Government Home Loan Pre-approval–How To

So what does it take to get pre approved for a USDA Rural housing loan in 2013?  It’s actually still pretty easy considering all the changes that have happened in the mortgage market over the past 5 years. Mortgages in 2013 are “back to basics” in most cases.  Long gone are the days of qualifying for a loan with no income, poor credit, etc.   Homebuyers today that have decent credit, stable documentable income and manageable debt usually have no issue getting pre qualified for a mortgage today.

All of the Government home loans ( FHA, VA and USDA) pretty much require the same things in order to get pre approved.  Below we have outlined some key points.

Credit – in most cases a 640 credit score is needed to be pre approved for any of the government home loan today – FHA, VA, USDA. But keep in mind that a 640 credit score does NOT guarantee loan approval as all lenders / banks have additional waiting requirements (overlays) in regards to home buyers with any past bankruptcy, foreclosure, or short sale.  Additional for USDA Rural loans, a clean 12 month payment history on all other credit trade lines is important.

Income – It has to be stable and documentable in 2013.  The days of stated income or no doc loans are long gone.  Documenting income properly can sometimes pose an issue with self employed or 1099 workers, especially those that have not been self employed for at least two years.  Banks and lenders generally want to see a 2 year employment history.  Small gaps in employment history are just fine, just as long the gap isn’t too long, or unexplainable.  Recent college grads are generally exempt from the 2 year employment rule.

100% USDA Loans –  these loans are available to any homebuyer looking to purchase a home in a rural defined locations. Click here for the USDA eligibility map.  USDA also have income limits based on the number of members in the household, county, etc.  Please click here for more information on FL USDA income limits. USDA, along with VA, are the only mortgages in Florida that offer 100% financing with NO down payment. All USDA FAQ’s are listed by clicking here.

FHA Loans –  these loans are available across Florida to any homebuyer that qualifies. FHA mortgages require a min 3.5% down payment, there are no income limits restrictions or property location restrictions.  Click here to learn all about FHA loan requirements in Florida.

VA Loans – available to all eligible past and present military personal.  Please click here to learn more about VA loans in Florida.

Homeowners that currently have a USDA, FHA or VA loan should also look into the verity of streamline refinance options available today. These programs allow homeowners to refinance REGARDLESS of the loan to value. If you currently have a USDA Mortgage, click here to learn about the Pilot program.  For FHA loans please click here,  VA loans can click here.  Interest rates are currently at all time low levels!

Please contact us at 904-302-6060 with questions, or visit www.UsdaMortgageSource.com for more information.

Top 10 Mistakes Home Buyers Make

Mistake #1: Waiting for the market to improve or not buying at all

No one can predict precisely where the market is going, so trying to time your home purchase with the bottom of the market is futile. If you’re financially and emotionally ready to be a homeowner, it’s always a good time to buy. Just think: all the time you spend procrastinating on purchasing a home, you could be building equity, getting tax deductions and enjoying the many other benefits of homeownership

Mistake #2: Making an offer without contingencies

When you’re buying a home, Plan A is always to buy the home on the terms in the original contract. Plan B is to buy the home after renegotiating some of the terms. Plan C is the contingency plan: if there is an irresolvable flaw in the condition of the home, the home doesn’t appraise for the purchase price, or your lender refuses to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than the money you’ve spent on inspections) so long as you have the appropriate contingencies in place. Remember, contingency = the right to bail.

Mistake #3: Not reading the fine print

If you did your homework, you had your trustworthy real estate attorney review all your paperwork and discuss it with you so you don’t get a nasty surprise at closing.

Mistake #4: Forgoing a home inspection

Even if a home looks flawless, it’s a mistake to assume that it’s actually problem-free. All homes have defects — even brand new ones — so getting a professional inspection before making the commitment to buy is crucial. Be sure to attend the inspection so the inspector can explain any issues

Mistake #5: Falling for love at first sight

Buying the first house you like is kind of like marrying the first person you go on a date with: not necessarily a good idea. If you don’t shop around and see what else is out there, you could miss out on a good deal or potentially regret your purchase.

Mistake #6: Buying a house you can’t afford

Just because a lender is willing to loan you a fortune doesn’t mean you should take it. Buying more home than you can afford can quickly lead to financial trouble. As a rule of thumb, your mortgage payment should be less than 28 percent of your gross monthly income. Besides your mortgage payment, be prepared for the additional costs of homeownership, such as insurance, property taxes, utilities and maintenance

Mistake #7: Buying a foreclosure or fixer-upper without doing your research

Some homebuyers are so set on finding a bargain, they overlook the fact that buying a home that needs repairs can be a stressful and expensive endeavor. Before buying a fixer-upper, get estimates on any necessary repairs and renovations and make sure they will pay for themselves in increased property value

Mistake #8: Not researching the neighborhood

What good is having your dream home, if you don’t like the community where it’s located? Before shopping for a home, shop for a neighborhood. Make sure it’s a good fit for your lifestyle — figure out how long you want your work commute to be, how close you want to be to amenities like shopping and nightlife, and which school districts are the best. Even if you don’t have children, living near good schools raises your property value.

Mistake #9: Thinking short-term

The house you purchase should be a place that feels like home to you and your family, but it’s important to remember that it’s also a huge investment. When shopping for a home, it pays to think about resale down the road. Search for homes in sought-after locations, and look for features that future buyers will want, such as central air conditioning and lots of storage space.

Mistake #10: Not getting pre-approved before house hunting

Why get your hopes up looking at $500,000 homes, when you can really only afford a $300,000 home? Before you start house hunting, narrow down your price range by getting pre-approved. Shop for a lender or mortgage broker you can trust. The mortgage pro will review your credit, income, assets and debts, and recommend a mortgage with monthly payments that fit your budget. The result is a good faith estimate, a document that spells out the likely terms of your loan, including the interest rate and closing costs. Not only does this let you know how much house you can afford, it also lets sellers know that you’re serious about buying.

