All Forum Posts by: Ally H.

Thank you, @Account Closed !

Background: We bought our first home this year and are renting out the extra bedrooms through AirBnB. We'll receive a 1099-K from AirBnB on the earnings and are not exactly sure how our tax situation with regards to tax deductions will be, as we've always just taken the standard deduction in previous years. 

As active duty military, I do have access to our tax volunteers on base every year, but we've always done our (previously simple and straightforward) taxes. I don't think that the tax volunteers offer any tax planning (more so tax filing), so we've been looking for a CPA who is knowledgeable and patient enough to teach us through the planning portion. We've read through the IRS resources, but are not sure whether our interpretation of the grey areas will align with what the IRS actually wants.

Regarding our tax plan, we think the itemized deduction approach will be more beneficial than the standard deduction approach. We can itemize our mortgage interest and property taxes on Schedule A. However, because we also receive rental income from AirBnB and this is our personal home and not a vacation home, can we still deduct a portion of our mortgage, home insurance premiums, hurricane insurance premiums, and utilities by using Schedule E? If so, is it recommended that we base the portions on the square footage of the rented bedrooms or by the number of bedrooms (we rent out 2 of our 3-bedroom house)? Since this isn't a vacation property, does depreciation apply in any way in our situation?

Lastly, if anyone can refer us to a great CPA who's located in Honolulu/Oahu, we'd greatly appreciate it! Thank you in advance, everyone!!!

Is it typical for a mortgage lender to require that the insurance policies start way before date of recordation? Our home and hurricane policies start 17 days before the actual date of recordation, so it seems odd to require us to have insurance on a property for an extra 2 weeks when we don't actually own it. 

Hi fellow BPers! We have some questions for those who are familiar with the VA loan for active duty military.

We went through a mortgage broker and locked in our interest rate and lender's credit last month with a Rate Lock Agreement. We chose a 30-year fixed with no down payment and the VA funding fee's rolled into the mortgage. The lender's credit was also confirmed with the GFE and HUD estimates; it was supposed to be enough to cover all of our closing costs, as well as have some left over for principal reduction.

We just received the finalized HUD, and there is a big change in the amount of credit that we are actually receiving (a decrease of a couple thousand dollars).

Are there different RESPA rules that apply to loans? Is it legal for the lender's credit (line 802 on HUD) to be decreased? Our understanding was that lines 801, 802, 803, and 1203 could not increase. We have heard that VA loans have a maximum allowable for credit but have not been able to find where this is explicitly stated.

In our research, we found the following on HUD's website (http://portal.hud.gov/hudportal/documents/huddoc?id=resparulefaqs422010.pdf):

"4) Q: The regulation states that while the borrower‘s interest rate is locked, the credit or charge for the interest rate chosen and the adjusted origination charge may not increase from the amount shown on the GFE. On a "no-cost" loan that covers third-party costs where the rate has been locked, the GFE should show a credit for the interest rate chosen, in an amount sufficient to cover the estimated loan originator and third party fees. If the actual third party fees at closing are lower than stated on the GFE, may the loan originator reduce the amount of the credit to match what is needed to pay the actual third party and loan originator fees?

A: No, the amount of the credit may not be reduced. The loan originator may choose to:

1) have the amount of the credit remain the same as stated on the GFE to cover additional closing costs previously not anticipated to be included in the ?no-cost? loan; 2) apply a principal reduction to the principal balance; 3) reduce the interest rate and the credit accordingly; or 4) have the credit remain the same, resulting in cash to the borrower." 

Thank you!

@Shaun Weekes , thank you for your helpful response! 

We did get a 100% VA loan, and funding fee was 2.15% and rolled into the loan (purchase price of 550K with funding fee of 11,825). I locked the rate on July 17 (3.75% for 30-year) according to the Rate Lock Agreement I signed.

Regarding the closing costs, they were/are supposedly paid from the lender's credit, so we didn't write any checks during closing. When we asked about this issue, the mortgage broker said that the "date is set by the lender". 

Have a great weekend!

"Effective July 21, 2011, the Real Estate Settlement Procedures Act (RESPA) will be administered and enforced by the Consumer Financial Protection Bureau (CFPB)"

In our research, we found the following on HUD's website (http://portal.hud.gov/hudportal/documents/huddoc?id=resparulefaqs422010.pdf):

"4) Q: The regulation states that while the borrower‘s interest rate is locked, the credit or charge for the interest rate chosen and the adjusted origination charge may not increase from the amount shown on the GFE. On a ?no-cost? loan that covers third-party costs where the rate has been locked, the GFE should show a credit for the interest rate chosen, in an amount sufficient to cover the estimated loan originator and third party fees. If the actual third party fees at closing are lower than stated on the GFE, may the loan originator reduce the amount of the credit to match

what is needed to pay the actual third party and loan originator fees?

