Why It Is Important For Apartment Dwellers To Work With An Independent Mortgage Broker

Rual development loans at USDA Loan AgencyIf you have a limited income, you might wonder how you will ever be able to afford a home of your own. You should speak to an independent mortgage broker rather than a bank officer. People who live at or slightly above the poverty line are often recipients of USDA Loans and Rural Development loans.

Many apartment dwellers are nervous about leaving their living quarters for larger spaces. They fret about being able to scrape together enough cash for a down payment. They are uncertain if they can get a decent house for the small monthly sums they can afford to pay.

Those individuals should not go to a bank to request funds for a home. This is not because bankers will be dishonest with them. If you have a limited income, the options a traditional financial officer can give you will likely be very sparse.

Individuals who have high credit scores but low paychecks can often benefit from working with an independent mortgage broker. He can show you contract options a bank official might not present to his customers. These include USDA loans and Rural Development loans with low or nonexistent down payments.

People who make very few dollars often question if they can afford structures of their own. They should consult with independent mortgage brokers. Experts like them can present renters with contract options most bankers never discuss with their clients. Individuals who exist at or a little bit above the poverty limit can often get USDA loans and Rural Development loans.

Are you eligible for a Rural Development loan?

Apply for a USDA home loan now

Low Down Payments

If you’re looking for an affordable mortgage that’s actually obtainable don’t overlook a USDA Rural Development Loan. They’re one of the few ways you can still get a zero down payment home loan, outside of the VA program for our military veterans. To go along with no down payment, USDA loans also carry interest rates comparable to conventional mortgages. There’s no private mortgage insurance required, although you do have to pay an annual fee equal to 0.3% of the loan balance. This is quite a bit less than you’d have to pay for PMI on a conventional loan with less than 20% down. By comparison, FHA requires a 3.5% down payment and its annual fee is 1.10-1.15% on 30 year loans. As the name implies USDA Rural Development Mortgages are limited to home purchases in rural areas. However, the definition of rural is fairly broad- it includes small towns and the outlying areas of many small-to-midsized cities, so you don’t have to live in the sticks to qualify. USDA loans are also limited to people with low and moderate incomes, but those limits vary depending on where you live. The general rule is the household income cannot exceed 115% of the median income for your area, other things can factor in and raise that limit such as kids under 18. There isn’t a specific limit on the amount you can barrow. However, typically speaking you can get approved for three times your annual income before taxes. Does all of this sound good to you? Let’s get you on the phone with one of our USDA specialist and pre-approved today! J

USDA Program Benefits

The USDA home loan is a fantastic loan program that has been around for decades helping those with lower income to accomplish the American dream of home ownership.   Whether you are a 800 credit score of a 650 credit score, this loan is made available to all qualified applicants.  The main idea behind the USDA home loan is to help develop rural communities but that is not all.  The special thing about the USDA home loan is its 100% financed, meaning you do not have to make a down payment on your home!  Combined with the 6% seller concessions (money from the seller to help pay for the buyers closing costs) you can potentially get into a new home with ZERO money out of pocket.  This home loan is fantastic for those who have recently graduated (with very little money saved) or for individuals going through a tough stretch in their lives looking for a new start.  A brief run down on qualifications and eligibility for the loan:  homes need to be single family in size, stick built (no manufactured homes or mobile homes) and move in ready.  As far as qualifying as an individual, that is quite simple too.  All you need to do is go to www.usdaloanagency.com and fill out some quick and easy information or you can call one of our agents who will be more than happy to help walk you through the pre-approval process step by step.   Let us help get you home! CREFCO J

USDA Structure & Property Requirements

When looking into a home purchase the USDA Home loan program is a great option as it is intended to help individuals get into a home without having to put a down payment on the property.   However, the USDA program has a lot of guidelines that have to be met for qualifying purposes that may differ from the traditional mortgage programs available.  Having a clear understanding of the specific requirements will make the process of purchasing much easier for any buyer.

 

A common subject area that potential buyers are not aware of is the structural and property requirements within this program.

