Fannie Mae is requiring additional reserves when a borrower has more than one financed property. The amount of reserves is based on a percentage of the unpaid principal balance (UPB). Reserves are liquid funds that you have access to. Reserves are funds you need to have after closing your transaction. Funds for reserves cannot be your funds for down payment or closing cost.
How Much Reserves are Required When Refinancing?
January 8, 2009 by 5 Comments
I had a great question yesterday from a potential client who asked how come my Loan Estimate was showing more reserves being required than the other lenders he was comparing me to. [Read more…]
Why Is My Payoff Higher Than The Principal Balance?
February 12, 2007 by 2 Comments
I am often asked this question during a refinance from homeowners.
Your mortgage payment is paid in arrears. For example, your February payment is paying January’s interest. Remember when you bought or refinanced your home and the loan originator stated, “you’re going to skip one month’s payment” or “you won’t have another payment due until the following month after closing”? Well, this is where that payment essentially catches up with you. (Technically, it’s not “that” payment, you’re just always paying the previous month’s interest).
