Orange County, CA first time home buyers need to be aware of how a taxes and insurance impound account works on an FHA loan, and how it affects their total mortgage payment. An impound account for property taxes and home owners insurance is required on FHA loans. (It is also required on VA loans.) An impound account, also known as an “escrow account”, is essentially a forced savings account held by the lender on the FHA borrowers behalf.

The Amount Collected for Taxes Depends on the Month the FHA Loan Closes

Property taxes in California are paid twice a year, in 2 six month installments. The first half taxes are due on February 1 each year and cover July 1 through December 31. Second half taxes are due February 1 and cover January 1 through June 30. The amount collected at closing to set up the new impound account is dependent on the First Payment date shown on the loan documents. For example, a loan closing in the month of August, lets say August 30, would have a First Payment date of October 1. According to the chart shown below, loans with a First Payment on October 1 should have 8 months taxes deposited into the impound account.

Since the purpose of the impound account is to make sure property taxes are paid in a timely manner, the lender needs to make sure there is enough money in the account when taxes are due. If we assume a loan closes on August 30 and will have an October 1 first payment, then the lender needs to make sure there is enough money in the account only 30 days after the first payment to cover the first half tax installment, due November 1.  But the lender will also need to make sure enough funds will be in the account three months later to cover the second half installment. Impound accounts are regulated by law and lenders are allowed to have up to a two month “cushion” to help prevent a shortage of funds in the account.

This all sounds confusing, but is necessary in order to keep the borrower from getting a surprise when property taxes are due. (The surprise may come in the way of “supplemental property taxes” in the first year after a purchase.)

Home Owners Insurance is also deposited to the impound account. At closing a one year premium is paid, but the equivalent of two months property taxes is also deposited into the impound account. This ensures there will, or should, be enough money in the account 1 year later to renew the insurance.

Orange County FHA Buyers Need to Budget for the Impound Account

Orange County home buyers using FHA or VA financing need to budget for the funds required for the impound account. Both FHA and VA guidelines allow for the seller to pay for the set up of the impound account, which can be the best solution for Orange County home buyers who have saved for the down payment and not closing costs.

It is important to contact an Orange County FHA or VA lender who can prepare customized loan scenarios which will show estimates for not only the amount of funds required to buy a home, but also will give a full breakdown of the purchase price, loan amount, and payment.

Authored by Tim Storm, an Orange County, CA  FHA and VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

Interest Rates for Orange County are at All Time Low's

Interest rates are at all time lows currently.  While many people can't refinance because they have lost too much equity in their home, there are plenty of Orange County home owners with plenty of equity in their home. They are able to take advantage of low rates, provided that can provide all the necessary income and asset documentation that it takes to get a loan these days. There are several programs available for people with little or no equity as well, including Fannie Mae's Home Affordable program, FHA Streamline Refinance program , and VA's Interest Rate Reduction Refinance . The FHA and VA programs do not even require an appraisal, while the Fannie Mae program will allow borrowers to refinance, even if they are at 125% of the properties value. Most Orange County lenders will only allow a refinance up to 105% of the properties value, but that is good enough for most people. Freddie Mac also has a similar program.

Where do the Closing Costs go?

While most mortgages will have closing costs, a No Cost refinance allows the borrower to take a slightly higher interest rate than they would have if they were willing to payment closing costs, and then use "rebate", Service Release Premium", or "Yield Spread", to cover the closing costs. The end result is no increase in the borrowers loan amount. For example, a home owner with a $300,000 home loan may be able refinance to a 4.625% interest rate if they are willing to either pay or finance $3,500 to their loan, ending up with a $303,500 loan amount. Or, they could take a rate of 4.875% and have no closing costs. Their new loan would not increase, remaining at $300,000.  The interesting thing is that the payment difference is minimal. The reason for this is because the payment on  $300,000 at 4.875% is only slightly hgiher than the payment on $303,500 at 4.625%.

