July 6, 2020 at 4:15 pm #70096
I havent been able to reach my counselor and I am trying to figure out what I can or cant do.
Please see if you can answer the questions below
Would I be able to do a home that costs $450,000 (this is over my approved amount) if:
Annual Taxes are $10,356
The seller is willing to do 5% seller assist = $22,500
I put $25,000 of my own funds
My mom and my sister gift me $10,000.
I also wanted to know if the monthly payment exceeds my qualified amount but I have been showing payment shock for more than 6 months would I still be able to proceed with my request to get the home.
Thank you guys.July 6, 2020 at 4:45 pm #70098
A few things. First, the only way to answer this is to know your approved monthly piti (qualified amount). There are members who can qualify for this house without any seller assistance or buy down amount so having that monthly maximum figure is crucial…though for security reason I don’t suggest you post it here.
Second, unless you go with the 15 year wealth builder mortgage you are limited to buying down 5 points on your own or 22,500. Anything beyond that (10,000 gift and 2500 of your own = 12500) will go toward principle reduction.
Now if you receive a gift it needs to be documented, a LOE probably will be required, and it needs to be in your bank account at credit access…so think about doing it when you make your offer.
I’m not quite sure I understand your question about payment shock. Payment shock needs to be demonstrated until the day you close. Withdrawing funds to pay for the home inspection and the EMD are accounted for so don’t worry. As long as they see the same savings patterns you should be fine.
Lastly your MC will almost never respond to any questions regarding affordability because all the information to figure it out is provided to you and the MC is giving you the benefit of the doubt that you can figure it out on your own. Just google mortgage calculator, plug in the interest rate after buydown, $12,500 for down payment, 10356 for taxes, estimated insurance, HOA and that’s the monthly payment. If PMI is added then subtract that. I get in the $2500 to $2600 range.
For reference the interest rate reduction from the seller assistance lowered the monthly payment by $300 from over 2800 while the principle reduction lowered it another 40.July 6, 2020 at 5:38 pm #70100
Thanks Nelson but I thought that as a priority member I could buy down the interest rate up to .125? This was what my counselor told me in a previous email. I am not questioning my affordability because I know I can afford since I have been putting away the rest of it in payment shock. I am just confused on what they allow so I ask before giving any information to my agent. When they switched my counselors there was alot of confusion and I honestly still think there are some things wrong with my qualification and the amounts that they put on there but after 7 months of going back and forth I just didnt have the energy to do it anymore. I just wanted my qualification and figured I would buy down my interest where I needed to.
If I am putting away the amount in payment shock would it be considered?July 6, 2020 at 5:57 pm #70101
Your money is your money and can be used how you see fit. They don’t want you to use your entire savings but if you have the appropriate funds to make it affordable then the decision to use it is yours. So yes based on the figures you provided as long as the monthly payment is affordable you absolutely can carry out the proposed plan.
The 0.125 limit is a point of contention. I could be wrong but I think toward the end of 2019 or the beginning of 2020 priority members can buy 5 points on a 30 year and down to 0.125% on a 15 year. Non priority members I think are fully limited to 5 points? @ttrumble can better explain this is one aspect I am not an expert on.
July 6, 2020 at 6:51 pm #70106
- This reply was modified 1 month ago by Nelsont.
@Nelson does 1 point equals to 1 percent reduction? I am so confused right now. I remember my counselor said for every 1% of the purchase price I can reduce the interest rate by a quarter percent. Also is there a limit on the seller contribution?July 6, 2020 at 7:18 pm #70107
1 point in industry language is the increment the bank decides to lower the interest by. It’s just easier to speak in terms of points because industry wide the value of a point as well as the cost of the point is very fluid and not at all consistent. One bank might charge $1000 per point and each point is 0.15% rate reduction another bank might charge 3000 for 0.2% reduction. They both might change with the tides.
Bank of America’s contract with naca states 1 point will equal a 0.25% rate reduction and cost 1% of the purchase price of the house or in your case every 0.25% reduction would cost $4500.
The seller can contribute up to 10%. Not to be confused with points.July 6, 2020 at 8:24 pm #70108
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