In the past, one of the most popular programs asked for by my customers is the 100% loan program. As you have heard, the government has been tightening the qualifications and requirements on all mortgage home programs. The "Rural Development Program" has been a mainstay, as not only do they do the hundred percent programs, they manually underwrite each application. That means that people who are borderline has a better chance to get their application approved.
Here's an excerpt from the letter I received concerning this:
"The USDA Section 502 Guaranteed Rural Housing (GRH) program has experiencedunprecedented demand over the last several years. Based on concern for availablefunds, USDA Rural Development has announced that funding for the USDA GRHProgram will likely be exhausted by the end of April 2010. In order to provide assistanceto your organization during this time, we have addressed the following key areas:Loans Approved by USDA Rural Development
Once a loan is approved by USDA Rural Development and a Conditional Commitment forSingle Family Housing Loan Guarantee (RD Form 1980-18) is issued, the loan will not beimpacted by the lack of funding, provided the loan closes before the expiration of the1980-18. (As a reminder, Lenders may request a 90-day extension of the 1980-18 fromUSDA Rural Development.) This projected lack of funding will only impact loans inprocess that have not received a USDA Rural Development approval (RD Form1980-18.)"
Every year, Rural Development has to get their funding approved, which normally happens in April. The concern is that Congress MAY not provide the funding on these loans, which means that there will no longer be this program allowing to buy a home without a large down payment.
Another issue that may be facing us is that HUD (talking mainly about FHA)is discussing an idea that would increase the amount a potential buyer would need for a down payment, and would not allow the seller contribute as much towards the closing costs. We'll know more about this sometime this summer.
We already know that FHA will increase the lump amount MIP premium in April, but keep the monthly percentage the same.
So with all these changes, what do we do? With all of this uncertainty, many people that are in the market to buy a home are sitting on the sidelines until the rules are clear. The problem now is that people that are waiting for clarity may end up paying thousands of dollars more that they would today.
If you're in the market to buy a home in the next few months and you are looking to find as close to a hundred percent program as possible, you need to secure the Rural Development loan guarantee. Essentially, the moment you find a property, you need to have your lender secure the guarantee from Rural Development.
These are tumulus times for homebuyers. On one hand, people want to make sure that they are getting the best price and best deal on a home purchase.
On the other hand, people that are being too exact are not only going to have to put more money down, but if they close on their home after May 1st, they will also loose thousands of dollars in tax credits.
So what do you do if you one of those guys that are home shopping and haven't found the perfect home?
T he first point is simple. Statistics say that t most people on average buy five homes over their lifetime. This means that your first home is NOT your final home. Most of the time it's a starter home, one that needs TLC, but it's a lot better to have that starter home, rather than pay your hard earned money in rent each month. When you pay rent, your landlord is getting money to pay his mortgage, and enjoying the benefits of that. You're getting nothing out the deal.
Don't be penny wise and dollar foolish. If you wait six months, and have to put 10% down on the home, and lose the tax credit, you'll be out tens of thousands of dollars.
My suggestion is this, wouldn't it be better to be a homeowner, with little money out of pocket on the not so perfect home, our pay ten to thirty thousand dollars out of pocket more by delaying?
Real simple.
Find a house.
Buy it with as little money as possible.
Find your perfect home in a few years.
Use the equity in your old home for the down payment.
Home prices are at an all time low, and you'll be in a better position as a home owner, rather than a renter.
We're coming on tough times in the real estate market, but those people that can take advantage of this are the ones that will come out ahead.
I have a link to not only rural development website; I also have links to the FHA programs, the repo programs, and more.
Thanks, and see you on the other side.
Mitch Champagne
In the past, one of the most popular programs asked for by my customers is the 100% loan program. As you have heard, the government has been tightening the qualifications and requirements on all mortgage home programs. The “Rural Development Program” has been a mainstay, as not only do they do the hundred percent programs, they manually underwrite each application. That means that people who are borderline has a better chance to get their application approved.