 

The following is what is deemed eligible for the USDA program with regards to the type of structure and property being sought…

  • Move in ready at the time of purchase
    • Structural integrity
    • Running water and electricity
  • Single family in size
  • Stick built
  • On a foundation
  • A maximum of 10 acres of land with the property ( no limits starting 9/1/2014 )
  • No potential income producing assets on the property
  • Must be the primary residence of any individual purchasing the home
  • Home must be located in a “rural” area as outlined by the USDA

 

Having a better understanding of these requirements will make the process of starting to look into homes much easier and will help a potential buyer streamline the time spent locating eligible homes much shorter.

 

If the USDA home program is of interest to you and the properties you are interested in would meet these requirements please let us know what Consumer Real Estate Finance Company can do for you!

 

 

 

USDA 101

USDA is a loan program that serves a fraction of the U.S. housing market and most banks don’t offer this program. However, many rural and suburban home buyers can use this program. The full name of the program is USDA Rural Development Guaranteed Housing Program. It is known to most as “USDA loans” or “Section 502”. If your lender does not offer USDA mortgages, the U.S. Department of Agriculture’s website can be accessed to obtain a list of lenders in the Rural Housing Program. The USDA loan program currently offers a 30 year fixed rate mortgage only. Beginning September of this year a 15 year fixed rate mortgage will be available however there are no adjustable rate mortgages.

 

There is no maximum loan size for the USDA Program. The amount that you can borrow is limited by your household’s debt-to-income. USDA typically limits to 41% except when the buyer has a credit score over 660, a stable income, or shows a demonstrated ability to save.  USDA loans are insured by the U.S. Department of Agriculture and the biggest feature is its no money down financing. The program can be used by first time buyers as well as repeat home buyers. Homeowner counseling is not required for the USDA Program. By using this Program you can finance 100% of a home’s purchase price and also have access to low; better than average mortgage rates. USDA mortgage rates are often the lowest among FHA, VA, and Conventional loan mortgage rates.

Appraisals Versus Home Inspections

Do I need both?  Home appraisals tell you how much a home is worth, and a home inspection tells you why you might not want to buy it, regardless of price. Both processes have the capacity to derail home purchases. Low appraisals sometimes sink loan approvals and disastrous home inspection reports might cause buyers to rethink purchase offers. Home appraisals are estimates of the market value of a home made by professionals, according to guidelines established by the industry and state regulation. Home inspections are estimates of a home’s condition based on an expert’s inspection of the mechanical systems and structure of the house.  Appraisals are critical elements in home buying and refinancing. Lenders hesitate to fund more than 80 percent of the market value of a home. When buyers and sellers agree to a sales price on a home, lenders do not automatically agree to provide a mortgage based on that number. The lender bases the amount it is willing to lend on the appraisal, so when a home appraises for less than the purchase offer, the buyer must come up with the money to cover the difference. Sometimes, the seller agrees to sell the home for less money in order to save the sale.  Buyers base purchase offers on the assumption that the home is in good shape. When inspections reveal items needing repair, buyers ask sellers to either repair the flaws or to credit them money back so that they can do the fixes themselves.  As unfortunate as both situations might be, qualified buyers and willing sellers often resolve impediments to a sale. Flexibility in negotiations is important, and setting priorities on both sides helps to keep emotions in check. Sometimes, a very low appraisal is a deal breaker. Buyers might balk at the idea of spending more than the home appraisal number. Sellers might refuse to lower the price or make any concessions. Likewise, a laundry list of physical flaws in a home inspection report might spook first-time buyers or those unwilling to deal with repairs. Sellers might not understand what all the fuss is, having lived with the flaws for years.  Bottomline, both are necessary during the process of purchasing a home.

Buying a Home is a Big Decision!

