We've launched the new HomeKeeper Knowledge Center! Click here for an updated how-to on entering a complete purchase transaction (with video tutorials!)
Certifying a Purchase is important because it provides a confirmation in your data that a buyer's purchase has taken place, and that your team has entered as much data as possible. You should not certify a purchase until you have entered all the information you have available. Certifying a Purchase also enables that Service File to roll up to the HomeKeeper National Data Hub. We will only include data from Service Files that have been certified (have a Certified Close Date).
Before proceeding with the instructions below, make sure you have already:
- Certified the Income
- Received the Final Closing Disclosure (or Settlement Statement for older purchases)
- Entered all Properties Allocations (subsidies) to date
- Entered birth dates of Applicant Household Members - so we can track number of children and seniors
1. Click into the Purchase Tab OR "Enter Purchase Information" from the Custom Links section
2. Complete the Program and Property and Closing Reconciliation Sections using your Closing Disclosure
Notes on these fields:
- Initial Purchase: Is this the first time that the property has been owned by a qualified buyer in your program?
- Program: This is related to which files roll up to the HomeKeeper National Data Hub. Let us know if you add a new Homeownership program.
- Seller: Seller should only be filled out if the Seller is another qualified owner (eg. another buyer in your Program). The Seller field connects this Service File to the household who sold the home's Service File.
- Property: A lookup to a Property record. Must have been created prior.
- Effective Purchase Price: What we call the Effective Purchase Price, some organizations sometimes call Base Price, Buyer's Original value, Affordable Base Price. What the price of the home 'seems like' to the buyer as a result of the community investment -> Market value Less community investment = Effective Price
- Oftentimes this is what's listed in the Ground Lease if you are a Community Land Trust
3. Enter all Funding Sources into the Service File from the Closing Disclosure (and Amendments)
- Use the New Funding Source button to add a new Funding Source.
- "Gross Amount Due Equals Funding Sources?" will check that you have entered all Buyer Funding Sources, because Funding Source Total should equal Gross Amount Due
The funding sources should reflect all amounts paid by or on behalf of the buyer itemized in section L of the Closing Disclosure (200 of the HUD-1) and any amount in last line of the Closing Disclosure (Line 303 of the HUD-1). These will include DPA and adjustments and credits paid to the buyer, for things like credits from the seller or the lender for taxes or other items. It can be useful to include the line of the Closing Disclosure or HUD in the Name of the Funding Source as you are reconciling.
Funding Sources are important to enter correctly in order for accurate Community Investment and Return on Investment Calculations, as well as keeping a record of loan terms for all funding sources applied at purchase.
Some programs want to itemize amounts paid by the buyer towards the purchase outside of closing, which is possible if recorded correctly. For more information see Introduction to Funding Sources.
4. Enter an Appraisal to record the Market Value of the Property at Purchase
- Add an appraisal with the New Appraisal button.Entering an appraisal of the unrestricted market value of the home allows you to show the discount your buyer recieved. Read about how to enter Buyer's Appraisal even if you don't have a physical appraisal, you should still create an appraisal with an estimate of the unrestricted market value of the home at the time of purchase.
- There is also a check to make sure you've entered a Buyer's Purchase loan Appraisal.
5. Enter non-principal and interest monthly housing expenses
You should have already entered the Monthly Principal and Interest costs for any loans on the respective Funding Source, and Monthly Principal and Interest will be auto-filled here. These amounts add up to Total Monthly Housing Costs.
2. Enter Monthly Insurance and Tax Liability, note these may be on the HUD-1 if it is part of a monthly escrow payment. Otherwise, you will need to estimate based on property tax and insurance rates in your area.
3. Enter the Land Use Fee and Replacement Reserves. This should include Ground Lease Fee Payments. Total Program Fee at Purchase sums any amount in Land Use Fee and Replacement Reserves. Any administrative fees to the buyer by the program should be included in Land Use Fee, otherwise Total Monthly Housing Costs will be inaccurate. DO NOT create a new field to better reflect your program's terminology surrounding program fees that buyers pay monthly.
