USDA Rural Home Loans in North Durham

October 27, 2011 By Leave a Comment

We get many calls from folks who love living in Durham, and want to know if they qualify for a USDA Home Loan. It’s often not a question of the home buyer qualifying for the program – often times, especially when it comes to Durham, there are few HOMES that qualify!  USDA RURAL Home Loans are designed as no money down mortgage loans for home buyers wishing to live in a more rural setting.

Unfortunately, most of Durham does NOT qualify.  As you can see from the Map below, the areas in North Durham past the Eno DO qualify.  Some of the areas near Briar Creek Qualify – and then, around 751 and 55 (think just past South Point Mall towards Wake County) there are properties available for the program.

durham usda

Here’s a close up of the area to the North of the Eno – again, the shaded area does NOT qualify

usda_durhamThere are also parts of Chapel Hill that qualify for USDA RD Home Loans.  In all, NC has over 70 Counties where the ENTIRE County Qualifies for USDA Home Loan financing.  This is a great progam!  It’s cheaper to get into a house than a FHA or Conventional Loan, and it has the cheapest PMI available (almost a hundred dollars a month cheaper than FHA!)!

Basic Underwriting Guidelines for USDA:

  • The Property must be located within the USDA Footprint for Rural Properties in NC
  • The Household Income must be UNDER the USDA Maximum Income Limits for the County (in Durham and Chapel Hill a Family of 1 – 4 the cap is 82,000, Person County is $74,750, Wake County is $91,850 – here’s a video that shows you how to find the maximum USDA Income limit for the area you are interested in)
  • Student Loans – DIFFERENT THAN FHA OR VA LOANS – Any student loan whether it is in repayment or deferred must be included in the qualifying calculations, per USDA Underwriting Guidelines (call us 919-649-5058 for more info).
  • 620 credit score and 12 months with no one writing anything on your credit report except GOOD STUFF.  Okay, so that exact wording is probably not in the Underwriting Guidelines… but if you have a credit score between 580 and 620 – THIS probably means you need 18 to 24 months of no judgements, no collections, AND on time payments.  You should also have at least 3 different companies updating your credit each month.  So, a car payment, a student loan, a credit card, and you’re golden!  We help people with their credit everyday, if you think you are CLOSE to a 580 score – Call us at 919-649-5058.
  • Previous Bankruptcy, Foreclosure or Short Sale?  USDA Underwriting Guidelines are pretty lenient.
  • The property must be Owner Occupied.  This is not a loan for Investment or Rental Property.

If you have questions about qualifying for a USDA Home Loan, an FHA Mortgage Loan… a first time home buyer program or a mortgage loan for Veteran’s, call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.  We do MANY of these loans every month, and we offer today’s lowest interest rates!

 

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Home Inspection Reports Causing Headaches at Closing

August 5, 2011 By Leave a Comment

Home Inspection ReportsMany home buyers get a home inspection prior to purchasing a new home in NC. We think that’s a great idea, but recently, we’ve run into some last minute problems that you should be aware of! (ESPECIALLY if you are applying for a USDA RD Loan in NC!)

We first saw this problem last fall with USDA Home Loan Financing… now we are seeing it across the board!

Here’s the problem… if the investor, Chase for example, knows that there is a home inspection, they want to see it and they want all issues on the report fixed. Even simple stuff.

We are sometimes advising clients to avoid putting the home inspection on the HUD. Granted, this is a PROBLEM, because it means that if the borrower was going to pay for the inspection at closing or the seller was reimbursing the buyer at closing the buyer has to absorb the cost outside of closing.

But that could be a better scenario than having to do a bunch of insignificant repairs that the investor discovers the day of closing. Or worse – repairs that the buyer was going to do himself after the fact. 

This is a great example of Lender Specific Guidelines.  Each lender has their own requirements… and sometimes those requiremetns are Geo-Specific.  But since we are seeing an INCREASING NUMBER of times where the Lender is asking for the Inspection Report and to see that all repairs are done… I think it’s something you should be talking to your lender about.

