Home Buyer Q & A
July 16th, 2012
- We are interested in refinancing our home. We have a first and second mortgage. The second mortgage was part of the original purchase. We have refinanced since. When we refinanced, we increased our equity line from the original. We understand our mortgage is serviced by Fannie Mae, does it pose an issue with the refinance? Your mortgage is serviced by Fannie Mae, confirmed via the website. The first and second may be combined into one loan as long as the second mortgage was, what we call, part of the purchase money transaction. When you refinanced and the terms were changed, the second is no longer considered purchase money and would not be eligible to combine in the refinance. Another option would be to do an 80% cash out refinance of the first mortgage and reduce the equity line as much as possible. Or depending upon equity position, we could refinance the first mortgage as a refi plus and keep the second mortgage in place as is.
- We are looking at purchasing a new home. We own our existing home, but we have had an offer on it. The offer is for owner financing, which means there would be an initial down payment, then the payments would be made to us and the mortgage would still exist as is. You had pre-qualified us without this mortgage. Would this satisfy our issue? If the existing mortgage stays in tact, and I have pre-qualified you without the mortgage, then no, this does not satisfy the requirement. As described, you are creating a notes receiveable. You must have income from the note for 12 months before it can be included as income, the income that would offset the payment. The income must continue for at least 36 months as well to be included.
- We have found a home we would like to purchase. We have a large insurance settlement. We have been taking income for about 12 months regularly, and we want to use the same money as our down payment. We have been told we can do this. Any advice? You can do this, of course, there are some things we need to do and parameters we need to stay within to meet investor guidelines. You should provide 12 months statements showing a consistent income being taken from the account monthly. Ideally, it should be set up as an automatic payment to you monthly. After we determine down payment, we then need to make sure there is enough remaining money to continue payments to you for a minimum of 36 months, or the income cannot be counted.
- We purchased an investment property with cash. We have renovated it and will be renting it out. We used our equity line on our home and would like to reduce the line and place the debt against the actual property. Can we do this? Yes, as long as you have owned the property for at least six months. A cash out refinance on an investment property can be obtained for 75% of the appraised value.
- Jennifer Keenan, Senior Mortgage Consultant, NMLS# 101837, Tidewater Home Funding 757-366-8690