Every year Congress puts funds into the USDA Rural Development “Account” for them to lend out to home buyers.

On March 11, 2010 Rural Housing folks announced that they will probably run out of money before the end of April.  What does that mean?

Unlike FHA, VA and Conventional loans – USDA Home Loans must be underwritten by a USDA underwriter.  The Underwriter issues a Conditional Commitment.  If the “account” that USDA has within the Federal Government to fund loans from runs dry… they can issue TWO different kinds of Commitments

According to Chase, the world’s LARGEST insurer of USDA Home Loans, “if the USDA issues “subject to funding commitments” we can still fund USDA loans, even if they are out of money. The USDA’s 3-11-2010 notification said that they will not issue the commitments subject to the availability of funds therefore we can’t fund the loans.”

This is significant because the Tax Credit for Home Purchases ends in April… and MUST fund by the end of June.  If you are looking ofr a home, and are considering using USDA Home Loan Financing – we suggest you call us IMMEDIATELY!  If you are SELLING a home – please make certain the funds are available for your transaction!  Call Steve Thorne, First Financial Services, 919-649-5058

 

1. Short sales that have not been pre-approved generally take much longer than foreclosures or standard sales to close… This is where your agent will be hugely helpful!
2. You should look at several houses before choosing one.  So don’t feel bad if you haven’t found the right one yet.
3. Before deciding against the house, make sure it’s because of large factors and not cosmetic issues such as the wall being dirty.
4. Don’t be turned off by paint colors – this is such an easy fix that it shouldn’t deter you from a great bargain.
5. If you need to buy appliances for the house, consider buying Energy Star certified ones to get the tax credit and be green.
6. Don’t shy away from homes that are not in move-in condition.  If a few weekends of work will increase the value by $20k – it might just be worth the work.
7. Compare homes in terms of how much you’re paying per square foot in homes that have similar features, your realtor will give you the comparables before bidding.
8. Don’t place all damages on the same comparison level, for example a broken tile is far less serious than a leaking roof.
9. Drive by the neighborhood at different times to understand the community and noise level.
10. Try to choose an area with good schools – this will come in handy even if you don’t have kids in terms of reselling.
11. Be flexible about your wants. Limiting your search to a set amount of features can prevent you from seeing other comparable properties.
12. Get pre-approved first (not pre-qualified), so that when you’re ready to buy, the underwriting process is already underway
13. Always check out the comparables for an idea of how much to bid.  Your realtor can hook you up with info about how much similar homes have sold for in that neighborhood in the past 6 months.
14. Keep in mind, in this market, many homes are being bought up with the incentive of the first-time home buyer tax credit,  so just because you write an offer – doesn’t mean you are going to win.
15. Take your digital camera along when you go to look at houses.  Look at teh Google Walking Tour to find your favorite spots.

Remember – if you had a $200,000 IRS lien -you would hire a CPA.  If you had a $200,000 Law Suit – you would hire an attorney.  You are making a HUGE Investment… hire a Real Estate Agent! Seller’s normally pay their fees!  We have GREAT Realtors that we work with, and would be glad to offer recommendations!

Call Steve and Eleanor Thorne, First Financial Services, 919-649-5058.

If you’re a DIY kinda’ guy… then check the USDA web site to confirm the property eligibility and income limits for the subject property and area (you will see those links on the left navigation – remember you are doing a Guaranteed Loan – which means you have a higher Income threashold). In today’s shrinking credit market, USDA Rural Housing Loan Programs are one of the best 100% mortgage financing options in the marketplace. Give Steve Thorne a call today for more details.

USDA Rural Housing Loan Program Highlights:

• Loans may be for up to 102% of the appraised value or sales price (whichever is lower). The 2% is for the Guarantee Fee, which is actually the only Default Insurance
• No MONTHLY PMI (private mortgage insurance)
• Secure, fixed-rate 30 year mortgages
• Sellers can assist with paying the buyer’s closing costs
• Little cash reserves needed for qualified borrowers (you’ll need money for your Homeowners / Fire Insurance Policy, and your taxes…)

Partial List of Eligibility Guidelines for USDA Rural Housing Mortgages

• Homebuyers must be United States’ citizens, qualified aliens, or legally admitted to the U.S. for permanent residence.
• Adjusted annual household income cannot exceed the moderate income limits for the area. A family’s size and child care considerations may increase chances for qualification if deductions are applicable.
• Primary residences only
• Home must be located in rural areas. This may include open country, and places with populations under 25,000 residents.

To find out more about Qualifying for a USDA Home Loan in NC, please click here.

If you want to find maps with areas that qualify for USDA Mortgage in and around the Triangle, Click Here.

Steve Thorne 919-649-5058, USDA Home Loan Expert.  We would love to help you buy your next home!