If you have questions about USDA Home Loans, and purchasing a home in NC – please call Steve and Eleanor Thorne, USDA Home Loan Experts in NC 919-649-5058

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USDA Home Loans – The OTHER 100% Loan

July 28, 2011 By Leave a Comment

usdaUSDA loans are great for people in Wake County!  This 100% loan has some exciting differences to FHA and VA loans.

USDA loans can be used for Manufactured Housing!  Since more than 35% of all housing in North Carolina is manufactured housing, this is a BIG PLUS!  Remember though, these must be NEW Installations – “existing” trailers do not qualify.

USDA loans have Minimum Credit Requirements and will allow borrowers to use non-traditional credit!  In addition to this,  we CAN use NC Housing Finance Agency “guidelines” to help people who have a score less than 620 qualify!

The only “tricky” things to consider about USDA loans is that they have some “quirky” requirements.  In order to qualify for a USDA the property must be in a qualified area, the borrowers must meet the maximum income limits for the area. USDA DOES NOT have a maximum loan limit based on the county the property is located in (like FHA) and base the loan on the amount the borrower can afford to repay.  They also consider the child care expenses, so when we talk, remember to tell us about those!

Property eligibility is determined by dense population – therefore, the City of Raleigh and Cary do not qualify for this program.  Johnston County, Chatham County, most of Fuquay Varina and Holly Springs – Wendell and parts of Wake Forest do qualify.  To find out if YOUR property qualifies click here.

The Income limits are calculated based upon the number of people in your family over the age of 18.  In general Wake County limits for a family of 4 (2 adults and 2 children) is $91,850.  It varies by area, and we put together a video to show you how you can check to see if your families income will qualify!

For more information on USDA loans contact Steve and Eleanor Thorne 919-649-5058  We still have USDA Home Loan fund available, and we are closing refinance USDA RD Loans too!

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USDA Home Loans in NC Are Affordable!

July 21, 2011 By Leave a Comment

NC Gets Rural FAST!In North Carolina, we get RURAL in a hurry!  I mean you can be in an area where you hear Roosters when you wake up, and only have to drive about 25 minutes to your job at the Research Triangle Park!  One of the programs that folks in this area are interested in, because it IS available – is the USDA Home Loan that’s been specifically designed for those who want to live in a more Rural Area… like Holly Springs, or Wake Forest!

To qualify for the mortgage loan, the home must be inside the “Foot Print” that the USDA Home Loan Program lays out – generally not in a densely populated area like Raleigh or Cary.  All of Franklin County, Johnston County and Harnett County qualify – and there are substantial areas in the Wake, Orange and Durham county areas that qualify too.  If you know an address for a property you are interested in, you can find out if it qualifies by clicking here.

You also need to have “decent” credit, and meet their Maximum Income Limits.  The Maximum Income Limits vary by County.  But for the MOST part, in the Wake/Johnston County area a family of 1-4 people the maximum income is $91,850.  In Durham County, the maximum income for the family is $82,000. [Read more...]

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USDA Home Loan Credit Qualifications in NC

April 15, 2011 By 1 Comment

Good News!  You do NOT need perfect credit to qualify for a USDA Home Loan!  Whew!  This 100% no money down program requires a MINIMUM credit score of 580 – but folks, just because you have a 580 score, doesn’t mean you can purchase. These days – we normally need a score above 620 to get the loan approved by Underwriters.

If you are NEW to the Credit game, meaning you are recently out of school and don’t have any BAD credit, you just don’t have a TON of credit – we can probably get a 620 score approved. In general, you need 3 different trade lines with 12 months of payment history.  Equifax will verify your rental payments (assuming the lease was in your name) and calculate that as a trade line, the other 2 credit repositories will not.

Here are some guidelines on what USDA Home Loan Underwriters will NOT take:

  • Foreclosure within the last 36 months.
  • Bankruptcy within the last 36 months
  • More than one 30 day late in the past 12 months
  • Outstanding Judgments in the past 12 months
  • Two or More missed rent payments within the last 24 months
  • Chapter 13 Bankruptcy – Case by Case review
  • Delinquent tax liens
  • Delinquent student loans

If you are in the market for a new home, and you want to know if your credit will qualify you for a 100%, no money down mortgage loan with USDA Rural Development Mortgage Loan, call Steve and Eleanor Thorne – 919-694-5058 we are NC’s USDA Home Loan Experts!

