Deanna Valeo
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Escrow or Not Escrow and FHA SFH Limit now $303,750 December 12, 2011

  

 

Escrow taxes and insurance

First a quick FHA update - the new single family home limit is back to $303,750 through the end of 2013.  This is good news as our limit had fallen to just over $270K.  This will assure buyers with mall credit flaws an opportunity to get in their home.


Escrow or Not to Escrow... Often this is the question (we get from borrowers).

As a homeowner in Charlotte , your fiscal responsibility extends beyond just making mortgage payments. You must also pay your home's real estate taxes as they come due, as well as your homeowners insurance policy premiums.

Failure to pay real estate taxes can result in foreclosure. Failure to insure your home is a breach of your mortgage loan terms.

There are two methods by which you can pay your real estate tax and homeowners insurance bills.

The first method is to pay your taxes and insurance as the bills come due, usually semi-annually. Depending on your home's tax bill size and the cost to insure your home, these payments can feel quite large -- especially if you've failed to budget for them properly.

The second method of paying your taxes and insurance is to give your lender the right to pay them on your behalf, a process known as "escrowing for taxes and insurance".

When you escrow your real estate taxes and homeowners insurance, you pay a portion of your annual obligation to your lender each month, which your lender then holds in a special account for you, and disperses to your taxing entities and insurance company as needed. Lenders prefer that homeowners escrow taxes and insurance because, in doing so, the lender is assured that tax bills remain current and that homes stay insured.

Want a discount on your next mortgage rate? Tell your lender that you're willing to escrow.

To help calculate your monthly escrow payment to your lender, do the following :

  1. Find your home's annual real estate tax bill
  2. Find your home's annual homeowners insurance premium
  3. Add the two figures and divide by 12 months in a year

The quotient is your monthly "escrow"; the extra payment you'll make to your lender each month along with your regularly scheduled principal + interest payment. Then, when your tax bills and insurance premiums come due, your lender will make sure the payments are made on your behalf.

If you're unsure whether escrowing is right for you, talk to your loan officer and/or financial planner. There are valid reasons to choose either path.

Have a fantastic week and remember we are here for you.

The Valeo-Croy Team - Call today

Todd Croy - NMLS #91428 NC, SC (704) 488-7763
Deanna Valeo - NMLS #91421 NC, SC, VA (704)488-1421

Accessible | Program Expertise | On-Time Closings   

Due to new Federal Laws we are now providing a link to Mortgage News Daily average rates for mortgages - please see the note below regarding the rates listed.

http://www.mortgagenewsdaily.com/mortgage_rates/

**Please note the rates quoted are at the absolute best loan amount, the highest credit score and lowest LTVs allowed with a 1% origination fee and indicate the absolute lowest rate possible. You should use this list as a guideline and trend indicator and get a specific quote for your project (often it may be slightly higher).
  
                         

Facebook link: 
http://www.facebook.com/valeocroyteam?v=app_4949752878

The Valeo-Croy Team and New American Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for New American Mortgage to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 12/12/2011


If your new home has a septic tank and well beware when going FHA December 20, 2011

 

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"Everyone has a fair turn to be as great as he/she pleases. ~ Jeremy Collier 


When taking a listing or when buying a rural (or formally rural home)  it is good to know if it is hooked up to city sewer and water.  If it is not you may have some hurdles to overcome; especially if you are using a FHA loan.

HUD does require that all properties are connected to public water and sewer whenever possible. The full regulations are published in Mortgagee Letter 2005-48. But it is always good to remember that individual water supply systems (wells) and septic systems are acceptable under HUD regulations if the cost of connecting to public or community water and sewer systems is excessive. (Generally over 4% of the cost of a home purchase is the bench Mark used by lenders).

If the costs exceed that benchmark, the DE underwriter has the option to not enforce the condition to hook up to public water/sewer systems. FHA will accept the state/local distance requirements for well/septic systems as long as they are not less than 75 feet between the well and septic tank drain field. The minimum from the well to a roadway or property line of anything other than a single family home can't be less than 10 feet. These distances are regardless of the state and local requirements.

Please remember that the HUD standard requirement is 50 feet between well and septic, 100 feet from the drain field and 10 feet from the property line. Appraisers are no longer "required" to fully document the locations of well/septic systems. Each appraisal must be reviewed on it's own merits, locations of the well/septic systems and ability to meet the local, state and health authority guidelines. If in doubt, the waiver from HUD is the safest way to ensure that the property will be insured after closing and not kicked back due to well/septic not meeting HUD's guidelines.

CHECKLIST FOR WELL/SEPTIC WAIVERS

___1. Documentation from the local authority that the subject property is unable to connect to a public or community water/sewer system. If connection is available and the costs to the public or community systems are reasonable (4% or less of the property value), connection must be made.