4. Enter HOA/Condo Dues if the buyer will pay HOA/Condo dues as well as any Other Monthly Housing Expenses that don't fit into any of the previous categories.
5. Check: Total Monthly Housing Cost Monthly is a formula field adding: Principal and Interest Payments + Monthly Tax Liability plus Monthly Insurance Costs + Total Program Fee + HOA and Condo Dues + Other Monthly Housing Expense/Adjustment. There is also a check that you've entered Principal and Interest on a Funding Source, as well as Taxes and Insurance.
Tip: Total Monthly Housing Costs is the numerator in the calculation of the Housing and Debt Ratio formulas on the Service File. If you do not include all expenses in the appropriate fields that are part of Total Monthly Housing Costs, these ratios will be inaccurate. You can also check the ratios to see if they seem accurate.
6. Update the Status and Copy Contact Addresses
- Update Buyer's Contacts by checking the addresses you want to copy the Property Address to. This will update when you Save the page.
- Update the status of the Service File to Current Owner. Note that Status field never changes automatically, though it does trigger updates on the Property and Contact records.
8. Click the "Certify Purchase" Button
Once you've completed all the above instructions, you're ready to certify the purchase! Click the "Certify Purchase" button. This verifies all transaction and homebuyer information, since only purchases with a Certified Close Date will roll up the National Data Hub. You can use the button in the Purchase Summary, or the button on the Service File Layout.
Here's what happens when you click "Certify Purchase":
- Purchase Certification Date set to current date
- Certified Subsidy Beyond Market Value copied from Subsidy Beyond Market Value (Property Purchase information section)
- Certified Close Date copied from Close Date (Certified Close Date is NOT on the layout but you will see it on the "Review National Roll-up Field")
- Number of Children at Purchase and Number of Seniors At Purchase are populated based on the birthdate and close date
9. You're done - you have entered this purchase! But don't forget your resales!
If this buyer bought their home through the sale of another home in your program, you will now need to make sure you enter the resale.
1. Select "Enter Purchase Information" from the Custom Links section
Note: The pre-built Homeownership Service File Record Page also includes this link in a tab.
2. Complete the Property Purchase and Closing Reconciliation Sections
In addition to these instructions you may want to refer to Translating A Buyer's HUD-1 to the Property Purchase Information Section
Notes on these fields:
- Initial Purchase
- Program: This is related to which files roll up to the HomeKeeper National Data Hub. Let us know if you add a new homeownership program.
- Seller: Seller should only be filled out if the Seller is another low income owner (eg. another buyer in your Program). The Seller field connects this Service File to the household who sold the home's Service File.
- Property: A lookup to a Property record. Must have been created prior.
- Close Date
- Effective Purchase Price: What we call the Effective Purchase Price, some organizations sometimes call Base Price, Buyer's Original value, Affordable Base Price. What the price of the home 'seems like' to the buyer as a result of the community investment -> Market value Less community investment = Effective Price
- Oftentimes this is what's listed in the Ground Lease if you are a Community Land Trust.
1. Fill in fields form Closing Statements. Starting in October 15, lenders began using a Closing Disclosure to replace the HUD-1 settlement statement they'd previously used, because of changes related to the financial crises. Depending if you're entering new or historical data, you'll need to reference different numbers to fill in these fields.
- Purchase Price: Closing Disclosure K1 | HUD 101
- Settlement Charges to Borrower: Closing Disclosure K2 | HUD 103
- Other Amounts Due from Buyer: Closing Disclosure (Add amounts from K4-115+K2) | HUD (Add amounts from 104-112+102)
- Pre-Paids/Reserves: Closing Disclosure Total in Sections 900 & 1000 | HUD Total in Sections 900 & 1000
- Gross Amount Due from Buyer: Closing Disclosure K | HUD 101 (Also listed in 301)
2. Gross Amount Due Accounted For? checks that you've entered all Buyer closing costs correctly. Gross Amount Due From Borrower should equal: Pre-Paids/Reserves and All Other Buyer's Settlement Costs (For pre-1.10 files, the formula will use legacy fields)
3. Enter all Funding Sources into the Service File from the HUD-1
- Use the New Funding Source button to add a new Funding Source.