Here’s an excerpt from the letter I received concerning this:
“The USDA Section 502 Guaranteed Rural Housing (GRH) program has experienced
unprecedented demand over the last several years. Based on concern for available
funds, USDA Rural Development has announced that funding for the USDA GRH
Program will likely be exhausted by the end of April 2010. In order to provide assistance
to your organization during this time, we have addressed the following key areas:
Loans Approved by USDA Rural Development
Once a loan is approved by USDA Rural Development and a Conditional Commitment for
Single Family Housing Loan Guarantee (RD Form 1980-18) is issued, the loan will not be
impacted by the lack of funding, provided the loan closes before the expiration of the
1980-18. (As a reminder, Lenders may request a 90-day extension of the 1980-18 from
USDA Rural Development.) This projected lack of funding will only impact loans in
process that have not received a USDA Rural Development approval (RD Form
1980-18.)” END QUOTE
Another issue that may be facing us is that HUD (talking mainly about FHA)is discussing an idea that would increase the amount a potential buyer would need for a down payment, and would not allow the seller contribute as much towards the closing costs. We’ll know more about this sometime this summer.
If you’re in the market to buy a home in the next few months and you are looking to find as close to a hundred percent program as possible, you need to secure the Rural Development loan guarantee. Essentially, the moment you find a property, you need to have your lender secure the guarantee from Rural Development.
So what do you do if you one of those guys that are home shopping and haven’t found the perfect home?
T he first point is simple. Statistics say that t most people on average buy five homes over their lifetime. This means that your first home is NOT your final home. Most of the time it’s a starter home, one that needs TLC, but it’s a lot better to have that starter home, rather than pay your hard earned money in rent each month. When you pay rent, your landlord is getting money to pay his mortgage, and enjoying the benefits of that. You’re getting nothing out the deal.
Don’t be penny wise and dollar foolish. If you wait six months, and have to put 10% down on the home, and lose the tax credit, you’ll be out tens of thousands of dollars.
My suggestion is this, wouldn’t it be better to be a homeowner, with little money out of pocket on the not so perfect home, our pay ten to thirty thousand dollars out of pocket more by delaying?
Home prices are at an all time low, and you’ll be in a better position as a home owner, rather than a renter.
We’re coming on tough times in the real estate market, but those people that can take advantage of this are the ones that will come out ahead.
I have a link to not only rural development website; I also have links to the FHA programs, the repo programs, and more. Check us out at
Click for Website
Check out the great buys on Electronics.
TIME IS RUNNING OUT ON THE TAX CREDIT
By Mitch Champagne
I Just got off the phone with a customer, (“John,” I’ll call him) and he casually mentioned that they decided to wait until August to buy their home.
I asked them, “You don’t know that the Tax Credit is running out in April?” Dead silence for a second. He cleared his throat and said, “I haven’t heard anything on it recently, I thought it already ran out.”
Um, no.
I politely told him that he had to have his home under contract by April 30th, and close before May 30th.
Ok guys; let me bring you up to date. The tax credit was extended last November to the dates I mentioned, and also expanded the package.
Qualifying first time home buyers can get up to $8000 tax credit, and previous home owners can get up to $6,500. You have to be what the IRS calls a “Long Time Resident”.
There is all kind of rules, but as long as you’ve lived in your previous home, then bought another home, you would qualify for up to $6500 credit. What’s important about the credit is that these credits DO NOT have to be paid back.
For example, let us say you’re bought a home for $100,000. You were getting back $100.00 back on your taxes, before the credit. If you’re a first time home buyer, you would get your $100.00 plus ten percent of the purchase price of your home, up to the Max of $8000, so you would get $8100 total.
