Home Buyers

Homeowners

- Existing customers

- Foreclosure help

- HOPE for homeowners

- Home Protection Program

- Home repair and rehabilitation

- Tips for homeowners

- Reverse mortages

 Trading Equity for Cash

- Avoiding predatory lending

Renters

Special Needs

Resources

Calculators
Mortgage Calculator
How Much Can I Afford

Housing Locators
Affordable Apartments
Housing Resources

Downloadable Brochures
The Reverse Mortgage: Trading Equity for Cash

Property Tax Relief for the Elderly and Disabled

Facing Foreclosure

Order program brochures

en español

Existing Customers

If you purchased your home using our low-interest FirstHome Mortgage or a Mortgage Credit Certificate (MCC), the following section can answer most of your questions about your loan.

How do I get information about my FirstHome Mortgage?
How does my escrow account work?
When can I cancel my mortgage insurance?
What if I can’t make my payments?
What if I decide to refinance my house?
Can I rent out my home?
What if I decide to sell?

How do I get information about my FirstHome Mortgage?

Contact your loan servicer. This is the company you send your payments to each month and may not be the lender who made the loan to you, since lenders frequently sell loans for servicing.

back to top

How does my escrow account work?

Your loan servicer applies your monthly loan payment to the loan balance and to your escrow reserves. The servicer is responsible for paying your real estate taxes and hazard insurance from the escrow reserves. While the tax and insurance bills should go directly to the servicer, they may come to you. If so, please forward them to the servicer for payment.

The escrow portion of the monthly payment may change if the insurance or real estate taxes associated with your property change. For example, if property taxes rise in your area, you will need to pay more into the escrow account each month to accommodate the larger bill. The servicer will calculate the increase and notify you of any adjustment to your monthly payment.

back to top

When can I cancel my mortgage insurance?

If you have a conventional mortgage loan and put less than 20% down on your home, you are required to pay private mortgage insurance. This insurance reimburses the lender for any losses, should you default on your loan.

If you have paid 20% of your home’s sales price or your home’s value has increased enough to give you 20% equity in it and you have a good payment history, you may request that the PMI be cancelled under the Homeowners Protection Act of 1998. Your servicer should provide information about PMI cancellation annually.

You also may be able to cancel your mortgage insurance if you have an FHA loan that was made after January 1, 2001. Known as the Mortgage Insurance Premium (MIP), this insurance will automatically cancel once the unpaid principal balance (including the MIP) is reduced to 78% of the initial sales price or appraised value, whichever is lower.

back to top

What if I can’t make my payments?

Many loan servicers offer “loss mitigation” options aimed at maximizing your ability to retain your home.

Early intervention is the key to saving your home. If you are having any problems making payments, contact your loan servicer as soon as possible to discuss all your options.

In addition, the U.S. Department of Housing and Urban Development provides guidance on avoiding foreclosure.

back to top

What if I decide to refinance my house?

If you have a Mortgage Credit Certificate (MCC) and are refinancing for the first time, you can apply to have your MCC reissued. Please note that an MCC can only be reissued once and it must meet the following requirements:

• The MCC is reissued for the outstanding principal amount of the prior mortgage loan, as of the date of the refinance.
• The MCC will only be reissued if you are the holder of the original MCC and still occupy the property as your primary residence.
• The reissued MCC will expire on the final payment date for the original mortgage.
• The tax credit rate will not be changed.
• The reissued MCC will state that the credit allowable for any tax year will not exceed the credit that would have been allowable under your original MCC.
• You must be refinancing from a fixed-rate mortgage to another fixed-rate mortgage.

To begin the reissue process, please provide the North Carolina Housing Finance Agency with the following:

• A copy of the payoff statement from the prior mortgagee confirming the outstanding principal balance as of the date of the refinancing.
• A copy of the executed Note and executed Settlement Statement for the new mortgage loan.
• A non-refundable processing fee of two hundred dollars ($225.00) paid by certified check. Personal checks are not accepted.
• An Owner Occupancy Certification.