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USDA Home Loan PMI Will Change 10/1/11

April 14, 2011 By Leave a Comment

If you are looking for a USDA Home Loan in North Carolina – you might want to do it before the end of September!  More Rule Changes! Okay, so you don’t HAVE to buy before October 1st.  It’s not like the 100% no money down program is going away – it’s just changing the way the PMI (which they call Guarantee Fee) is being charged.  Starting at the end of September, the  USDA Rural Guaranteed Loans will have an annual fee that is collected on a monthly basis. The upfront fee will be coming down as the guarantee fee is changed.

Currently, the guarantee fee for this loan is 3.5% of the loan amount which includes the guarantee fee, so it actually works out to about 3.63% of the net loan. If you are into algebra, the equation for that would be purchase price/.965-purchase price=guarantee fee.

The new PMI/guarantee fee will be 1% of the total loan amount plus a .3% annual fee. The calculations on this fee are a lot more complicated because it is calculated on the average yearly principal balance.   So, to do a simple back of the napkin calculation of what it will cost think about this:

$100,000 loan amount – add 1% for the upfront PMI fee.  So your monthly Principal and Interest payments are based upon $101,000.

On a monthly basis, you will be paying $25 a month for that original $100,000 loan during the first year… as your balance goes down, the amount you will be paying will diminish as well!

This will put USDA mortgage loans more in line with other low down payment programs.  However,  USDA Home Loans will still compare much better than FHA or Conventional loans due to the fact that the annual guarantee amount (the monthly payment) will be so low, and will be diminishing each year. In comparison,  FHA loans require a 3.5% down payment, and have an annual PMI (mortgage insurance) rate of .9%, three times what the guarantee fee will be with USDA home loans on a 100% down program.

If you have questions about USDA Home Loan Qualifications, Credit Score Requirements, or want to know what Counties Qualify for this program in North Carolina, Call Steve and Eleanor Thorne, NC’s USDA Home Loan Experts!  919-649-5058

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USDA Home Loans and Deferred Student Payments

March 13, 2011 By Leave a Comment

deferred student loans usda home loansPeople are moving to the Raleigh / Cary Metro area to go to one of the more than 20 Universities and Colleges we have in the area… and after graduation, they often stay in the Triangle because we have jobs.  As folks are ready to put down roots and buy a home in Raleigh, they need to know how those Student Loans might affect them when they apply for a mortgage.

Whether it is a USDA Home Loan, an FHA Loan, or a VA Mortgage Loan – if you have have existing student loans, first off they need to be current. If you are past due – call TODAY and see what can be done to create a payment plan.   Once you’ve made 6 to 7 payments on the new plan – you will be closer to being able to buy a home in NC.

The USDA Loan Program is very popular among recent graduates, and a couple reasons are because there’s not a down payment requirement and it is the simplest home loan to get with credit scores of 620 being used to qualify. [Read more...]

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Why Is It Taking 6 Weeks to Get A USDA Home Loan?

February 11, 2011 By Leave a Comment

There’s a ton of interest in 100%, no downpayment USDA Home loans in NC.  Unlike large Metro areas, like Washington DC, we have many large areas that qualify for USDA Mortgage loans near Raleigh! In fact, all of Johnston, Franklin, Chatam and Harnett Counties qualify for this program. Click here to see a map of all counties that qualify for USDA mortgage loans.

But demand for the program is not why people are calling us to ask why another lender is taking so long to close under this program.

“Is USDA just backed up again?” someone asked this week?

No.  USDA Underwriting turn times in NC are back to 48 hours.

Our theory is that the reason that loan is taking longer than anyone expected is because loan officers are taking tough deals… filling pipelines with loans that can possibly close – but it’s not the “easy” 700 credit score with $2000 in the bank customer that we are seeing right now.  For the most part, the deals that we are talking to people about are tough!

We are talking to many people coming to the Triangle who left a ton of sorrow behind.  People are looking for a home when they just got out of a Bankruptcy, or they were laid off and started a new company.

These people realize that it’s a great time to buy -  but getting their financing done can be tough.

