USDA Guarantee Fee Reduction October 2016

USDA Guarantee Fee October 2016Great new today from USDA Rural Housing in regards to the one-time upfront guarantee fee, and the annual (monthly PMI) fee.  These USDA loan fees are going to reduced across the board starting 10/1/2016.  This reduction will apply to both purchase and USDA refinance transactions and will stay in place until September 2017.

USDA Guarantee Fee Reduction October 2016: Example of saving for a buyer purchasing a $175,000 home.

Guarantee Fee Savings ( amount of overall closing costs reduction)  =  $3,062.00

Monthly Mortgage Payment Savings = $37.00 per month.

The USDA upfront guarantee fee and annual fee structure that will be effective for Single Family Housing Guaranteed Loan Program (SFHGLP) loans in fiscal year (FY) 2017, which begins October 1, 2016 and ends at the close of business on September 30, 2017.  The upfront guarantee fee will be reduced from 2.75% to 1.0% of the loan amount.  The annual fee will be reduced from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.

This USDA fee reduction is great news for first time home buyers that often have little money to put down on a home. The USDA mortgage is still 100% financing with secure 30 year fix rate terms.

Questions about USDA 502 Guarantee Loans?  Please contact USDA Mortgage Source at ph: 904-302-6060 or visit www.UsdaMortgageSource.com  We serve buyers across the nation 7 days a week.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming

Posted in First Time Home Buyers, General USDA Information, USDA Homebuyer Q&A, USDA Program Updates, USDA Rural Refinance | Tagged , , , , | Leave a comment

Tennessee First Time Buyer Programs

Tennessee First Time Buyer ProgramsBuying a home can be nervous pain for most home buyers, especially for Tennessee first time home buyers.  Below we have outlines some steps of the loan process to help give applicants a snapshot on what to expect. We will also briefly discuss some of the most popular Tennessee first time buyer programs in 2016.

 

Mortgage Application  – Applying & Pre-Qualification.

Buyers should start the loan pre-approval process about three months before purchasing a home.  Pre-qualifying can mean several things depending on the lender you talk to, but generally it involves knowing the following key points – the location you want to purchase, the property type, mortgage type and down payment amount.  From there a loan specialist can talk to you about financing options that fit your needs.

There are many of loans available like FHA, VA and USDA,  so you should know your best options. The mortgage company will also ask if they can check your credit report. This credit profile report will alert the lender to any credit/financial problems. If you’ve experienced any financial hardships in the past, you should explain that to the lender so they can provide the best alternatives for you. Next, the lender will most likely ask you a few questions regarding other things about your life such as employment history, address history, bank savings, marital status, ownership of additional properties, and many other questions to help them determine your ability to repay the mortgage. This is standard procedure in the mortgage process, so please don’t be alarmed. The entire process only takes about 15 minutes to complete.

The following are some additional questions the bank or mortgage company might ask:

Are you a first time home buyer?

A first time homeowner has not owned a home in the last three years, or is a recently divorced?  Why is this important? Because there may be other programs that require a low to $0 down payment, provide a lower interest rate, or even provide down payment and closing cost assistance to new home buyers.

Are you a Veteran?

Many Veterans qualify for 100%  VA mortgage financing.  In most cases, it is easier to qualify for a VA loan. So, why not use this special benefit? Becoming pre-qualified is an important step in the mortgage process to enable you to get into the right house with the right terms and conditions. Furthermore, getting pre-qualified helps you strengthen your position when negotiating with the seller as they now know that they have a qualified borrower. VA still offers 100% financing with no monthly mortgage insurance costs!

Are you looking to live in a more Rural location in TN? 

If so, the 100% USDA rural housing loan may be a perfect choice. USDA offers a government back 30 year fixed rate loan with no down payment. The home seller can also pay the buyers closing costs. Learn more about USDA loans FAQ’s here.

Make The Offer To Buy Home

Now you have found the perfect property you want and you are ready to make an offer. You must consider what sales price to offer, terms, seller concessions, earnest money, option fee, as well as closing and possession dates.

If you are in a sellers market, you will be able to negotiate very little. If you are in a buyer’s market, you will be able to get several concessions from the seller. It really just depends on the market you are located in. This is a process that can be best accomplished with the help of a competent and trusted Realtor. The Realtor is also very important because they should always have your best interests in mind when negotiating with the seller. This allows them to stay objective throughout the process even when you become emotionally involved.