The First Step for a Zero Cost Refinance

The first step an Orange County homeowner needs to take to find out if a No Cost Refinance is right for them is to contact a local Orange County home loan expert. A good Lood Officer should be able to quickly prepared customized loan scenarios which will give the details on the options available.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

This is a "Normal Sale"

	9192 Bickley Circle Garden Grove, CA 92841 Cul-De-Sac Home For Sale in Landmark, Garden Grove
Home Photo Gallery Virtual Tour Property Map Payment Info Request Showing Contact Me Greg Ziemba 01777692 Mobile: 714-403-0153 Website: Visit Website	Price : $399,900 Bedrooms : 3 Bathrooms : 3 Square Foot : 1,728 Lot Size : 5,850 Community : Landmark County : Orange Property Type : Detached Year Built : 1972 click for more information and pictures Property Description REGULAR SALE! Rarely on the market Landmark home. Prime location at the end of a cul-de-sac street. Recent updating includes a tile roof, new forced air furnace and central air conditioner, replastered pool and spa. Open Kitchen leads to Dining Room. Living Room with vaulted ceilings, built-in shelving and a cozy fireplace. Entertainers rear yard with a patio cover, built-in barbecue, concrete block fencing, pool and spa. Well manicured separate side yard patio with a lawn and fruit trees. The interior has many of its original features and has been lovingly maintained and cared for over the years. Main floor bedroom with bath. Both of the upstairs bedrooms have their own bath. Direct access three car garage. OUTSTANDING FAMILY HOME. ACT NOW AND ENJOY THE POOL DURING THE HOT SUMMER DAYS!
Equal Housing Opportunity.	Prudential CA Realty : 2249 North Tustin Ave - Orange CA 92865 : 714-403-0153

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

What Is Needed to Claim the Tax Credit

Two Dates to Be Aware of

How Did the Flip Rule Work?

Why Did FHA Change their Mind About Flip's?

Conditions That Need to Be Met for the FHA Waiver of 90 Day Flip Rule

• <:od>All transactions must be "arms length" with no relationship between the buyer, seller, or other parties taking part in the sale of the property. The lender will need to verify the chain of title for the property to make sure there has not been a pattern of flipping over the past 12 months. Also, the property must of been marketed openly, either on MLS, For Sale By Owner, or some other means.
• The sales price cannot be more than 20% above the sellers purchase price without meeting additional conditions. If the property is being sold for more than 20% above the sellers purchase price, the lender may require an additional appraisal and property inspection. The lender needs to make sure there is a legitimate reason the property is valued 20% higher than the recently acquired price.
• The 90 Day No Flip Rule waiver is only for the "forward" FHA loan program. The waiver will not effect the Reverse Mortgage, or HECM in Orange County.

Not only Orange County First Time Home Buyers, but also real estate investors will benefit from their waiver. First time buyers will have more homes to make offers on, and investors will have more buyers to potentially sell to. FHA is just about the only loan program available for home buyers that allows a down payment of less than 10%. FHA only requires a 3.5% down payment, and the down payment can be a gift. The first thing an Orange County First Time Buyer needs to do is talk with an Orange County FHA loan officer who can prepare loan scenarios based on your qualifications and goals.

1. The Upfront Mortgage Insurance Premium (UFMIP) will be increased from 1.75% to 2.25%. The UFMIP is financed into the loan, so realistically this will not be a big deal. For example, on a $300,000 base FHA loan, the UFMIP would currently be $5,250, resulting in a total FHA loan of $305,250. Assuming a 5.5% interest rate, the principal and interest payment would be $1,733. Using the new 2.25% figure, the UFMIP would be $6,750, resulting in a total FHA loan of $306,750. The payment, using a 5.5% interest rate, would be $1,741 per month. That is only a $8 payment increase. Not a big deal.
2. FHA is updating the combination of FICO scores and loan to value maximum. Currently, FHA does not have a minimum FICO score requirement for a home buyer putting the minimum 3.5% down payment down. Now, a minimum FICO score of 580 is required for 3.5% down payment. If the FICO score is lower than 580 then a down payment of 10% is required. Reality: So what. Most lenders have already instituted a minimum FICO score requirement of 620. Some won't go below 660. This change should have not effect on Orange County First Time Homebuyers. If a homebuyers score is less than 580 then they probably need to work on  their credit before buying a home anyway.
3. Seller contributions will be reduced from 6% to 3%. Reality: Not a big deal, at least for Orange County First Time Buyers. A first time buyer purchasing a home for $350,000 in Orange County, and who needed the seller to pay for closing costs, could have the seller pay as much as $21,000 under the current guidelines. That would be excessive. Under the new guidelines of 3%, the seller could pay $10,500. That would be enough to coverall closing costs (assuming 1 point Origination) and most of the prepaid expenses in most cases. Maybe in areas with lower priced homes, like Tennessee, where you can buy a home for $50,000, will be effected by this, but not Orange County.

Upfront Mortgage Insurance Premium Information

Advantages of FHA Financing for Orange County First Time Buyers

FHA Interest Rates Remain Low