If you are a long-time resident who bought a home after November 6, 2009, subject to certain criteria, were eligible for a maximum credit of $6,500, (which again, you don’t have to repay) There’s all kinds of rules if you had a long term home owner, and you remarried, what could you do, so check out the IRS’s link at IRS Website
One of the new wrinkles is that even you don’t have to sell the home to qualify for the $6500 Tax Credit. I see nothing that would stop you from using your old residence as a rental property. (Here’s my disclaimer, check this with your tax advisor and CPA).
One change from last year is that you have to send in documentation that you actually BOUGHT a home in the property time frame, which means that you have to manually send in your tax forms, no filing electronically on this. The IRS says you should a refund in six to eight weeks, some CPA’s I talked to said that some of their customers that bought a home in January still hasn’t gotten their refund check back. So file as soon as you can.
You still would be allowed to file an amended return if need be, so technically you could get your normal refund, and then just wait on the credit check. No one I know has been brave enough to try that, but if any of you guys has had success on this, let me know. Now some states are doing “loans” so that you can use the money for closing costs, or down payment, but that’s not available in my state, so you will need to check with the Department or Housing Authority in your state.
I would suggest you move fast, as the government is ending a program that has kept the rates down for the last few months. In about two weeks, at the end of this month, the Federal Reserve will stop buying mortgages from Fannie Mae and Freddie Mac. The Fed has said numerous times that this was a short term measure to help the housing industry, so the rates should rise.
Another factor to bring into play is HUD also enacted legislation in January that has tightened up the market, and Analysts predict that we may see an increase in the required down payment also. Now I was told by some guys, (rather gleefully I might add) that if people are required to put more money down, that would reduce the foreclosures.
It wouldn’t, but I could have spent an hour explaining why, so I left it alone. I asked this question, and this shut them up quickly.
“What was the purchase price on your home?” I asked.
$175,000, he answered,
“How much money did you have in the bank when you bought your home?” “Ten thousand,” he said proudly.
“Ok, under the new rules, you would have had to pay $17,500 plus three percent of the purchase price, because they reduced the closing costs to be paid down to 3%. Then add in your taxes and insurance.”
He turned white. “Over twenty thousand.”
Guys, what I’m saying is this. If you have plans to buy a home in the next two to three years, factor in the tax credit you’ll be losing, plus the additional amount in taxes and other costs you’ll have to pay, which way is going to save you the most money?
If you have any questions, you can email me or go to our website, my Web Site.
I also have some other links for HUD homes, rural development loans, etc. I’ll write about those later.
Until next time.
Most of my customers that have bought homes purchased a Home Warranty program at the time they closed on their home.
Many argue that if you're buying a new home, a home warranty is not needed, but if the home is three years old or older you should consider it.
The top notch warranties cover major appliances such as:
Heating System ,Built-in Microwave, Heat Pumps
Garbage Disposal, Ductwork, Ceiling Fans
Plumbing System, Exhaust Fans, Electrical System
Central Air, Water Heater, Refrigerator
Range/Oven, Garage Door Opener
Cook Top Clothes Washer
A home warranty cannot prevent systems or appliances from breaking down, but it can help you avoid unexpected repair costs, make covered repairs or replacement easier and less costly.
Your home is the biggest investment you'll ever make, which is why it's so important to protect it. That's why you have homeowner's insurance – it's there for you should any number of catastrophes come your way. But sometimes things happen in your home that doesn't necessarily trigger your homeowner's coverage but can still cost you a lot of unexpected money.
I've done some research and found some that I think offers the best coverage at competitive prices. Just email me and I'll send you the links.
See you next time.
Well, maybe not, but another way to look at this is that this could be a type of insurance for your air conditioner, heater, and your major appliances like washers and dryers.
Here's an amusing video!
Who can afford 1000 to 8000 to repair or replace air conditioning? Or your stove goes out, and you're spending money on eating out.
The top notch warranties cover major appliances such as
A home warranty cannot prevent systems or appliances from breaking down, but with a $75 service fee, it can help you avoid unexpected repair costs, make covered repairs or replacement easier and less costly.
