Mortgage News

Home Buyer Q & A

April 9th, 2012

  • We have been told we can help our child purchase a home through the FHA Kiddie Condo program. The house needs some repairs, could we do an FHA 203(k) as part of the purchase instead?  Unfortunately not. FHA will not allow for use of the 203(k) program as part of a kiddie condo purchase.  I am purchasing a condominium. I have just heard that the condo association is in litigation. Does this affect my financing? It depends. The litigation needs to be reviewed by an underwriter to determine if there is any risk to financing your ownership in the property. In other words, does the litigation put your property at risk? If the suit is lost, would your property be in disrepair?
  • We are interested in refinancing. Our home is worth about 770,000 and our mortgage is around 530,000. The problem is our middle score is in the high 600 range. Do we have any options?  When you start talking about jumbo money, the guidelines change. Most programs will only allow you to refinance up to 75% of the value of your home and require a 720 middle score. Our professionals program expects a score of 700. We do have one investor that will allow for a 680 middle score, but the maximum is 65%. We could either work together to improve your credit score to give you other options, or we would need to consider reducing the balance to meet the program that would be available to you.
  • We have a second home but treat it as an investment property on tax returns. We want to refinance the property but believe we are upside down. Do we have any options?  Possibly. First, if on your Schedule E you indicate you do not spend more than 10 days in the property a year, then we have to treat as an investment property. Next we check to see if the loan on the property is service by either Fannie or Freddie. If serviced by one or the other, a relief refinance is possible.
  • We have an second home, but for tax purposes, we say we do not use it as a second home. Can't we treat it as a second home for financing purposes? Nope, sorry. Things have tightened up so much. If you report a property as an investment to the IRS to enjoy the tax benefits, then for our purposes it is investment as well. How would we know the difference? We will request copies of your Schedule E as well as request tax transcripts from the IRS. Most investors require transcripts, it used to be a quality control measure. It is now a fraud prevention measure. So, we can't have our cake and eat it too.

- Jennifer Keenan, Senior Mortgage Consultant, NMLS# 101837, Tidewater Home Funding 757-366-8690