Documentation Needed For a Mortgage Loan

March 27, 2012 By Leave a Comment

Call Us!Here’s a list of the various types of information we are required to receive for most (if not all) loan applicants:

  • Social Security numbers
  • Residence addresses for the past two years:If renting, we will need contact information for your landlords
  • Names and addresses of your employers over past two years: If you were a student, we will need either a copy of your Diploma or your transcript
  • If you are Accepting a Position that will start in the future:  Please provide your letter of offer
  • Your current gross monthly salary: We’ll need pay stubs for a month, and W-2s for the last 2 years
  • Alimony or Child Support:  We will need evidence that you are receiving this income
  • Divorced or Separated:  We need a copy of the recorded divorce or separation agreement [Read more...]

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FHA Guidelines to Qualify “Rent to Own” in NC

May 5, 2011 By 1 Comment

Rent-to-own agreements and or sales that take place between a tenant and landlord have special FHA Guidelines. Often times, when someone moves to our area with a short sale, or previous forced foreclosure in their past – they will rent a home here until their “waiting period” is over.

If you are in this situation, and plan on buying a home under a rent to own scenario, there are different rules for different types of loans. All Government loans are popular, because of their low downpayment requirements.  VA has no “formal” guidelines for this scenario, and neither does USDA- however, most Underwriters follow the FHA Guidelines for all Government loans in a lease to own scenario.

The appraiser will determine the fair market rent for the property.  Any money paid ABOVE the fair market rent will be used as a credit towards a future downpayment. So, if the appraiser says the fair value rent for the home is $1000, and you pay $1500 a month – $500 for each month you paid that could be paid by the Seller as Downpayment for you at closing! [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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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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Profile of 2009 – 2010 First Time Home Buyer

November 9, 2010 By Leave a Comment

The National Association of Realtors released information about First Time Home Buyers last week that showed some interesting trends!

  • 93 percent of those surveyed in 2009 – 2010 reported that they purchased using one of the first-time buyer tax credits. (Who’s surprised??? Nope, we’re not surprised either!)
  • Ninety-five percent chose a fixed-rate mortgage.
  • The median age of first-time buyers was 30 and the median income was $59,900. (This part was a little surprising!) The typical first-time buyer purchased a 1,540 square foot home costing $152,000 (bet they were keeping their total payments under the $1000 mark)
  • First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 38 percent received a gift (or a loan) from a friend or relative, (READ:  their parents) Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.
  • Women accounted for 1 in 5 purchases, and single Males made the largest leap in the survey ever – which was attributed to the tax [Read more...]

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New Survey of Home Buyers by the National Association of Realtors

November 8, 2010 By Leave a Comment

There have been a couple of survey’s released recently by the National Association of REALTORS® that highlight long term (like over 8 year) patterns and shorter term (last 12 to 18 month) patterns in buyers.  If you are considering a home SALE or purchase, these trends are important.

  • Typical sellers had been in their previous home for eight years. This is up from the 2009 survey that showed home sellers in their home for only seven years.  The survey also showed that repeat buyers plan to stay in their home for 15 years… so we are all thinking a little more long term!
  • First Time Home Buyers plan to stay in their home for at least 10 years. This says (to me) that SCHOOLS are going to be an even bigger issue in the future.

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

“Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase,” NAR President, Ms. Golder of Arizona said. “Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property.”

Homeownership, despite all of the problems in the last few years, still appears to be an American Dream according to this survey.   NAR economists state in the survey that, “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks.”  What are some of the OTHER reasons they are buying?

  • “Honey We Need A Bigger House!” A desire for a larger home influenced almost 10% of all buyers.
  • A change in their families’ situation (like divorce or death) influenced just under 10% of buyers
  • The Whopping $7500 and $8000 First Time Home buyer tax credit was cited by 8 percent of buyers
  • A job-related move (which we thought would be much higher) influenced 7 percent of buyers
  • Affordability Issues (meaning can’t afford your house anymore) only figured into just over 5% of those responding (which was surprising).

Another NAR Survey released details the massive numbers of First Time Home Buyers entering the market.  For more on that, click here.

If you have questions about purchasing a home, how long you need to wait after a short sale or modification – or special ways for First Time Home Buyers to qualify in NC, please call Steve Thorne 919-649-5057. We have the best mortgage interest rates, and the lowest Fees Available!

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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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USDA Home Loans Near Greenville NC Pitt County

September 21, 2010 By Leave a Comment

USDA Home Loans are 100%, no money down loans available for “less urban / more rural areas.”  North Carolina has more areas available for this financing than most states. Pitt County, and the area around ECU, and Greenville has a TON of the county that qualifies for this great program.

The property must be located in the USDA “footprint” (so in the lighter shaded area), and the borrower’s household income can not exceed $74,750.  This income limit for a household of 1-4 people varies from county to county.  To see what the requirements are for your area, click here.

Here is a map of the areas that qualify for USDA Home Loan financing in Pitt County NC

Looking at the little “triangle” that I pointed the arrow to looks like this:

If you are looking for a no money down payment loan in Pitt County, NC – or anywhere else in NC for that matter, Call Steve and Eleanor Thorne, Mortgage Banker in Cary 919-649-5058 We are USDA Home Loan experts! We have great rates, we can help you with your credit challenges, and we know what WILL work for USDA… and what won’t.  So don’t waste your time!  Call Steve at 919-649-5058

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