Home Owners – Protect Your Most Valuable Investment
Your home is a place to make memories and it's probably the biggest investment you'll ever make, which is why it's so important to protect it. That's why you have homeowner's insurance – it's there for you should any number of catastrophes come your way. But sometimes things happen in your home that doesn't necessarily trigger your homeowner's coverage but can still cost you a lot of unexpected money.
This program can also help with homeowners deductibles, auto deductibles, mortgage payments, a place to stay while your home is being repaired, emergency cash and so much more.
Emergency Cash - Up to $1,000*
Covers up to $1,000 when a loss covered by your homeowner’s or renter’s insurance company renders your primary residence uninhabitable or there is a mandatory evacuation by a public service officer or the National Weather Service
Emergency Lodging – Up to $1,000 for Lodging Expenses
Covers up to $100 per day for up to 10 days when a loss covered by your homeowner’s insurance or renter’s insurance company renders your primary residence uninhabitable or there is a mandatory evacuation by a public service officer or the National Weather Service
Rent or Mortgage Reimbursement - Up to $1,000*
Covers up to $1,000 a month for up to 6 months for Rent or Mortgage expenses incurred for the days that your homeowner’s insurance or renter’s insurance company deems your primary residence uninhabitable for at least 5 consecutive days.
Emergency Lodging Coverage Expenses - Up to $1,000*?Covers up to $100 per day for up to 10 days when a loss covered by your homeowner’s insurance or renter’s insurance company renders your primary residence uninhabitable or there is a mandatory evacuation by a public service officer or the National Weather Service
Extended Service Protection
Extended Service Protection doubles the original manufacturer's warranty time period up to twelve (12) months and provides coverage similar to the original manufacturer's U.S warranty or store brand warranty on many items you purchase while you are a member. This benefit will provide similar coverage as given by the original manufacturer's U.S. warranty or store brand warranty. Coverage begins the day after the original manufacturer's U.S. warranty or store brand warranty expires.
Coverage is limited to the actual repair or replacement cost or the cost of the item as recorded on the sales receipt up to $1,000 per claim and a total of $5,000 per member, per year. Coverage is excess of any other applicable insurance or indemnity.
Typical Items covered by this benefit: Home Appliances (not built-in), Audio Equipment, Desktop Computers, Laptop Computers, Televisions, Power Tools, and Home Electronic Equipment
JUST GOT THIS EMAIL IN.
A few minutes ago I got an email mentioning that there were changes today in the HUD guidelines for the 8000-tax credit.
Thanks to the Mortgage Grapevine for keeping us informed!!
“The Department of Housing and Urban Development issued guidance that opens the door for FHA-approved lenders to provide short-term loans — with restrictions — to borrowers who are eligible for the $8,000 first-time home buyer tax credit. Borrowers must still come up with the required minimum 3.5% down payment using their own funds. But after that, they can use the short-term liens to increase their down payments, cover their closing costs or buy-down their mortgage rate. Calling the tax credit advance "another step towards accelerating the housing market," HUD secretary Shaun Donovan told the National Association of Home Builders' annual spring board meeting in Washington that the initiative is a "real win for everyone." The NAHB estimates the advance will lead to 160,000 more sales — 101,000 to first-time buyers and 59,000 to move-up buyers who are selling their current residences to first-timers. Tax credit loans made by state and local housing finance agencies, government agencies and certain nonprofit groups can be used to cover the minimum 3.5%. However, non-profits that receive fees from sellers cannot provide down payment assistance under this program. HUD didn't want to do anything that would allow "these seller-funded schemes back in," a senior HUD official said. The department has issued a mortgagee letter (2009-15) with guidance on acceptable interest rates and fees. "We are putting in place the necessary safeguards and consumer protections, and if monitored the right way, tax credit loans can be used efficiently and safely," secretary Donovan said.”