Purchasing a home, especially for the first time can be intimidating to most people. They say that it is the largest purchase any one will make throughout their life time. Having been with Consumer Real Estate Finance Company for almost 9 years now, carrying many different hats from being a Loan Officer, Loan Auditor, ordering title work, verification of employments, appraisals to handing closings up until the very end, I have learned a lot.  I must say though, working within the business have taught me so much over the years that I can certainly use in my personal life. If that involves purchasing another home for myself or helping a friend/family  through the process.

 

I recently helped my in-laws purchase a home in Ohio. We went back and forth with the builder, deciding if we should “let” them handle it all. Including the financing part. I was somewhat against it as I felt I could provide a much more reliable outcome by doing the work myself. We talked about USDA loans, with no money down, since they were purchasing the home in a rural area of the city. My Father-in-Law is a retired career Air force Veteran, so a VA (Veteran) loan made more sense.  I started the process myself by providing them with a VA application. Took it home and explained every single page to them. From a Loan Officers perspective, I think you need that personal touch to not only gain another customer, but also build the rapport with them. Make them feel that you DO care about this very large purchase they are about to make. Of course in my case, they were family, but I still felt the need to put on the Loan Officer hat at the time so I could really explain what they were getting themselves in to.

 

Being in the Air Force for over 28 years, my in-laws have lived all over the world, but had never purchased a home for themselves, as they knew they would always be on the move. At the end, my in-laws DID end up going with the lender’s finance company. The reason behind this was simply due to some extra credits they were giving out by staying with the builders finance company and title company.

 

I still feel good about their purchase as we DID review the finance company’s paper work as well, making sure we still felt comfortable with what they were providing.

What is a RESPA?

 

 

The Real Estate Settlement Procedures Act (RESPA) is an act passed by Congress in 1974.  It was designed to protect potential homeowners and enable them to become more informed consumers.  This act requires lenders to provide more information to borrowers at certain points in the loan process and prohibits referral fees and kickbacks between lenders and third-party settlement service agents in the settlement process.  Some disclosures list out the costs of the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.  It also prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.  RESPA covers loans secured with a mortgage placed on a one-to-four family residential property.  These include most purchase loans, refinances, assumptions, property improvement loans and equity lines of credit.  It requires lenders to provide a good faith estimate (GFE) listing all of the approximate loan costs as well as a HUD at the closing of the real estate loan.  Origination charges are not allowed to increase, while certain third party service provider fees can increase by no more than 10%.

When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:

  • a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only).
  • a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use of a particular settlement provider, then the lender must disclose this requirement on the GFE.
  • a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.
  • If the borrowers don’t get these documents at the time of application, the lender must mail them within three business days of receiving the loan application. If the lender turns down the loan within three days, however, then RESPA does not require the lender to provide these documents. The RESPA statute does not provide an explicit penalty for the failure to provide the Special Information Booklet, Good Faith Estimate or Mortgage Servicing Statement. Bank regulators, however, may impose penalties on lenders who fail to comply with federal law.

Zero Down Purchase Loans

Let Consumer Real Estate help you get started in the pursuit of purchasing a new home!

 

Here at Consumer Real Estate we specialize in helping individuals utilize the USDA Home Loan Program to make the dream of home ownership a reality.

 

The USDA Home Loan program is a 100% financed program that allows people to purchase a new home with no down payment at all.  It is meant to make the home buying process a bit easier and put less financial strain on an individual at the time of purchase!

What is the USDA Home Loan Program?

  • It is designed for move in ready homes, that are single family in size, stick built, and can have up to 10 acres of land
  • It is meant to develop rural areas and help construct communities outside of major cities
  • Allows individuals and families to purchase homes without financial strain that takes away from other aspects of life

This program is designed for anyone looking to purchase a home!  If you think this is something that you would like to look into, we will do anything and everything possible to help you get into a new home!

 

Consumer Real Estate will work directly with you throughout the entire process, keeping the best interests of the buyer in mind at all times.  It is our goal to make the home buying process as easy, stress free and successful as possible for all clients that choose this company, and to get them into a program that suits their needs best and costs as little as possible.

 

Please, Let us know how we can best help you as far as getting into a new home!