Acceptance Of The Offer

Acceptance occurs when all parties agree to the price and terms of the contract. At that time, the clock starts ticking to adhere to all details that are outlined in your transaction, home inspection time, appraisal time, etc. You should be sure that all changes are initialed, no matter how insignificant you feel the change is. Absolute agreement and clarity is the key to protecting your rights and expectations for your purchase.   This process is stipulated in your contract and should not be more than five days total from the time you submit the offer to the seller. It is important that this process moves along quickly. Once acceptance occurs, the next few weeks are filled with inspections, appraisals, and many other deadlines that you will need to meet to ensure a smooth closing.

Meeting All Deadlines

Below is list of some of the things that will happen during this time period:

Open Title

After all parties have agreed to the terms of the contract and the executed date is filled in, a copy of the contract and the earnest money must be delivered to the title company. The title company, a disinterested third party, must remain neutral throughout the transaction. They will carry out all the instructions of your contract and provide the title insurance. The address of the title company chosen will be on your contract, so you can communicate freely with them. Generally, your real estate agent will contact the title company for all key factors and they will review your final figures before closing. A good real estate agent can review the HUD-1 (settlement statement) and make sure you have not been incorrectly charged.

Home Inspection Time

You have the right to do inspections any time prior to closing. Many homebuyers choose to get the property inspected during the option period. In case there are problems found, the buyer can terminate the contract. The option period begins on the executed date of the contract and normally lasts from 7 to 14 days.

If you feel there is a major item that must be addressed after the general inspection is done, your options are:

  • Terminate the contract within the option period.
  • Propose a lower sales price.
  • Request the seller do the named repairs.
  • Split the cost of repairs with the seller.

This is when a great Realtor comes in handy.

WDO (Termite) Inspection

If you are getting a loan, a wood destroying insect report ( Or WDO) may be required before closing. This report is filled out by a specially licensed inspector and is often done at the time of the general inspection to keep inspection costs down. If you order the general inspection with the termite inspection at the same time, you’ll most likely save yourself a trip charge. This inspection report states if there is a current infestation, there has been infestation, there are conducive conditions (areas that might attract), or the property has been treated. Please keep in mind that infestation in general is easily treatable.

Home Appraisal

Not to be confused with the home inspection above, the appraisal is required by the lender to insure the property’s market value and to certify the property meets required standards. Two important areas to focus on are the appraiser’s value and the lender-required repairs. Although the appraisal belongs to the lender, you typically pay the cost as required by the lender. The law entitles you to a copy of the appraisal before closing.

Mortgage Approval

After the underwriter has reviewed your file, they will approve and send it to the closing department. Loan approval is the full and final approval to get your property closed. Sometimes the loan approval is conditional and you must provide documented proof that either your previous home has closed or a receipt of a paid account. Either way, the loan approval moves you one step closer to owning your property. One major factor that lenders consider when approving your loan is your credit profile.

Home Repairs

All repairs are generally done after the loan approval. Sometimes a seller might agree to do them early, but don’t expect this until you have been completely approved for the loan. Repairs include lender-required repairs that must be done prior to the funding of the loan. Lender required repairs take precedence over all repairs, because the loan will not be approved unless they have been completed. Although the required repairs discussed are addressed in the contract, repairs that are needed after you are a homeowner should be a concern to you. A good realtor should always recommend a residential contract to protect you in the coming year.

Re-Inspection

After repairs are complete, it is always recommended to re-inspect the property. Often times, the general inspector you originally hired will look over the work for a nominal charge. This re-inspection trip is often required by the lender, but should never be skipped. Allow yourself enough time before closing for the re-inspection of items where repairs had been requested.

Homeowners Insurance

Before closing on your home loan you must obtain homeowners insurance. You will need to provide your insurance agent with the address, square footage, and age of the property. Some insurance companies ask for additional information that can be provided by your real estate agent. Your insurance will not go in effect until your loan has closed and funded. Your insurance premium is most commonly included in your closing costs, so make sure you don’t pay for it up front.

The amount of your insurance premium is determined by the type of coverage needed:

  • Replacement versus actual cash value of items in your house
  • Replacement versus actual cash value of dwelling coverage
  • Deductible amount
  • Security system, deadbolts and smoke alarms
  • Discounts may be given if you use the same insurer for your auto insurance

Please remember that flood and earthquake damage are not covered by a standard homeowner policy. You may need to buy a separate policy to cover those types of risks and is depended on the likelihood of occurrence in your area.

Survey

A survey will provide a graphic account of the property you are purchasing. It will show the structure fence line, boundary lines, encroachments, and easements of the property. The buyer customarily pays for the survey, but the cost can be negotiated if the property includes acreage. Sometimes the home sellers existing survey can be re certified and used again by the home buyer.

