USDA Home Loan Change in PMI 12/11

December 14, 2011 By Leave a Comment

usda home loansUSDA notified us that they are once again changing their “PMI” for their Home Loan Program.  USDA, like FHA and the Veteran’s Administration don’t actually “make” the guaranteed loans, they just insure the lender against default.  That “default” insurance is just like PMI, and unless you are putting at least a 20% down payment – you are going to have some sort of this insurance,

Earlier this year, the USDA RD Single Family Loan Department announced that for the 2012 fiscal spending year, folks who are purchasing a home would expect to pay the following:

The new fee structure for FY12 is as follows:

·         2 percent Upfront Guarantee Fee for purchase transactions.  This means that if you are purchasing a $100,000 house, the loan will be $102,000; OR, you can pay the 2% out of your pocket… or see if you can get the Seller to pay it.  We are NOT seeing many situations where the Seller is doing this, but if you have extra funds, you can go ahead and pay this off.  Unlike FHA, the Guarantee Fee (or Mortgage Insurance Fee) is not refundable.

·         0.3 percent AnnualFee for purchase transactions.  This means that if you purchase a $100,000 house, with a $102,000 loan on it, you will pay a MONTHLY Insurance fee of $25.50 ($102,000 x .3% = $306 divided by 12 months = $25.50 a month)

Even with this additional fee – USDA is still much lower than FHA!

Like the FHA Streamline Refinance, As of February 2012, USDA Rural Development Single Family Home Program is offering a LIMITED Streamline refinance program.  Because of this, we MIGHT be able to refinance your USDA Home Loan to a lower rate with NO Appraisal!  Please call us for details!

If you’ve been in your home for several years, this might be the time to Refinance! 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 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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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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Is My Home Loan Underwritten by a Person or a Computer

April 25, 2011 By Leave a Comment

“Is My Home Loan Underwritten by a Person or a Computer??” I understood the borrower’s question.  The answer is, in North Carolina, your mortgage loan will be underwritten, or approved, by BOTH a computer system and a real person.  The Computer Program used to approve loans is call an Automated Underwriting System – or AU.  The Automated Underwriting is performed on every mortgage these days whether you know it or not.

Think about this – in 2010 we had over 395 changes to mortgage loan guidelines.  There are too many variances for a loan officer to know by heart any more! The Computer Automated Underwriting can be done upfront when you make loan application or later when the mortgage is submitted to underwriting. (Usually it’s done at BOTH times, because obviously, it is much better to know upfront instead of wondering if you are approved farther into the process!)

Automated Underwriting Definition

Automated mortgage underwriting is when a computer takes in all your qualifying information along with your loan program and spits out an approval or a denial based on what it saw. f you are approved, the automated underwriting computer tells you what documentation is needed for final approval and closing. If it was a denial, it tells you why you were denied.  The actual VERIFICATION of the information put into the Computer Automated Underwriting system is done by the Loan Officer, Processor, Underwriter and Closer (meaning a bunch of different folks are going to be verifying the documents).

Even though every mortgage (barring a very small handful) gets runs through a computer, it is not always the same computer system. Fannie Mae automated underwriting has all of Fannie Mae’s guidelines and was developed by them to underwrite their loans. FHA automated underwriting is a totally different computer system developed only for FHA approvals. Freddie Mac has it’s own system – and the system used to underwrite USDA Home Loans is called GUS.

The Computer Automated Underwriting System is simply looking to see if the numbers we input meet the guidelines that it has. If so, you get a big thumbs up… if not, it’s not a complete denial (usually).  The system will give us a list of items we need to review, change, update, or redo and try again.  I’ve updated information for a single file 21 times before I got it approved! (Paid off a truck, added a wife to the loan and made a larger downpayment!)

So, if you hear us talking about the Automated Findings, or the Automated System – that’s what we are talking about.  It’s part of the new Underwriting Team!

If you are considering a home purchase in NC, and want the BEST mortgage interest rates, and the BEST Chance of getting your mortgage loan approved – call Steve and Eleanor Thorne, NC Mortgage Loan Experts!  919-649-5058

 

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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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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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