The FHA Streamline Net Tangible Benefit Worksheet is a result of the Federal Housing Administration’s (FHA) broadening their definition of what constitutes an asset. An asset is considered an investment which yields a profit. The benefit is an income derived from the sale of that asset. The FHA defines an asset as “any tangible personal property, including land and buildings, equipment, instruments, securities, and other similar financial instruments.
From this definition, the agency allows for an appraisal to be performed for an asset to determine its value. This value will be used to calculate the value of an asset, and the FHA requires an appraisal of the asset by a qualified professional. The appraised value is the basis for the total loan amount.
When the FHA mortgage worksheet is used, the appraisal will not be required, but it should be reviewed in order to obtain an accurate appraisal. The FHA streamline net tangible benefit worksheet will review all of the properties purchased, both structured and unstructured, with an emphasis on those properties that have been analyzed for their fair market value. A fair market value is defined as a price which reflects the opportunity for profit from a future transaction. This value can include the current value of the property, its value in comparison to similar properties, or a historical value.
In many cases, the FHA guidelines for appraisal are less stringent than in other situations. However, if the appraisal results in a fair market value that is less than the total loan amount, an increase in the appraisal fee may be required. To prevent this from occurring, you should follow all of the guidelines in the FHA Streamline Net Tangible Benefit Worksheet.
Most investments will require appraisal due to their value and significance in the field of finance, including bank accounts, financial instruments, stocks, bonds, and certificates of deposit. Typically, they will not be required to pay an appraisal fee. In situations where these assets were acquired with FHA funds, the FHA guidelines may be slightly different.
It is the responsibility of the buyer to provide proof of ownership in all financial instruments. When the seller signs an asset form, it does not reflect ownership in the item. The ownership of the item is verified by a financial professional to ensure that it is properly transferred.
Benefits derived from the sale of an asset can be reported as income on your tax return. The FHA streamline net tangible benefit worksheet will provide examples of when you may be able to report this income. The main types of benefits include interest, dividends, and capital gains.
These benefits should be reported on your income tax return along with the principal amount of the loan and all applicable interest. The FHA Streamline Net Tangible Benefit Worksheet will help you understand what must be reported in your mortgage papers and how you can determine fair market value.
