii) Good news for those single homebuyers also! This convenience isn’t just for people getting married. The FHA allows their gift registry to be used for any other ‘special’ occasion for which gift funds might typically be received by someone including Graduations, Birthdays and so on.
Contact the featured Loan Officer or Real Estate Agent on this Blog for more details!

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Client called today with a not-so-unusual scenario. They had been declined by a Bank on this . .
They lost their home in foreclosure 5/29/2008, filed Bankruptcy in 10/2008 and the BK was discharged 6/4/2009.
In their Bankruptcy filing their attorney had listed the balance of the foreclosed-on mortgage. The bank denied their loan stating that the filing of the BK to include the mortgage made it to where 3 yrs had to expire from the BK discharge date.
Can they qualify for FHA financing now ?
The answer is:
The bank is wrong.
The three year time-clock to satisfy the ‘seasoning since foreclosure’ requirement of FHA, begins from the date of the Trustee sale (or in Judicial Foreclosure states such as Oklahoma, from the Court ordered sale date) -Well this client is past that 3 yr period (5/29/08).
The fact that the BK included the deficiency balance of the foreclosure (which would have prevented the Lender from trying to collect on it) doesn’t negate the 3 yr seasoning.
The BK is 2 yrs old (from Discharge date) and therefore they are eligible for FHA financing. :)

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The majority of transactions involving financing are ‘arms-length’ transactions where Buyer and Seller are strangers and have had no previous relationship.
However, often a parent wants to sell to their kid, or a similar family-2-family sale happens where the buyer has no money for a standard FHA downpayment (3.5%). Is there a way for the buyer to take out a new FHA loan and use equity in the home to cover their downpayment requirement? (assuming equity exists) . . .

The answer is yes, with restrictions.

We are limited to 85% LTV if the Donor (person Gifting the equity) is not presently using the home as his/her principal residence. In this instance, the home has to have 15% equity or more if the buyer has no money for a cash downpayment.
However if the donor/family member presently lives in the home then we can go to 96.5% with just a 3.5% equity or cash downpayment requirement.
It gets even better. Even if the donor has NOT been living in the home as his/her principal residence, we can still reach 96.5% financing if we can document that the Borrower (ie the person receiving the gift of equity) has leased the home for at least the past 6 months.

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