A: No, the amount of the credit may not be reduced. The loan originator may choose to:

1) have the amount of the credit remain the same as stated on the GFE to cover additional closing costs previously not anticipated to be included in the ?no-cost? loan; 2) apply a principal reduction to the principal balance; 3) reduce the interest rate and the credit accordingly; or 4) have the credit remain the same, resulting in cash to the borrower." 

Hi fellow BPers! After much learning and analyzing, we finally closed on our first home this week! Now we have a slice of paradise in Hawaii....but have some questions for those who are familiar with purchasing RE here, especially with a VA loan for active duty military.

Background: We completed the final walk-through on Sunday with our realtor. The escrow company sent a mobile notary to the home after our inspection to sign the papers. We signed the HUD estimate, deed, note, etc. of which we received all physical copies of. No one else was present other than the mobile notary and our realtor. We were told that recordation would not happen until Wednesday at the earliest. No keys.

Wednesday comes, and we are told that our loan's VA rider just got signed, so recordation will happen on Friday. No keys or finalized HUD.

Friday: Our realtor calls us to let us know that we can meet up to pick up the keys. We ask for the finalized HUD, which we received from our realtor. Escrow had sent it to the realtors, but not us. Upon analyzing the final HUD, we discovered that there was a big change in the amount of credit that the lender promised us. When we locked in the rate, our credit covered all of our closing costs with some principal reduction and cash back as well. The finalized HUD showed a significant reduction in the credit, so now we end up with no cash back and less principal reduction, to the tune of over a few thousand less than we were promised on all of the estimate HUDs (and GFE) that we have received up to this point. When we immediately asked about the credit reduction, our realtor deferred us to the mortgage broker, who deferred us to the Escrow officer, so we're now waiting for his answer.

We have been fortunate and blessed to be able to use the VA loan for our first home. However, there's been a few hiccups along the way, and we've spent a lot of time following up with people to make sure that the right things gets done on time because it is our first time through the rodeo. With the recent discovery, we feel like we are being actively deceived because we are seen as fresh meat or something similar. Had we not asked for the finalized HUD, we're not sure when we would have realized the switch. It's disheartening because everyone involved is already make thousands off this transaction (with the home prices in Honolulu so high).

BP community, can you please offer your advice/suggestions/etc. to the following:

1. Under RESPA, is it legal for the lender's credit (line 802 on HUD) to be decreased? Our understanding was that lines 801, 802, 803, and 1203 could not increase.

2. If this is not legal, what is our recourse? 

3. Since it seems that we have had to follow up on everything (a good habit, we think), including the finalized HUD, what other important documents, etc. should we make sure that we have on hand? We have kept copies of everything that we have signed so far.

4. We were under the impression that closing referred to the day that we signed all of the documents, we receive the keys, the day that the deed is recorded, and the day that we start paying property taxes and mortgage interest. This has not been the case for us. Can someone please clarify what the true typical timeline is. 

5. Lastly (and unrelated to the lender's credit issue), is it typical for the lender to require that the insurance policies start way before date of recordation? Our home and hurricane policies start 17 days before the actual date of recordation, so it seems like another plot to wring more money out of us by requiring insurance on a property for an extra 2 weeks when we don't actually own it. 

THANK YOU in advance for all your valuable input! 

@Account Closed , this is a great and thorough plan, and kudos to you for thinking long-term. I'm also military and just closed on my first home with a VA loan in Hawaii. We're already saving up and planning on our next purchase.

One thing I just have to add is you have many real-estate plans listed, as well as side jobs, but you only have so many hours in your day and days in your week. Don't forget to account for the hours you will need to spend on studying outside of your classes, depending on what your intended major is. Speaking from personal experience (BS, MS, MD...eternal learner, but done with adding letters after my name for now!), I took on more than I could chew during college (side jobs, clubs, varsity sport) and had to repeat some classes. It was a painful experience finding that balance and setting priorities, and my hope is that you don't waste your GI bill and grants because you neglected to take into account of how many hours outside of class your major takes (this definitely applies if you're planning on majors such as engineering). Maybe you're a prodigy who doesn't need to study at all, which in that case, congrats:)! Good luck!

@Account Closed , @Dana R. ,@Micki M.

Thank you all for sharing your experiences! From my discussion with others and further research, I don't think that we are quite comfortable enough putting the few eggs that we currently have in a leasehold condo given that there are factors outside the real estate market that severely contribute to whether that egg will grow or be taken away at some point. Bob, we are definitely admirers of your RE success in Oahu and hope to follow a similar path:).

Mahalo!