- Gross Amount Due Equals Funding Sources? will check that you have entered all Buyer Funding Sources, because Funding Source Total should equal Gross Amount Due
The funding sources should reflect all amounts paid by or on behalf of the buyer itemzed in section L of the Closing Disclosure (200 of the HUD-1) and any amount in last line of the Closing Disclosure (Line 303 of the HUD-1). These will also include adjustments and credits paid to the buyer, for things like credits from the seller or the lender for taxes or other items. It can be useful to include the line of the Closing Disclosure or HUD in the Name of the Funding Source as you are reconciling. Funding Sources are important to enter correctly in order for accurate Community Investment and Return on Investment Calculations.
Some programs want to itemize amounts paid by the buyer towards the purcahse outside of closing, which is possible if recorded correctly. For more information see Introduction to Funding Sources.
4. Enter an Appraisal to record the Market Value of the Property at Purchase
- Add an appraisal with the New Appraisal button.Entering an appraisal of the unrestricted market value of the home allows you to show the discount your buyer recieved. Read about how to enter Buyer's Appraisal even if you don't have a physical appraisal, you should still create an appraisal with an estimate of the unrestricted market value of the home at the time of purchase.
- There is also a check to make sure you've entered a Buyer's Purchase loan Appraisal.
5. Enter non-principal and interest monthly housing expenses
Enter Monthy Tax liability, Insurance Costs, Land Use Fees, Replacement Reserves, HOA/Condo Dues and Other Monthly Housing Adjustments (if any) in the Monthly Housing Cost section of the Purchase Summary. You should have already entered the Monthly Principal and Interest costs for any loans on the respective Funding Source, and Monthly Principal and Interest will be autofilled here. These amounts add up to Total Monthly Housing Costs.
2. Enter Monthly Insurance and Tax Liability, note these may be on the HUD-1 if it is part of a monthly escrow payment. Otherwise, you will need to estimate based on property tax and insurance rates in your area.
3. Enter the Land Use Fee. This should include Ground Lease Fee Payments. Total Program Fee at Purchase sums any amount in Land Use Fee and Replacement Reserves. Any administrative fees to the buyer by the program should be included in Land Use Fee, otherwise Total Monthly Housing Costs will be inaccurate. DO NOT create a new field to better reflect your program's terminology surrounding program fees that buyers pay monthly.
4. Enter HOA/Condo Dues if the buyer will pay HOA/Condo dues as well as any Other Monthly Housing Expenses that don't fit into any of the previous categories.
5. Check: Total Monthly Housing Cost Monthly is a formula field adding: Principal and Interest Payments + Monthly Tax Liability plus Monthly Insurance Costs + Total Program Fee + HOA and Condo Dues + Other Monthly Housing Expense/Adjustment. There is also a check that you've entered Principal and Interest on a Funding Source, as well as Taxes and Insurance.
Tip: Total Monthly Housing Costs is the numerator in the calculation of the Housing and Debt Ratio formulas on the Service File. If you do not include all expenses in the appropriate fields that are part of Total Monthly Housing Costs, these ratios will be inaccurate. You can also check the ratios to see if they seem accurate.
6. Update the Status and Copy Contact Addresses
- Update Buyer's Contacts by checking the addresses you want to copy the Property Address to. This will update when you Save the page.
- Update the status of the Service File to Current Owner. Note that Status field never changes automatically, though it does trigger updates on the Property and Contact records.
7. Optional: Review National Roll-up Data
If your organization is participating the the HomeKeeper National Data Hub, you'll want to check that your National Roll-up Fields have been entered by using the "Review National Roll-Up Data" button on the regular Service File layout.
9. You're done - you have entered this purchase! But don't forget your resales!
If this buyer bought their home through the sale of another home in your program, you will now need to make sure you enter the resale.
Below is a sample completed and certified purchase viewed from the Service File in the Lighting user interface.
0 Comments