Recapture Tax

Many benefits are provided to first time homebuyer and who apply for FHA financing for buying a home. These benefits include loans on low interest rates and also funds for down payment assistance. These programs are governed by Federal laws. There is "recapture" tax to pay if the borrower meets the following conditions:

• Borrower sells the property within nine years of ownership.
  
• There is a net profit on the sale of the property.
  
• There is a increase (5% per year) in the income of the borrower.
  

But, the borrower don't have to pay the recapture tax if,

• the property is sold after nine years of ownership.
• there is no profit by selling the property.
  
• no increase in the salary of the borrower.
  
• the house is destroyed by any natural calamity.
  
• transfer of property to the spouse or ex-spouse as an agreement of divorce.

Buying a home after bankruptcy

Buying a home after filing bankruptcy is quite difficult. It affects your ability to take a loan in the coming months and sometimes in years but if you take proper steps then you can purchase a home after 18-24 months of filing bankruptcy. You have to wait until your bankruptcy case has been decided.

After bankruptcy, the most important step to take is to rebuild your credit scores. You must keep your credit scores perfect after bankruptcy and should have a steady job. Keeping credit scores perfect for nearly two years will bring back the faith of lenders in you. You have to prove to lenders that you can be trusted on paying back the money you owe. For this, you can apply for "installment loans" which can include student loan, car loan etc. and the only thing you have to do is pay your installments on time.

After improving your credit scores, you can go for FHA home loans as FHA requirements are flexible.

• two years have passed since bankruptcy have been discharged.
• three years have passed since a foreclosure
• all the judgments have been paid.

Your first home loan after a bankruptcy may be available to you on higher interest rates but if you can manage large down payment then, you can get loan at low interest rates.

Importance of FHA home inspection

Every home buyer should go for a FHA home inspection. When you want to buy a home, you want the home to be in proper condition. You don't want to face any problems in future or spend thousands of dollars in repair works. Getting a home inspection from a trained expert before buying a home is an intelligent step.

A home inspector will evaluate all the physical conditions of the home including construction, structure and mechanical systems. A inspector will also evaluate the working of major equipments (plumbing, air conditioning, electrical etc.) Inspector will provide the buyer with the detailed information about the home and any repair works that are needed in the home.

One thing home buyers should understand is that the home inspector will not evaluate the value of your home. Home inspection is different from an appraisal. Appraisal provides you with the estimated value of the home which is required by the lender before your FHA loan approval so that you don't borrow more than the value of the home.

FHA loan guidelines

When you apply for FHA loan to buy a home, there are certain guidelines that you must meet. Among them most important are your relative mortgage amount and your income. FHA does not want that your mortgage payment (includes principal, interest, taxes) to be more than 31% of your gross income and also your monthly debt obligation including mortgage should be not more than 43% of your income.

You must collect all information and put them in a file send it to an underwriter. The underwriter decides whether you are approved or rejected after reviewing your file. You should understand what are the important information that you must include in your file.

SOME OF THEM ARE:

• Social Security Number
• Address of your residences for the past two years
• Information of your employer for the past two year
• Current gross income
• Complete information about your bank accounts
• Detail of any property you owe.
• estimated value of the home.

FHA closing costs

when you buy a home, there is always a closing cost apart from the down payment. These closing costs are charged to the buyer and are considered allowable and these costs are necessary to close the loan.

The closing cost and other fees that you can finance in your mortgage are:

• Loan origination fees.
• Any credit report costs required for FHA mortgage.
• Appraisal fees which is used to determine home-value.
• Costs included with the title.
• Recording fees and taxes associated with the purchase of the home.
• Deposit verification fees.
  

Advantages of FHA refinance

• FHA refinancing can assist you with the funds or money you need to make necessary repairs in your home. With the funds, you can also expand your home and can also renovate it.

• You can lower the interest rate of the loan by refinancing the mortgage with a lower interest rate program.

• As the interest rates are lowered, so are your monthly payments and you can save significant amount of money.

• You can adjust the time period of the loan by refinancing. You can increase the period of the loan or can also decrease the period of the loan.

• FHA refinancing don't need any extra amount or cash. And, if the refinancing doesn't cost you anyhting then you can save a lot amount of money.
  

Things you should consider before applying for Reverse Mortgage

As you all know, Reverse Mortgage is a loan provided to senior citizens against their residential property and the home equity is converted into the cash. But before applying for FHA insured Reverse Mortgage you must consider the following points:

• First of all, you should go for a counselling. It acts as consumer protection and requires a third party to understand the program completely. You can contact local HUD-approved counselling agencies or national agencies and can be done on phone or face to face.

• You should consider for other options apart from a Reverse Mortgage. Because these loans are costly, and if you intend to leave the home in few years then it is advisable not to go for a Reverse Mortgage.

• Usually Reverse Mortgage does not affect your social security benefits. But, the fund you receive must be used in the same calender month only. If you retain the funds then it will counted as assets and can affect your Medicaid and social security benefits.

• You can apply for Reverse Mortgage even if you already have a mortgage but the money you recieve should be used to pay off the mortgage first as Reverse Mortgage must be in first lien position.
  

Reverse Mortgages

Reverse Mortgage is a loan available to senior citizens who are above 62 years of age and owns a home with home equity. This home equity is released as one lump sum amount or multiple payments according to the borrower's choice.

Reverse Mortgages are really beneficial as it provides financial stability to senior citizens. The loan is paid back when the home is sold, the owner dies or the owner moves away. To qualify for the loan, there is no minimum income or credit required but you must qualify on other factors. Amount of money that can be borrowed depends on the following factors.

• Age of the borrower (older the senior, the more money he/she can borrow)
• Interest rate
• Appraised value of the home.

All these factors together determine the amount of money that can be borrowed by the seniors. Before applying for the loan you can consult FHA or HUD as they can provide you with proper guidance.