Tag Archive: down payment assistance

Oct 23

Mortgage Helpful Hint #6

Cash to Close

 We have already covered in Helpful Hint #2 that EVERY PENNY used at the closing must be sourced (show where it comes from).  Be ready for this well in advance. 

 If you show up at closing with a check drawn off of an account we have not verified then we can not close!

 We cannot accept CASH at closing, I had a guy show up with a briefcase full of cash once, did not close, took weeks to fix before he could close. 

The check you bring to closing must be drawn off YOUR account from funds we have sourced, made payable to yourself for the exact amount needed at closing.  It is okay if you bring too much, the closing attorney will refund the difference at closing.  It is not okay to be short on funds at closing.

 There are a couple of exceptions to checks allowable only from your account.  If you are selling a home right before buying another home is one exception.   Do not deposit the check you receive from the first closing unless there is plenty of time for it to clear (a week or more).  If you deposit more than $5,000 in your account there is a very good chance your bank will freeze your account until the check clears and they receive the funds from the other bank.  Your bank will not certify funds until they have them from the other bank.  Under this circumstance you should bring the net proceeds check from the first closing to our closing.

 BUT DO NOT assume the closing attorney preparing your deed and mortgage will accept an escrow check from another closing attorney they do not know.  If you intend to bring a third-party check to closing and endorse it over then we need to clear that PRIOR to our closing.  

 Another exception is when the buyer is receiving a gift from a blood relative, that check can be from the donor’s account.  But don’t wait until the last-minute, this is something that should be covered very early in the process.  If the donor proves funds from one account but writes the check from another…BOOM! Your closing will explode.

 Every Penny must be sourced if you are using a mortgage to finance the purchase.  Do you think I care if your money is buried in a fruit jar under your neighbor’s house?  Absolutely NOT.  These are Federal Regulations, not my rules.  All I am trying to do is help you get from where you are to where you want to go without stepping in a mess.  Call me before moving money around, not after.  I can’t fix something that is already messed up.   

Please link this page to any of your friends or family that are planning to buy or refinance a home.  They’ll be glad you did.

Jul 09

Searches Leading to The Hub

From POA to Me

Behind the scenes this web site tracks where my traffic originates and creates a list that shows what search terms brought them here.  Thousands of terms and phrases are on the list but a few dominate the top.  A few of the leaders are amusing, some are flattering (specifically looking for me) and a couple are disturbing.

Number one on the list and a winner by a long shot is Power of Attorney or POA.  It shows up more than twice as often as any other search, strange because I advise people not to use a POA if it is avoidable. 

The other words and phrases that head the list remain fairly constant over time with the top three staying the same month after month.  Searches for me personally slip back and forth between the fourth and fifth slots, rotating with the one that I find disturbing, Mortgage Fraud.  People actually search for “How to commit mortgage fraud.”  Good grief!

Here is the top five for the previous 12 months:

1.  Power of Attorney or POA

2.  Creditxpert

3.  Down Payment Assistance Kentucky

4.  Jim Simms

5.  Mortgage Fraud or How to commit mortgage fraud

Some of the phrases about fraud were alarming; many were questions beginning with “how to” while others were obviously worried about crimes they already committed.  

May 10

KHC Funds Down Payment Assistance Programs

I noticed earlier this week that KHC had funded two of the more popular down payment assistance programs.  Check Available Funds.

The Regular DAP must be repaid over a ten-year period at 6%.  It is provided in the form of a second mortgage loan up to $6,000, and can be used to purchase a home up to a price of $243,500. This DAP is NOT restricted to first-time home buyers.  Home buyers that recently sold a home but do not have enough funds to purchase another can use this program!

Home-DAP goes up to $4,500 and does not require repayment, it is forgiven over five years.  The ceiling price for homes when this program is being used is $195,700. 