In reading this, it looks like HUD will be looking more to the local agencies to fund this rather than the DPA companies that were around in past years. If a non-profit does this, under those restrictions, the down payment requirement is waived.
The HUD letter says that it can be down either as second mortgage or a grant, and HUD will be monitoring the non-profits closely to make sure they are not charging “excessive” fees.
One sentence that pops out at me is the non-profits can’t receive fees from the sellers. Does that mean that a non-profit can charge the buyer? Could this be done as a reverse down payment assistance program?
Also I downloaded the printed up the letter from HUD, and there are more details there. If you’d like a copy, drop me an email to information@networkfundingla.com and I’ll be happy to forward you one.
I welcome your ideas and comments. I’m sure that there is someone out there that can come up with a plan to utilize this benefit. Let me know.
Thanks.
Mitch
www.networkfundingla.com
information@networkfunding.com
225-910-6053
How would you like to buy a vacation home, your dream home, or a rental property, and be able to get it with only ten percent down? On top of that, how would you like to buy that home with no appraisal required, fast turn around time, and with NO mortgage insurance?
"OK," you ask, "This sounds too good to be true. What's the catch??"
The catch is that these homes are foreclosed homes that arebeing sold by Fannie Mae. The good news is that you can find some really good gems in these, and Fannie Mae is offering some really good loan terms.
If you like to check it out, here's a link to some of the homes. After you study this, drop me a line, or give me a call so that I can explain the financing to you.
Until next time, take care.
mitch.champagne@nflp.com
Fannie Mae Properties
One of my customers called and asked me what I knew about a way to tap the equity in her house to offset the income she lost with her mutual funds. "I heard about this on the radio," she said, "but it sounded to good to be true.
After talking with her, she was more wrong that right on what a reverse mortgage was, as there are a lot of misconceptions on this program.
I wanted to touch a few of the hightlights.
The Home Equity Conversion Mortgage (HECM) is the program that we offer through FHA. This program is designed to let you access some of the equity in your home. You choose how you want to withdraw your funds, whether in a fixed monthly amount or a line of credit or a combination of both.
Rather than risk selling investments that are going down in value, many older Americans are considering tapping their home equity to help fund their retirement.
This program is for consumers that are:
Be 62 years of age or older, own the property as a primary residence, and not be delinquent on federal debt, and they must complete a consumer information session given by an approved HECM counselor
Another benefit to the Reverse mortgage is that no income or credit qualifications are required of the borrower, no repayment is required, as long as the property is your principal residence.
There's a ton more information on this, but if your interested, drop me an email and I'll send it to you.
As always, please comment on my blog, let me know what you think.
If there's other topics you'd like me to address, let me know that too.
What is a HUD Home? HUD homes are properties that have been foreclosed upon, and being offered by the lender that has foreclosed on the property, often at a reduced cost. HUD Homes have been around for a long time, but never with as much inventory as they have right now. You have a window of opportunity here because it's a niche market that many people know about - but few participate in.
Under normal FHA rules, you have to show the ability and the assets to put down at least 3.5% of the purchase price. On the repo program, what FHA will allow purchasers to buy these homes with almost no money down. In the case of this program, the required down payment is $100.00. What FHA has done now was to extend the $100-down repo program that allows borrowers to purchase HUD-owned properties. In fact, the attraction of these programs is that the properties offer financing of up to 100% of the loan amount, which can include a "repair escrow" for repairs for up to $5,000. In some markets, there are additional "incentives" to borrowers, with up to $2500 in paid closing costs and an additional $500 commission bonus to the real estate agent.
The attraction of these programs are obvious. You could literally buy a home with the change you could find in a sofa!
The downside of this program is if you're looking to buy a home in the Baton Rouge area, the selections are limited. However, if you're looking in other areas of this state, you can luck into a good buy.
Interested? drop me an email and I'll send you the info so you can check out these homes.
As always, any comments on this blog, please click below and respond.
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