Second Mortgage showing as Personal Loan

[TXPocohontas]

So I purchased a house in Texas and closed on Feb 5, 2020.  They offered a first time homebuying program which puts the down payment/closings costs the builder did not cover into a second mortgage (they waited until I was at the closing table to show me that paperwork).  Anyways, the caviat to this that it is on my credit reports but I cannot make ANY payments on it until I either pay off the main mortgage loan or sell the house (which goes back to paying off the first mortgage loan).  I have always paid early and made extra principal payments each month to the first mortgage which lowers the balance but the balance obviously never changes on the 2nd mortgage loan.  My question is how do I get an underwriter to understand this?  I am in the process of buying a 2nd house in Nevada that is being built.Here is my Experian to give you an idea.

Thanks in advance for advice.

Happy Holidays!  

[dragontears]

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@TXPocohontas wrote:

So I purchased a house in Texas and closed on Feb 5, 2020.  They offered a first time homebuying program which puts the down payment/closings costs the builder did not cover into a second mortgage (they waited until I was at the closing table to show me that paperwork).  Anyways, the caviat to this that it is on my credit reports but I cannot make ANY payments on it until I either pay off the main mortgage loan or sell the house (which goes back to paying off the first mortgage loan).  I have always paid early and made extra principal payments each month to the first mortgage which lowers the balance but the balance obviously never changes on the 2nd mortgage loan.  My question is how do I get an underwriter to understand this?  I am in the process of buying a 2nd house in Nevada that is being built.Here is my Experian to give you an idea.

Thanks in advance for advice.

Happy Holidays!  

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What exactly do you need to explain? Is the underwriter asking about it? What are they asking? 

[TXPocohontas]

@dragontears Yes.   Asking why I am not paying on it.  Just want to make sure this does not mess up my loan approval. 

[VALoanMaster]

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@TXPocohontas wrote:

@dragontears Yes.   Asking why I am not paying on it.  Just want to make sure this does not mess up my loan approval. 

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Generally when you have a silent 2nd mortgage like this it means there are no monthly payments required and the loan is usually forgiven in 3 to 10 years depending on the program.

For example: 

https://www.idahohousing.com/documents/down-payment-and-closing-cost-assistance-programs.pdf

This shows the loan has a tiered forgiveness feature where the loan is forgiven at 10% per year.

You should have signed a note at closing with all of the terms for this loan. You may need to provide a copy to the u/w.

[VALoanMaster]

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@TXPocohontas wrote:

@dragontears Yes.   Asking why I am not paying on it.  Just want to make sure this does not mess up my loan approval. 

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I just realised you said you bought a home in Texas but the lender used an Idaho DPA program?

[TXPocohontas]

@VALoanMaster Yes.  Loan Depot sold my loan 30 days later to HomeLoanServ aka Idaho Housing.

Thank you for the valuable information. 😃