Okay, here is how both programs can be used for maximum benefit.  The buyer can borrow the entire down payment and have the seller pay all of the closing cost and pre-paids. It is possible to purchase a home with less than $100.  The only reason any money may be needed is because the down payment could be an odd number and the DAP’s are made in $100 increments.  

Apr 23

Down Payment Assistance In Kentucky

Ever had a loan officer GIVE you money? I am not talking about a $100 knocked off of the closing cost but cold hard cash ranging from $4,500 to $10,000 for down payment!

We had another training session this morning regarding Kentucky Housing Corp (KHC) loans, this time a DE Underwriter helped with the presentation.  In addition to being a Direct Endorsement Underwriter for FHA she is also delegated to sign on behalf of KHC.  That can speed up the timeline in our shop by as much as a week compared to other lenders.

We talked a great deal about the different combinations using an FHA/KHC first mortgage with down payment assistance (DAP).  The DAP’s are in the form of a second mortgages, some forgivable over time and one that must be repaid.    Kentucky Housing DAP’s range from $4,500 to $6,000. 

This is how it works.

The first mortgage is an FHA/KHC loan for 96.5% of the purchase price.

The DAP is a second mortgage for 3.5% of the purchase price. 

The seller can pay all of the closing cost and pre-paids.

The borrower only needs to pay for an appraisal (unless the seller pays for that too). 

Inside scoop for you, I spoke to my source in Louisville Metro last week, they are expecting funding for their DAP program in July.  Last year it was $10,000 a pop plus another $2,000 for closing costs.  This program requires FHA home ownership classes so sign up soon if you want to grab this round.

 

Need Assistance with a Down Payment?

Visit my online application site or print and use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

 

Mar 06

KHC Home Buyer Tax Credit

Kentucky Housing Corporation (KHC) is making available a tax credit to home buyers throughout the Commonwealth.  The tax credit reduces the amount of federal tax a home buyer must pay to the federal government.  KHC provides the home buyer a Mortgage Credit Certificate (MCC) which reduces the amount of Federal income tax by a substantial amount.  The result is more available income to qualify for a mortgage loan.

The tax credits are not mortgages, or any kind of debt for that matter. In fact, the net effect provides the tax payer/home buyer additional cash flow that could be used to pay off the mortgage quicker.  One way this can be accomplished is to have your employer reduce the amount of tax dollars withheld from your regular pay check.  This move will increase your take home pay even though the gross income remains the same.

Under the current federal tax code the government allows a homeowner to deduct the interest portion of their house payment from their income when filing their tax return.  A deduction is different than a tax credit.  A deduction is a reduction of the amount of income that is taxed.  A tax credit is reduction of the amount of tax you owe, big difference.

The MCC is a tax credit equal to 25% of the interest you pay up to a maximum of $2,000.  If the amount of mortgage interest you pay during the year is $8,000 then the tax credit would equal $2,000.  You could still deduct the remaining $6,000 on your tax return. Let’s say that you still own $2,500 in taxes after taking the deduction, here is where the tax credit kicks in, the amount of tax owed drops to $500.

The MCC stays in effect for the life of the loan as long as you continue to live in the house.

In order to be eligible to apply for the program you must be a first-time home buyer or have not owned a home in the last three years.  The sale price of the home must not exceed $243,000.  There are also income limits, 1-2 person household income up to $83,400 and a 3-4 person household is up to $97,300.

Of course the home must be located in Kentucky.  Take advantage of this exciting program offered by KHC.   Low down payments, low interest rates and a tax credit, now that is a trifecta you can count on!

Buying a property in Kentucky and want to be pre-approved for a mortgage and or tax credit? Visit my online application site or printand use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

Apr 23

Down Payment Assistance

I just finished a report prepared from the notes for my book Invisible Money in Kentucky that will be published this summer.  The subject of the book is different methods of coming up with a down payment and closing costs.

There is still over half a million left in down payment assistance funds at KHC. 

 Looks like someone would grab some of that while it is still there.