___2. Professional sketch (Surveyor) showing the location of the well, septic tank, and drainfield with relation to the subject property and property line. The sketch must specify the actual distances separating the well and septic system components: well to property line, well to septic, and well to drainfield. HUD distance requirements: Well to Property Line 10 Ft, Well to Septic Tank ? 50 Ft, and Well to drainfield 100 Ft. (good to have a survey)

___3. Well test in accordance with Mortgagee Letter 95-34. This includes testing for Led, Nitrate (as Nitrogen), Nitrite (as Nitrogen), Total Nitrate/Nitrite, Total Coli forms, and Fecal Coli forms or E. coli. When coli form is present, how was the Coli form corrected?

___4. Evidence of the Local Authority's approval that the well and separation distances between the well, property line, septic tank, and drainfield are in compliance with the local codes for the subject property. If the subject property does not meet the Local Authority's requirements, a waiver granted by the Local Authority must also be submitted. When applicable, evidence that a well in the foundation, is acceptable and common to the area.

___5. Evidence that the system is working properly. And there is sufficient space for repair/maintenance.

___6. Holds Harmless agreement, a signed letter from the borrower acknowledging that the property does not meet current FHA/HUD regulations, and a waiver must be granted to obtain FHA insurance.

___7. Cover letter requesting waiver, FHA Case number, borrower's name, property address, reason for request; underwriter's name, address, phone number, fax number, and email address.

Please be aware, the reviewer of your file may require additional documents to make a final determination.


Have a fantastic week and remember we are here for you.  Merry Christmas & Happy Hanukkah: be with you next week!

The Valeo-Croy Team - Call today

Todd Croy - NMLS #91428 NC, SC (704) 488-7763
Deanna Valeo - NMLS #91421 NC, SC, VA (704)488-1421

Accessible | Program Expertise | On-Time Closings

Due to new Federal Laws we are now providing a link to Mortgage News Daily average rates for mortgages - please see the note below regarding the rates listed.

http://www.mortgagenewsdaily.com/mortgage_rates/

**Please note the rates quoted are at the absolute best loan amount, the highest credit score and lowest LTVs allowed with a 1% origination fee and indicate the absolute lowest rate possible. You should use this list as a guideline and trend indicator and get a specific quote for your project (often it may be slightly higher).
                           
Facebook link: http://www.facebook.com/valeocroyteam?v=app_4949752878

The Valeo-Croy Team and New American Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for New American Mortgage to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 12/20/2011


15YR FHA may be best with 22%+ equity - No Power Lines December 27, 2011

Deanna and I recently had a Realtor come to us with a FHA buyer interested in purchasing a new home in a subdivision.  Unfortunately the home we located within the fall zone of a high voltage power line tower.  Per FHA (also VA and USDA) rules this home cannot be financed by HUD.  Therefore we were unable to finance the property using FHA.  Fortunately the client had the 5% of their own funds for a down payment and we could go conforming.  

Remember as well the FHA loan limit is up to $303,750 (for anyone below 700 score this will be the best solution).  For refinances on 15-yr mortgages if the borrower has more than 22% equity FHA may actually be the better solution as FHA rates are much lower than conventional (15-yr FHA MTGs with 22% equity or more there is no monthly MI).

The FHA, VA and USDA rule is as follows:

OVERHEAD HIGH-VOLTAGE TRANSMISSION LINES

         No dwelling or related property improvement may be located within the engineering (designed) fall distance of any pole,tower or support structure of a high-voltage transmission line, radio/TV transmission tower, microwave relay dish or tower or satellite dish (radio, TV cable, etc.).  For field analysis, the appraiser may use tower height as the fall distance.

         For the purpose of this Handbook, a High-Voltage Electric Transmission Line is a power line that carries high voltage between a generating plant and a substation.  These lines are usually 60 Kilovolts (kV) and greater, and are considered hazardous.  Lines with capacity of 12-60 kV and above are considered high voltage for the purpose of this Handbook.  High voltage lines do not include local distribution and service lines.

         Low voltage power lines are distribution lines that commonly supply power to housing developments and similar facilities. These lines are usually 12 kV or less and are considered to be a minimum hazard.  These lines may not pass directly over any structure, including pools, on the property being insured by HUD.

Please be aware, the reviewer of your file may require additional documents to make a final determination.


Have a fantastic week and remember we are here for you.  Happy New Year: be with you next week!

The Valeo-Croy Team - Call today

Todd Croy - NMLS #91428 NC, SC (704) 488-7763
Deanna Valeo - NMLS #91421 NC, SC, VA (704) 488-142
1

Accessible | Program Expertise | On-Time Closings

Due to new Federal Laws we are now providing a link to Mortgage News Daily average rates for mortgages - please see the note below regarding the rates listed.

http://www.mortgagenewsdaily.com/mortgage_rates/

**Please note the rates quoted are at the absolute best loan amount, the highest credit score and lowest LTVs allowed with a 1% origination fee and indicate the absolute lowest rate possible. You should use this list as a guideline and trend indicator and get a specific quote for your project (often it may be slightly higher).
                           
Facebook link: http://www.facebook.com/valeocroyteam?v=app_4949752878

The Valeo-Croy Team and New American Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for New American Mortgage to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 12/27/2011