The encouraging thing about it is that these people… people who were laid off and figured out a way to take their entrepreneurial spirit and “take care” of their family have hope.  They’ve seen things get better for their family!  They went through months sometimes of really painful foreclosures, or were hassled through the short sale process.. and now they are in a better place and want to buy again.

When these folks come to us, we are realistic with them… but if there’s a way to figure it out… if there’s a chance that they can meet the guidelines and purchase now, we’re trying it.  Most loan officers we know are working hours to document the file and make the deals work.

So – if it seems like your USDA closing is taking too long… maybe you should ask the Lender if it’s a USDA problem.. if it’s a tough deal.

If you are considering a USDA Home Loan Purchase in NC we understand the guidelines! Please call Steve and Eleanor Thorne 919-649-5058 we specialize in these loans!

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Proving Housing Expense When Landlord is Foreclosed Upon

January 18, 2011 By Leave a Comment

Qualifications for a USDA Home Loan in North Carolina

Rental Payments / Housing Expense

We just sent a letter to a consumer applying for a USDA mortgage loan about a problem with the approval…

“I completely agree with you that it’s not your fault that the owner of the property was foreclosed against and due to the massive amount of foreclosures it took the bank almost a year to get around to doing something with the property.  It really is a catch 22. They want to see how you paid your existing housing expense and we cannot provide it due to no fault of your own.” *please see note at end of this post

I CAN TELL YOU that many people are having problems in their mortgage applications right now not because THEY missed rent or mortgage payments… but because the home they were renting was foreclosed on, and no one would take their payments!

USDA Home Loan Underwriters, especially – are looking at how you paid your current housing obligation to determine if they are going to lend you money for a new home. If you can’t PROVE you paid rent during the last 12 months you could have a problem.

Our best advise is this:

  1. Make sure you are setting your rent payment aside each month in a savings account. We need to prove that you CAN manage a monthly housing expense, and if you have been saving $750 or paying that towards a rent – then it’s pretty easy to show the underwriter that you won’t have any payment shock.
  2. Keep all documentation you get from the Landlord, the courts, the sheriff’s office the bank.  We need to document that you TRIED to make the payments and they were returned.

Remember also that the HIGHEST debt ratio allowed on a USDA Home Loan is 42%. We do have borrowers who are approved with higher back ratios – but this is considered an Underwriting Exception.

If we are asking that evidence of on time payments for the Housing Expense to be an exception (because the home went into foreclosure) then we can’t ALSO ask for an exception on the total back ratio.   We only get ONE exception per loan.

I’m not trying to make you a mortgage loan officer with all of this… I’m just pointing out that if you are in a situation that is beyond your control, and you are not being forced to make a rental payment… I wouldn’t “blow” that money. Talk to a loan officer NOW. It’s difficult to get a mortgage in 2011 if you don’t have a rental history – and you should have one (meaning if you have been living with family, that’s a little different).

If you need more information about Qualifying for a mortgage loan in NC, please call Steve and Eleanor Thorne, 919-649-5058 NC’s USDA Home Loan Experts.

*By the way we were able to make this customer a loan, it was just a longer process than anyone wanted, and it was frustrating… that’s why I’m suggesting you call NOW!

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USDA Home Loans and Home Inspections Don’t Mesh

October 4, 2010 By 1 Comment

Many home buyers get a home inspection prior to purchasing. We think that’s a great idea, but recently, we’ve run into some last minute problems that you should be aware of if you are using USDA Home Loan Financing!

A monster problem that we are starting to run into is that if the investor, Chase for example, knows that there is a home inspection, they want to see it and they want all issues on the report fixed.  Even simple stuff.

We are sometimes advising clients to avoid putting the home inspection on the HUD. Granted, this is a PROBLEM, because it means that if the borrower was going to pay for the inspection at closing or the seller was reimbursing the buyer at closing the buyer has to absorb the cost outside of closing.

But that’s a better scenario than having to do a bunch of insignificant repairs that is discovered by the investor the day of closing. Or worse repairs that the buyer was going to do himself after the fact.

If you have questions about USDA Home Loans, and purchasing a home in NC – please call Steve and Eleanor Thorne, USDA Home Loan Experts in NC 919-649-5058

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