Posts

Legal Sources of Funds; FHA Purchase to $800,000

I received the following questions from a very seasoned agent last week: “I have a 3.5% down offer for $795,000 on my desk – A. Does FHA even go that high; and B. What are the legal sources of funds for a down payment and closing costs?” MAX FHA LOAN AMOUNTS In “high-cost areas” (most […]Read More

8 Ways To Lower Debt Ratios & Qualify for More

We repeat this topic from time to time because “Debt Ratios” weigh so heavily in our pre-approval process and because tight debt ratios so often prevent borrowers from buying the property they want. I explain what debt ratios are and how we calculate them in this past blog. 8 Ways to Lower Debt Ratios: #1 – Put less […]Read More

Don’t Deposit Gift Funds, Please! (Straight to Escrow)

It is well-known that buyers can use “gift funds” from a relative to help with the purchase of a home. But, we want to again remind buyers to not deposit gift funds into their personal accounts. Buyers should instead tell their “donors” (aka “gifters”) to hold on to their funds and to instead deposit all […]Read More

8 Ways To Lower Debt Ratios & Qualify for More

I repeat this topic from time to time b/c “Debt Ratios” weigh so heavily in our pre-approval process and b/c tight debt ratios so often prevent borrowers from buying the property they want. I explain what debt ratios are and how we calculate them in this past blog. 8 Ways to Lower Debt Ratios: Put less money […]Read More

The New Millennial Housing Market

Millennials made up 34% of the housing market in 2017. They were the largest group of homebuyers that year, with 66% of them being first-time buyers. That means nearly half of all millennial buyers are already in the housing game and have bought and sold more than one property. Those who couldn’t count themselves in […]Read More

Post-Close HELOC to Reclaim Liquidity; 90% CLTV

We often encourage buyers to put down 20% or more not just to avoid mortgage insurance, but also to make their offers much stronger and to allow us to close in 17 days (80/10/10 financing with two loans requires 21 days). Buyers are often reluctant to deplete their liquidity, borrow from 401ks, or access gift […]Read More

Cash to Close – Part 27; Beating The Dead Horse Again

We hit this often but it is the cause of so much confusion and delay that we are addressing it again. Lenders need to carefully estimate how much cash will be necessary to close (for closing costs, reserves and down payments), and they need to fully educate borrowers in regard to “cash to close.” Most […]Read More

Rules For Gift Funds

We have a few borrowers right now navigating the best way to receive gift funds, so we wanted to provide a few reminders. Gift Funds – a Few Rules of Thumb For FHA Loans – An entire down payment can be a gift. FHA Gifts must be “sourced;” this means that the donor or “gifter” […]Read More

Converting “Cash” to Down Payment Funds – Gifts

We frequently have borrowers with substantial sums of cash that they want to use for a down payment. They cannot simply deposit the funds in escrow or into their bank accounts b/c lenders will want to know where the money came from. Lenders prohibit the use of un-sourced and unseasoned funds in all transactions. Buyers […]Read More

Gift Funds Should Go Straight to Escrow, Not Into Bank Account

We are seeing buyers use gift funds more often than ever lately. This is a reminder that it is much easier if borrowers wait until they are in escrow before receiving gift funds. The funds can then be deposited by the donor or “gifter” directly into escrow. For conventional loans, when gift funds are deposited […]Read More

Realtor Commissions Credited for Closing Costs & Down Payment (Gift)

Realtors can credit their commissions toward recurring and non-recurring closing costs. This is well-known. What many Realtors do not know is that they can “gift” all or a portion of their commission towards a down payment as long as the buyer is a relative. Almost anybody can be a relative, however. Jay Voorhees Founder/Broker | […]Read More

Almost Anybody Can Be a Relative for “Gifting” Purposes

We repeat this often b/c such a large proportion of our borrowers purchase properties with “gift funds” for down payments and closing costs. A “donor” or a person gifting funds can be almost anybody, including an aunt, an uncle, a sibling, a parent, or a grandparent. Lenders do not verify the authenticity of the relationship. […]Read More