The FHA Program for Condominiums is a tiny bit different from the program that covers “traditional” Single Family Homes. Originally, the program was designed with differnt mortgage insurance coverage, that is no longer the case. The program,

HUD / FHA do not make loans, they insure them thruogh the mortgage insurance program.   HUD will insure mortgagees against losses on mortgages used for buying a condo or to refinance individual units in eligible condominium projects provided that they meet certain guidelines.

If the Condominium is not approved then the Lender may go through the “Spot Approval” process.  For more information on this approval process, please click here.

If you are considering a Condominium in NC, please call Steve and Eleanor Thorne, First Financial Services, 919-649-5058

Which prompted the VA to come out with a clarification on what Closing Costs  they feel are reasonable for a Veteran to pay in connection with a Mortgage Loan!  Here’s the latest from the Veteran’s Administration regarding Closing Cost Fees:

One Percent Origination Fee. The lender may charge the veteran a flat fee up to one percent

of the loan amount. The flat fee is intended to cover the lender’s costs and services, which are

not reimbursable as “itemized fees.” For Interest Rate Reduction Refinancing Loans (IRRRLs),

please note that this fee may not exceed one percent of the existing VA loan balance of the loan

being refinanced plus the cost of any energy efficient items less any cash payments from the

veteran – see line 4 on

b. Reasonable and Customary Itemized Fees. Veterans may pay reasonable and customary

amounts for the following services. Whenever these itemized fees relate to services performed

by a third party, the veteran may only pay the

(1) Appraisal and compliance inspections

(2) Recording fees

(3) Credit report

(4) Prepaid items (taxes, assessments, and similar items)

(5) Hazard insurance

(6) Flood determination

(7) Survey

(8) Title examination

(9) Title insurance

(10) Special mailing fees for refinancing loans

(11) Mortgage Electronic Registration System (MERS) fee

(12) Other fees authorized by VA

We love doing loans for Veterans, and encourage you to talk to us about the VA Mortgage Loan Programs available to you!  Did you know that it might be to your advantage to make a Down Payment on a VA loan?  Call us about VA Mortgage Loans!  Steve Thorne, 919-649-5058

P-I-T-Y!  I mean really, Bro… too bad.

You are missing out on THOUSANDS of dollars! People who OWN a home, get tons of deductions you don’t… just for living in a HOME!  Haven’t you ever heard the saying, “Buy a House Get a Raise!”

Mortgage Interest Deduction:

You may not deduct interest on more than $1,000,000 of home acquisition debt for your main home and secondary residence. Home acquisition debt means any loan whose purpose is to acquire, to construct, or substantially to improve a qualified home. The limit is reduced to $500,000 if you are married filing separately.

Use the worksheet on page 11 of Publication 936 to calculate the allowable mortgage deduction.

This meant that if an Investor purchased property on January 1 at the Courthouse, had contractors in, did the work that was needed – they couldn’t sell it to a new buyer until the end of March.

Effective February 1, 2010 (and lasting for 12 months there after) HUD is making a change!

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

To read more about their policy – click here!

Mortgage Rates are L-O-W! It does not look like this is going to continue to be the case, as “Big Ben” (and the Fed) announced he is going to stop purchasing Mortgage Backed Securities in March (which will force rates higher).

The Government is G-I-V-I-N-G you a tax credit of $8000 or 10% of the home’s value. If you are a First Time Home Buyer! So if you buy a really nice $250,000 house—that’s $8,000 for furniture, pay off your college loans, buy a car, big screen TV… or to just plain ole save!  $8,000!!!

There are a couple of restrictions / things to remember:

• Some States are helping the Tax Credit to be used as a down payment.  Unfortunately, the State of North Carolina does not have the funds to be able to offer this grant program.

• Homes that cost more than $800,000 aren’t eligible for the credit
• You must be over 18 years old to claim the credit (dependents are not eligible to claim the credit either).
• Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.
• You cannot claim the credit if acquired your home by gift or inheritance OR if you acquired your home from a related person.

If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $8,000 or 10% of the purchase price. Note: A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit (I would go with 50/50 as a reasonable method if one person is not eligible for the credit)

The way you determine which credit you are eligible for is based upon the purchase date. Only homes purchased from Jan 1 2009 to April 1st 2010 are eligible for the fully refundable $8000 credit.

If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

Foreign or Overseas Homes: You are considered a first time home buyer when buying an American residence, even if you owned principal residence outside of the United States within the previous three years. Non-resident alien’s cannot claim the credit. In addition to this, in order to qualify for a mortgage – you must have a two year US Credit History (FNMA and FHLMC changed rules in December of 2009).

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit.

An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and close on that purchase by June 30, 2011.

For more details on the Tax Credit and Frequently Asked Questions, click here.

First Time Home Buyers should purchase a home NOW, because houses are CHEAP, mortgage interest rates are LOW, and the Government is GIVING YOU up to $8,000!!!  WOW!

If you have questions about buying a home in RTP, or want to get pre-qualified for a mortgage loan in Raleigh NC, please contact Steve and Eleanor Thorne, First Financial Services, Inc in Cary, NC  919-649-5058

• Those who are current on their mortgage leading up to the short sale.
• Those who have delinquencies leading up to the short sale.