Mail these documents to:
North Carolina Housing Finance Agency
ATTN: Home Ownership Business Group
3508 Bush Street
Raleigh, NC 27609-8066.

While we will make every effort to process the information within 60 days, we cannot guarantee this time frame since new loans receive underwriting priority.

Once you receive your reissued MCC form, keep it in a safe place. It proves you are entitled to receive the tax credit each year for the remaining term of the original mortgage as long as you occupy the property.

back to top

Can I rent out my home?

If you bought your home with a FirstHome Mortgage or a Mortgage Credit Certificate (MCC), your new home must be your principal residence. Should you move out, regardless of whether you then rent your home or leave it vacant, the mortgage becomes due and payable. (The MCC is simply cancelled.) This is also the case if you don’t occupy the home as your principal residence within 60 days of closing.

If we hold the Deed of Trust to your home and you must move out as a result of extreme financial hardship, military transfer, or temporary job placement, we will consider other options. To learn your rights and responsibilities, contact your loan servicer or the North Carolina Housing Finance Agency prior to leaving the property. For further details, contact Charlene Smith at 919-877-5637 or cbsmith@nchfa.com

back to top

What if I decide to sell?

The new buyers may be able to assume your low-interest mortgage or Mortgage Credit Certificate. Conventional loans, however, are not assumable. In addition, the price limits for existing homes apply for re-sales.

A federal law commonly known as “recapture tax” may affect homeowners whose mortgages are financed using Mortgage Revenue Bonds like the ones that we use for FirstHome Mortgages and Mortgage Credit Certificates. While you may be concerned about the recapture tax, in reality, the odds are low that you will have to pay it.

No recapture is due

• if you sell your home after nine years,
• if your household income does not rise significantly over the life of your loan (generally more than 5% per year), or
• if you sell your home within nine years but there is no gain.

In other words, to owe any recapture tax at all, you must sell your home prior to the ninth anniversary of your closing date, earn significantly more income than when you bought the home, and realize a gain from the sale. All three of these criteria must be met. View the Recapture Tax Income Limits.

For the few home buyers who have to pay it, the recapture tax will never exceed one-half of the gain on the sale of the home, or 6.25% of the original mortgage, whichever is less. If you are required to pay it and have a FirstHome Mortgage provided by us, you may be eligible for reimbursement from the Agency. For more detailed information, please review form 107-FirstHome Recapture Tax Closing Packet or the 107-MCC Recapture Tax Closing Packet.

Recapture taxes are figured on a scale based on the number of years you have lived in the house, with sales in the fifth year being the most likely to require the tax.

Even if you do have to pay, the recapture tax guidelines are structured to help you:

• The 5% increase in income that makes you a candidate for recapture tax is figured from the maximum income limit for the low-interest mortgage program at the time of purchase. For example, if you earned $40,000 per year when you purchased your home and the maximum income limit was $50,000, the 5% increase would be figured from $50,000, not $40,000. You would actually have to receive in excess of a 5% increase in salary each year to be considered for recapture.
• Recapture tax may not exceed 50% of the gain you realize upon the sale of the home. Even if you sell your home in year five (when the tax liability is the highest), your income increases significantly, and you make $2,000 on the sale, the maximum you could owe is $1,000. And the gain is calculated after items such as the real estate agent’s commission and legal and closing fees have been deducted from the proceeds of the sale.
• If your income exceeds the maximum income limit, but by less than $5,000, only a percentage of the tax is due.

The recapture provision is administered by the Internal Revenue Service (IRS). If any recapture tax is due, you pay it after selling your home as part of your federal income tax liability for the year in which the home is sold. After closing on the purchase of your home, you will receive an individualized “Recapture Settlement Disclosure” showing the maximum recapture tax, if any, that could be due in the event you sell in the first nine years.

For most people, the financial benefits of the NCHFA’s low-interest mortgage and of home ownership—deductions for mortgage interest and taxes—far outweigh the possibility of having to repay part of the assistance that they receive.

If you are planning to sell your house and are concerned about the possible impact of the recapture tax, call us at 919-877-5700 or 800-393-0988.

back to top