Using “Realtor Commission” As Gift for Down Payment

Realtors writing offers for relatives can credit their commissions as “gifts” for down payments. We have a pre-approved borrower right now with limited down payment funds. Her daughter is a Realtor, however, and she is going to “gift” her commission to her Mother to be used towards most of the FHA down payment. Realtors can […]Read More

“Seasoned Funds” Revisited; Looking for Seasoned Funds

We defined and addressed “Seasoned Funds” in Monday’s comments, and our trainer astutely pointed out that we missed a couple of significant sources for “Seasoned Funds.” This is especially important during tax season. This is also important b/c some loans (Investment property loans for example) allow for no gift money. Below is a list of […]Read More

100% “Gift Funds” OK for Conventional Now

FHA allows 100% of a down payment to be from “gift funds” from a relative (parent, sibling, aunt, uncle, etc.). Fannie Mae (conventional lending) used to only allow 100% gift funds if the down payment was equal to 20% or more of the purchase price. If a down payment was less than 20%, at least […]Read More

Gift Money Revisited: Parents, Siblings, Cousins, Fiancé

We remind borrowers in need of more down payment funds that they can access “Gift Funds” from almost any relative, including cousins and even a fiancé (we recently learned). Lenders do not actually verify that a donor is a relative, so there is much leeway with respect to making a person an “eligible” donor. Remember […]Read More

FHA Offers Need to be Held in Higher Esteem

We frequently have lunch with competitors to find out what is going on in the industry; we like to make sure there is not some technology, market segment or manner of business that we are ignoring. It usually turns out that we are ahead of the game. Our most recent lunch was with a very […]Read More

Fed “Stimulus”; Gift Funds for Down Payment

The Fed announced their $600 billion stimulus yesterday. They plan to buy up $600 billion in bonds to further reduce rates and to flood the economy with more dollars. Reactions were mixed yesterday (rates bumped up a bit) b/c this action could prove inflationary, and inflation fears push rates upward. GIFT FUNDS can be used […]Read More

Gift Funds – Reminders

When a buyer is receiving “gift funds” from a relative for a purchase, it is imperative that the funds go straight to the Title or Escrow Company. We beat this dead horse often, but we continue to get buyers who have received gift funds into their own checking accounts, creating “paper-trail” nightmares. GIFT FACTOIDS: (1) […]Read More

2nd “Wave” of Foreclosures; Gift Funds Again

1 million foreclosures are expected this year in the so-called “2nd wave”. This one is supposedly caused by unemployment and it involves more “A Paper” loans instead of “sub prime”, but it remains our observation that it is “negative equity” that sparks the most foreclosures. The upside to all the foreclosures: All of these houses […]Read More

The Beauty of Gift Funds; Gift Funds Explained

Gift Funds for Down Payments are often employed to salvage transactions. Gift Funds for FHA transactions need to be sourced at the DONOR level, meaning the Donor must prove her “ability to gift” with bank or investment account statements. For Conventional Transactions, however, we have lenders that do not require Donors to “prove their ability […]Read More

Sources of Funds for Mortgages – ALL Are Necessary

It is important to understand that there are multiple channels for mortgages, and access to ALL of them is essential. HARD MONEY: These are pools of money primarily from private investors. They focus mostly on investment properties. They also focus on equity (LTVs), over and above a borrower’s credit quality. PORTFOLIO LENDERS: These are lenders […]Read More

Gift Funds Again; FHA – 5% Down Payment?

Once again we have a slight funding delay because the buyer simply deposited her gift funds (from her sister) without getting a copy of the check or keeping a copy of the deposit slip (she had forgotten our previous instructions). In any case, when a buyer needs gift funds to close, it is always best […]Read More

Do Not Deposit Gift Funds – Gifting Parties Should Hang On to Their Funds

If your client is going to receive a “gift” from a family member for a down payment or closing costs, it is not advisable to have the “gift funds” deposited into your client’s bank account. It is far better and easier to have the gift funds deposited directly to escrow. The gifting party should just […]Read More

Gift Funds for Down Payment

We are getting frequent questions with respect to GIFT FUNDS. For a Conventional (Non-FHA) Purchase, Gift Funds do not need to be seasoned, and it is best if the Gifting Party does not gift the funds to the buyer; it is best from a paper trail and underwriting perspective if the Gifting Party writes a […]Read More