 

Mortgages for Foreclosure Purchase and Repairs

Purchasing foreclosures also means discounts, but with the markdown is the price of repairs. According to RealtyTrac, foreclosures or REOs sold at an average discount of 27 percent compared to non-distressed properties in the first quarter of 2012.  Through an FHA 203(k) loan, potential buyers who want to purchase a discounted foreclosure but don’t have cash for the repairs may find a way to receive financing.

According to HUD, the 203(k) program is the department’s main program for rehabilitating and repairing single family properties, and it’s viewed as an important tool to revitalize neighborhoods.

In order to be eligible, the property must be purchased as a primary residence or it can be for a HUD approved nonprofit. Also, the property must be a one-to four-family residence that has been completed for at least one year.

Dan Green, loan officer with Waterstone Mortgage and author of themortgagereports.com, explained that FHA 203(k) program can be used on any 1-4 unit residential property, and is not limited to just HUD properties or foreclosures.

The maximum amount that can be taken out for the property is based on the value or the purchase price of the property before rehabilitation (whichever is less), plus the estimated cost of rehabilitation or 110 percent of the property after improvements, according to HUD.

A down payment is required, and the minimal amount for a down payment is 3.5 percent of the accepted bid price plus the cost of financing additional repairs.

Since there is more “file” to underwrite for an FHA 203(k) loan, Green said the approval process takes longer than a standard FHA mortgage.

“FHA 203k approvals take more time, but are no more difficult than any other mortgage type,” said Green. “Borrowers should expect to provide the documentation required, and should respond to loan officer requests in a timely manner

There are a limited number of banks who offer these loans, so contact me at 850-305-6256 for more information on who offers these in the Destin/Niceville/Crestview/Fort Walton Beach/Navarre areas.

Underwater Mortgages Rise

The percentage of homeowners with mortgages who owe more than their homes are worth continued to rise during the first quarter, but only 1 in 10 of underwater homeowners are seriously delinquent on their loans, according to estimates released today by real estate search portal Zillow.

Zillow — which looks at outstanding loan amounts on individual properties, and compares them with estimated valuations for each home that are generated by computer models — estimates that 15.7 million homes were underwater during the first three months of the year.

That’s 31.4 percent of all homes with mortgages, up from 31.1 percent during the last three months of 2011 (not all homeowners have mortgages).

Although just 10.1 percent of underwater homeowners were more than 90 days behind on their mortgage payments, that represents nearly 1.6 million homes that could eventually hit the market as distressed properties.

Numbers like that can put fear into the hearts of would-be homebuyers, since distressed properties sell at discounts that can drag down home prices. Those effects are highly dependent on individual market conditions.

Zillow estimates that nationwide, about 2.4 million underwater homeowners owe more than double what their home is worth. In the Las Vegas metro area, 26.8 percent of homeowners with mortgages are that deeply underwater — nearly 90,000 homes.

FHA Mortgage Insurance Premium Increase

Starting next Monday on April 9, FHA upfront mortgage insurance premiums will rise from 1 percent to 1.75 percent of the base loan amount, and the annual mortgage insurance premium will rise by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.

Even if one hasn’t applied for a loan just yet, Dan Green, loan officer with Waterstone Mortgage in Cincinnati and author of themortgagereports.com, said by getting an FHA loan registered by April 9, one can avoid paying those premiums.

“To register an FHA loan simply means to have an FHA Case Number assigned to it. You don’t have to lock a mortgage rate and you don’t even have to choose a particular lender to work with,”

4 Reasons Every Buyer Needs a Pre-approved Home Loan

 

Posted Mar 1 2012 by  Peter Fletcher

A pre-approval is one of the greatest assets a home buyer can get.

Pre-approval is a written assessment of your worthiness for a loan. When you seek pre-approval for a home loan, your lender will assess your ability to pay, as well as your credit history, to decide how much they are willing to lend you.

Although you can make an offer and go through to the start of property settlement without having pre-approval, smart home buyers get pre-approval before they make an offer.

Really smart home buyers get pre-approval before they even start going to home opens.

Here’s why you should, too:

1. You get a better choice of properties. When you visit a home open and talk to a real estate agent, letting them know that you have pre-approval is a sure-fire way to get them to take you seriously as a buyer. Once a real estate agent knows you’re serious about buying, they’re likely to call you about potential properties before they’ve even hit the market, giving you a better choice of properties, and potentially cheaper deals.

2. You get a better deal. To sellers, pre-approval is almost like a guarantee that the deal they strike with you won’t fall over. Sellers want certainty, because if the buyer they choose can’t get finance, the seller will have to start marketing their property all over again. To them, this certainty is worth money – I’ve seen plenty of deals where the seller has accepted a lower offer because that buyer had pre-approval and the higher offers didn’t.

3. You won’t waste time looking at homes you can’t afford. Getting pre-approval will give you a much better idea of what homes are within your price range, so you’ll know in advance which properties are too pricey to waste your time on.

4. You won’t have your heart broken. Imagine falling in love with a property and even going so far as to make an offer on it – only to find out at that it’s out of your price range! Save yourself the disappointment of having a deal fall through by knowing in advance what you can (and can’t) afford.

If you’re planning to buy a home, get a pre-approved home loan from your chosen lender. Your seller, real estate agent, and settlement agent will thank you for it – and you’ll be glad you did.

Help for Short Sale Process

The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.

The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer

will be limited to one extension of no more than 21 days.

The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.

According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.

“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”

Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”

The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.

When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.

In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.