Final Details 

During these final few days you will need to finish up any last minute details to ensure that you get the keys to your house the day of closing. This is an exciting time, so try to relax and enjoy the process knowing that your new house is just around the corner. Below are a few last minute things that you will encounter.

Home Closing

Closing time is the date and time set-aside for you to come in and sign the paperwork. Your real estate agent will coordinate the time and date convenient for you and the title company. As a buyer, you may want to close near the end of the month, so that you will minimize the number of days you must pay pre-paid interest. The other consideration is that most closings are scheduled for the last day of the month. A wiser strategy might be to close three days prior to the end of the month.

Funding

Funding occurs when all papers have been signed and all conditions have been met. Funding may occur on the day of the closing or on the next day. Careful planning will ensure that all expectations have been met. You will not receive the keys for the premises until the loan has funded, so plan to close early when there are definite time constraints.

Possession

After funding, your real estate consultant will give you the keys to the property and you will officially own your new home. Now all  you just need to find some good friends to help you move in!

Questions about any of the government loan programs available today in Tennessee? USDA Mortgage Source is nations leading Government loan resource – just submit the short Info Request Form on the right side of this page for quick service. Mobile phone users can find the Info Request at the top of their page.   You can also call us 7 days a week at  ph: 904-302-6060

Serving Tennessee home buyers: Memphis, Nashville, Knoxville, Chattanooga, Clarksville, Murfreesboro, Jackson, Franklin, Johnson City, Bartlett, Hendersonville, Kingsport, Collierville, Cleveland, Smyrna, Germantown, Humbolt, Brentwood, Belle Meade, Germantown, Bartlett, Collierville, Spring Hill, Maryville, Farragut, Hendersonville, Franklin, Oakland, Tusculum, Atoka, Ridgeside, Nolensville, Arlington

Posted in FHA HUD Loans, First Time Home Buyers, Other Home Loan Programs, Tennessee USDA Loan, VA Home Loan | Tagged , , , , | Leave a comment

April 2016 USDA Interest Rates

april 2016 USDA ratesApril 2016 USDA interest rates are starting out a little higher when compared to last month. The average USDA 30 year mortgage rate currently sits around 3.5-3.75% as we begin April. This rate assumes good credit (over 680 credit) and no discount points.Borrowers with lower credit scores ( 620-679) can expect slightly higher rates.

The Spring time home buying season has started, there are some great opportunity out there especially for first time home buyers. Interest rates have remained very attractive, and should remain this way for most of 2016.  100% USDA Rural Housing is a perfect way for buyers to purchase their first home with no money down. J. Chambers -USDA loan specialist.

USDA Closing Turn Times April 2016 –  USDA closing times can vary state to state. However, the average time it takes to close is around 30-35 days from contract.  USDA RD is taking about 2-5 business days for their part of the process (conditional commitments)  Buyers that already have a USDA in process should contact their lender directly for current turn times.

USDA Pilot Refinance –  The USDA pilot refinance remains a great opportunity for home owners that currently have a USDA mortgage.  The streamline pilot refinance program allows homeowners to refinance into a lower interest rate even if they have no equity in their home. No appraisal, no home inspection and reduced paper work makes the process easy. Read all about the USDA Rural Refinance O&A here.  Home owners that have other types of mortgages ( FHA, Conventional, VA) can contact us to learn more about their refinance options.

Questions about applying for a new USDA loan, or refinancing a current USDA mortgage?  Please submit the short Info Request Form on the right side of this page for quick service. Mobile phone users can find the Info Request at the top of their page.   You can also call us 7 days a week at  ph: 904-302-6060.  We are happy to assist home buyers in all 50 states.

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Alabama USDA RD Mortgage Guide

Alabama USDA Home LoanMany home buyers in Alabama still don’t know about the 100% USDA Rural Housing mortgage program.  The Alabama USDA RD program is a “less known” government sponsored home buying program that allow eligible buyers to purchase a home with little to no money out of pocket. 100% financing is hard to come by today in Alabama, but still possible with USDA. Similar to other government backed loans like FHA and VA, USDA loans are processed through approved lenders, banks and brokers.

Let’s look at the latest Alabama USDA RD Mortgage Guide below.We will also discuss some of the benefits and possible challenges of the USDA Rural Housing program.

