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Rules for lending have changed significantly this year. Lenders (banks, not mortgage brokers) have less flexibility now than in times past in what they can do and still sell get the mortgage insurance companies to be willing to insure the loan and get the secondary lenders (Fannie Mae, Freddie Mac, Ginne Mae) to buy the loans. I agree, in times past, there may have been a way to get a lender to waive an impound account for taxes and insurance, but not for most loans. If you are borrowing in excess of 89% of the loan, and it's a regular conventional loan you'll have to have the escrow account in place. If you're getting a FHA or VA loan, it's not an option. You have to have it regardless of the LTV. And for Hollie, the woman who is buying a home at half it's value not wanting to have PMI isn't an option. Lenders rules are that we must go off of the sales price or appraised value WHICHEVER IS LESS. "Talking to the lenders to see if they can be convinced of waiving the PMI" isn't an option. See... lenders don't make the rules, the secondary investors do. And if a lender were to arbitrarily waive that and use the appraised value in lieu of the purchase price, that loan would be unsaleable on the secondary market. Be careful about the advice to take the loan and then think that you can turn right around and refinance it, by the way. Underwriting rules generally are that within the first 12 months if you want to refinance the lender would look at the purchase price or current appraised value, whichever is less, and use that for the value of the refinance. Lastly, for Frank. Gift letters have to be very specific about where the money is coming from. With the onset of so many straw buyers, fraud and deceit that have occurred in the recent past in lending, lenders are now very wary of undocumented assets. The lender needs your account number to verify that the money came out of an actual account, not a cash advance off of a credit card, which is an unacceptable source of down payment money. The lender isn't going to go to your bank and get your account information. Nothing in that gift letter gives them permission to do that. But, depending on when you gave your son the money (before or after he made the application for the loan with the lender) will determine how much information you will need to show the lender. The type of loan determines it as well. Giving the gift is wonderful, documenting its source is imperative.
Paying the Funding Fee in cash is one option, financing it into the loan is another (more popular) item. There are some fees that the Veteran is not allowed to pay, and the appraisal is a little tighter on conditions of the property, but all in all it is probably the best loan out there right now! I always ask my borrowers if they are eligible for VA benefits, as most of them don't realize the enormous advantage they hold in the marketplace right now!