If you fall into that SECOND Camp (and you were filing the Short because you are BEHIND on mortgage payments) – well – sorry to say this, but you are toast.  You can’t get another FHA mortgage for 3 years.

There are a FEW exceptions to this… Exceptions would be due to circumstances beyond the borrowers control i.e. death of primary wage earner or a long-term uninsured illness. However the credit report must indicate borrower had satisfactory credit leading up to circumstances beyond the borrower’s control.

If you are in that FIRST Camp (and you didn’t miss any payments) then you CAN get FHA financing.  The tough part will be that the with homeowners who are current on their mortgage leading up to the short sale are in a real tough place with their current mortgage holder actually agreeing to the Short Sale… they just don’t have as much incentive! 

Our experience is that Servicers looking at borrowers who are current on their mortgage take a long time granting a short sale. This affects borrowers who move due to job  re-location and the current market hasn’t recovered enough yet to reflect equity.

Here’s the OTHER problem… some mortgages that are Short Sales actually reflect on the Credit Report kinda’ like a “Repossed Car” (foreclosure) because of the DEFICIENCY balance the bank reports.  Because there is NO STANDARD way for the Banks to report Short Sales, some are reporting them simply as paid off loans, and others are reporting “paid with balance still owing.”

If you are a homeowner and you were current on your mortgage payments, and you were in a Short Sale – BUT your lender shows the information to the Credit Bureau with a Deficiency Balance, you will likely have a problem finding a lender who will do the mortgage.  FHA says they will insure the loan – but that does not mean the banks will make you a loan, unfortunately.  

OUR BEST ADVICE is for you to call a lender approximately 60 days BEFORE you close on a Short Sale… and then again after you close on the Short Sale.  Talk to them about your credit, and the situation and see if you can qualify for a FHA Mortgage Loan or USDA Home Loan  financing.  We have been able to do loans for couples who quick deeded a spouse who was on the Deed of Trust, but not the NOTE – and then made a loan to THAT spouse (who was not on the Short Sale / Foreclosure note to the bank) … There are some options, so talking to a lender to find out what your options are is the smart way to do this!

 If you are in NC, SC, Virginia – we would be glad to help!  Please call Steve and Eleanor Thorne, First Financal Services 919-649-5058

We’re kinda Nerdy at my house, and last night we watched a CSPAN discussion regarding the Future of Mortgage Lending in Washington, DC.  John Courson (President of Mortgage Bankers of America) and the folks from the Center for Responsible Lending were on the panel.

One of the questions to the panel was, “Do we need to change the way we regulate agencies, including FHA?”  Well – this is really not much of a debate, because new regulations from FHA’s new “Risk Manager” are already headed into action later this month.  I’ve included some of the text below, and I toally disagree with the “assumption” I’ve bolded below:

Strengthen and Streamline Lender Approval – Lenders seeking approval to originate underwrite, or service an FHA loan must meet the eligibility criteria for a supervised or non-supervised mortgagee.  FHA-approved Mortgagees must assume liability for all the loans they originate and/or underwrite.  While loan correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees, they will no longer receive independent approval for origination eligibility. This will require the FHA-approved mortgagee to assume responsibility and liability for the FHA-insured loan underwritten and closed by the approved mortgagee. These changes align FHA with Fannie Mae and Freddie Mac and will potentially increase the number of loan correspondents (mortgage brokers) who are eligible to participate in the origination of FHA-insured loans while providing for more effective oversight of loan correspondents through the FHA approved mortgagees.

Strengthen the Capacity of FHA-Approved Mortgagees– Since 1993, FHA has required approved mortgagees have a net worth of at least $250,000.  To strengthen the financial capacity of FHA counterparties to ensure they can meet their obligations, the proposed rule would require mortgagees maintain a minimum of $1 million in net worth within the first year and at least $2.5 million of net worth within three years of the effective date of the rule.   These changes are consistent with industry standards and will ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting FHA to mitigate losses and decrease risks to its insurance fund.

Here’s my point… in today’s “Mortgage Brokers are BAD” environment, do you really think Wells Fargo (for instance) is going to continue to “supervise” mortgage brokers who are closing FHA loans?  Ugghh, No.  The number of “reputable” banks that are willing to supervise brokers will continue to SHRINK.

Someone said, “Yeah, it took 1,000 years for the Dinosaurs to become EXTINCT…” but that’s the long, slow march Brokers are on.  Regulation is going to END Mortgage Brokers entirely – and only LARGE, Regional Mortgage Bankers, or LARGE Banks are going to be left!

That’s why Steve and I went to work for First Financial Services.  We operate as a Mortgage Banker, and we are Regional – and we can meet the staggering 2.5 MILLION dollar reserve requirements.  Call us, if you are a Mortgage Broker looking for a home! 919-649-5058