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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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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USDA Home Loans and Home Inspections Don’t Mesh

October 4, 2010 by 2 Comments

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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Does Obama Know Something We Don’t About the Economy?

September 3, 2010 by Leave a Comment

I read a TON of Economic Newsletters, watch CNBC, and Congressional hearings… I’m an economic junkie who misses Louis Rukeyser!  I’m always looking to see if I can figure out which way rates are headed.

So when the President came on the news this week to announce that the war in Iraq was over, and the pundits started asking why it was only a 15 minute address – I was kinda’ let down, because I had also been expecting that he would take this chance to give folks a “Positive Message” when it comes to the markets.

Without that Presidential Guidance, I’m back to the Economic Numbers for insight.  And here’s what they are telling me:

  • “… the public is no longer investing in stocks, but rather in bonds.  So far this year through July, bond mutual funds have attracted $224.4bn in net inflows including reinvested dividends.  ” — Ed Yardeni, September 1, 2010.” Which means a Consumer Spending spree is not going to get the Economy going.
  • “The Fed terminated the purchases of $1.25 trillion in GSE mortgages and mortgage-related paper in March.  Simultaneously, the housing-purchases credit subsidy ceased in April.  Housing went into relapse, as most economists expected.  Simply put, subsidize something and you get more of it; remove the subsidy and you find that you have borrowed economic activity from the future, and now you get less of it.” Cumberland Advisors  Which means ANOTHER Tax Credit is not going to get the Economy going.
  • Case Shiller Numbers indicate that the Housing PRICEs actually went UP during the 2nd quarter.  “While some may see these price gains from the trough as a sign of bouncing along the bottom, most experts believe home prices nationally will fall again, but not necessarily immediately.”  Which means the Housing Market is not going to get the Economy going.
  • Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis…  and today’s non-farm payroll job’s numbers showed 54,000 jobs lost in August (many of those from the Census Jobs that are gone).  So there’s not a surge of Employment to get the Economy going.

So was it just that the President didn’t have any positive news… or does he know something we don’t know? One of my favorite charts is the Four Bad Bears.

Permission from D Short

As you look at this chart – this “Bear” looks just like the other three. Maybe we ARE heading into a little dip – but it’s not really that’s alarming!  When you stop just looking at the headlines, and you look at the long term trend… things are not sky rocketing up, but they don’t look that bad! We are going to have a slowly improving picture!

Mortgage Interest Rates typically get LOWER when there’s BAD NEWS in the Economy… and they go UP when there’s good news. Believe it or not – the last three days we’ve had higher rates!  The Dow is Happy!

That’s not good news if you are waiting to Refinance!  NOW is probably the time to do it!

If you are considering a Refinance, call Steve and Eleanor Thorne, 919-649-5058  We have the best rates available, we offer FHA Streamline Refinances, Conventional financing, USDA Home Loans and VA Mortgage Loans!

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USDA Guarantee Fee Update 8/23/2010

August 24, 2010 by 1 Comment

The Single Family Housing Origination Department of the USDA Home Loan Program announced yesterday that they should have their computer systems up and running to accommodate the changes required by Congress in their fees.

Since the end of May, USDA has been issuing “Conditional” approvals… and because of that, Wells Fargo, Bank of America (and many, many others) are not doing USDA Home Loans.

We are still closing these loans... here’s what the directive says:

Rural Development also is working on a more complete system upgrade to accommodate all provisions of the new law. We expect this full enhancement to be completed as early as possible next fiscal year. While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to maintain a zero cost program. We appreciate your role as a lender in responsibly servicing loans in the SFHGLP portfolio and helping us maintain a successful program.

So here’s the headline folks… USDA has the authority to give a lower guarantee fee to “poorer families.”  They also have the authority to charge an ANNUAL (monthly) Mortgage Insurance Fee... they are NOT doing it right now, but reserve the right to do so in the future.

Almost all parts of our state qualify for the USDA Home Loan Program, which offers 100% no money down financing. You will need to meet the income requirements (which vary by county) and you need to have a credit score of at least 620.

If you are considering a USDA Home Loan, Call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-694-5058.

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USDA Rural Development Home Loans

May 27, 2010 by Leave a Comment

Thinking about buying a home so you can get that Tax Credit? Don’t have a ton of CASH laying around??  Well, the first thing you should do is call Steve Thorne to see where properties are in your area that qualify for USDA Rural Development Home Loans!  Steve is a USDA Rural Housing Mortgage Expert, and he can research your property and determine if both you and the property will qualify! (okay so that’s the FAST way to do it – call 919-649-5058)

If you’ve heard that USDA Rural Development might be out of money… click here for an update!

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!

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USDA Rural Development Home Loans – No Money?

April 15, 2010 by 2 Comments

As of 4/15/2010 USDA has less than 2.0 Billion dollars left to fund in home loans.  This is a HUGE issue for folks who waited until the last minute to purchase a home, thinking they could a) get a better deal and b) use USDA Home Loan financing (no money down).  At the current rate – we will be out of funds before May 1, 2010.

There are TWO major issues you should know if you are STILL wanting to write a contract and get your Tax Dollars.

  • It’s going to be HARD to get a seller to accept your contract.  It currently takes 2 weeks at USDA underwriting to get a loan approved.  So if you write your contract this weekend, even if we could get an appraisal in ONE DAY – they would be out of funds before you could get submitted!

But let’s assume that you get /or have a contract that’s accepted prior to the end of April… now you need to close by the end of June.  Here’s the rest of what you should know:

  • The National Association of Home Builders are going to Washington next week. They are NOT asking for an additional Tax Credit… they are asking for MORE USDA dollars.  You see, the way this deadline approached left many people feeling that they were going to change the guidelines for USDA Home Loans.  The NAHB is asking that they leave it in place with no guideline changes – because the default rates on these loans are LOW.

The Associated Press Said today:

Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee, and four other members of his panel wrote letters to Agriculture Secretary Tom Vilsack last month supporting the program and proposing immediate funding options.

Waiting until the next fiscal year to replenish the program would mean shutting it down for five months. And proponents say that would hurt people who could not get a conventional mortgage.

We agree – and suggest that you contact your Senators and Legislators and ask them for more funds… we certainly have.

If you are in a contract or trying to get in a contract using USDA Home Loan Funds… call us.  We will give you straight answers, and work to solve your problems.  There are other solutions.  Steve and Eleanor Thorne, Mortgage Banker in Cary 919-649-5058

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Durham County USDA Financing Tips!

January 26, 2009 by Leave a Comment

Part of Durham County, NC qualifies for USDA mortgages – and the qualifying guidelines have recently changed!

To see maps specific to where you can find a home that qualifies for this 100% financing in Durham, click here

The maximum income is calculated per family members living at home.  The current guidelines are:

  • 1 person in household maximum income is $57,400

  • 2 people in household maximum income is $65,600

  • 3 people in the household maximum income is $73,800

  • 4 people in the household maximum income is $82,000

  • 5 people in the household maximum income is $88,550

In addition to this – the property need to be located in a qualified (less densly populated area).  If you want to see if your property is qualified for a USDA 100% home loan – click here! If you have quesitons about purchasing a home using a USDA Mortgage – please call Steve and Eleanor Thorne at Connect With Us on Facebook, 919-649-5058

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