  • 100% Financing – no down payment.
  • Single loan at a 30 Year low fixed interest rate
  • USDA Closing costs, home insurance and taxes escrow can be rolled into the loan, or paid by the home seller
  • You don’t have to be a first time home buyer
  • Low monthly mortgage insurance (PMI) required
  • Large bank savings NOT required
  • Simple credit requirements (like FHA, minimum: 620 credit score)

USDA loans are not for everyone, let’s look at some of the restrictions for home buyers:

  • Single Family Homes only (can’t purchase duplexes, apartments, etc.)
  • No mobile homes
  • No “fixer-uppers” (standard homes in working order that meet basic HUD compliance)
  • No “build on your own lot”
  • Student loan debt – cannot be deferred, must be counted towards debt to income ratios.
  • Property must be located in a USDA approved area – see below
  • Income for the household must be below the set county limit

USDA Approved Locations:

USDA home loans are not for the “big cities”, but most surrounding suburbs in cities like Birmingham, Montgomery, Mobile, etc still qualify. If you qualify for an Alabama USDA mortgage, many times it can be a more attractive mortgage program than other options like FHA loans. USDA mortgage insurance is nearly 30% less.  The home (any seller – short sale, foreclosure, bank owned) must be located in a USDA approved are according to the map here.

USDA Income Restrictions:

Rather than having a loan purchase limit, USDA has household income and debt to income ratio limits. The household income limits vary by county and household size. For most counties in Alabama the family income limits start at 75,000 and up – depending on the size of the family, county and other factors.

Common misconceptions of the USDA Rural Housing loan program:

  • USDA loans are just for ranchers and farmers – USDA Loans are not “just for farmers,” millions of home buyers from all walks of life already qualify.
  • USDA loans are not flexible – The truth is USDA loans can be used to buy a new home (located in a USDA approved area) or refinance to a lower rate (for home owners that already have a USDA loan)
  • Only certain people can qualify – Anyone who meets the income and credit guidelines can qualify for a USDA Rural Development loan.
  • They are only for rural areas – Actually, USDA Loans are available in many areas that most people would not consider “rural”  For example, many small communities just outside of metropolitan areas qualify as rural areas according to the US Department of Agriculture.
  • FHA or Conventional Loans are better – USDA home loans often offer better terms than an FHA or conventional loans. In addition, the mortgage insurance is cheaper.
  • They are harder to get than FHA or Conventional Loans – This just isn’t true.  In many cases USDA Loans are actually easier to get because the loans are guaranteed by the government.
  • USDA loans take months to close –  Maybe in the past, but not true today. USDA loan close just as fast as other home loans these days. Buyers can go under contract to purchase a home and close about 30 days later.

USDA Mortgage Source is nations leading USDA loan specialist. If you have questions, or want to get pre approved, please submit the short Info Request Form on the right side of this page. Mobile phone users can find the Info Request at the top of their page. You can also call us 7 days a week at  ph: 904-302-6060.

We serve all of Alabama including: Birmingham, Montgomery, Mobile, Anniston, Huntsville, Tuscaloosa, Hoover, Dothan, Decatur, Auburn, Oxford, Albertville, Selma, Trussville, Troy, Tillmans Corner, Center Point, Helena, Hueytown, Talladega, Fairhope, Ozark, Scottsboro, Cullman, Foley, Madison, Florence, Gadsden, Vestavia Hills, Phoenix City, Alabaster, Bessemer, Opelika, Enterprise, Homewood, Northport,  Prichard, Athens, Daphne, Pelham, ALA

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Spring 2016 USDA Closing Turn Times

USDA closing turn timesGreat news, the spring 2016 USDA closing turn times are currently running 1-3 business days in Florida. Most of the other states are seeing similar turn times.  This is big improvement over the past where USDA Rural Housing times could take up to 3 weeks in more populated states.  Just a little background – the USDA closing turn times is the time is takes the USDA / Rural Housing office to review the applicants loan for a final loan commitment. Below we will breakdown the entire USDA loan closing process and estimated time lines:

  1. Buyer’s initial loan consultation and pre approval – During this step the buyer talks to the mortgage company about their goals and completes the USDA loan application for their initial loan pre approval. This step is generally completed in about 1 hour.  Once the buyer has their letter of pre approval, they can begin searching for the perfect home.
  2. Buyer finds the perfect home and goes under contract to purchase the home – Once this happens the loan process technically begins. The buyer will provide any outstanding underwriting paperwork to the lender, sign their loan disclosures, etc. This can all be done electronically or face to face.  Once this step is complete, the lender will order the home appraisal.  The entire appraisal, home inspection, underwriting, etc takes the lender (or bank) about 2-3 weeks to complete.
  3. Once the file has been cleared by the mortgage company, the loan is sent to the local USDA Rural Development office for the final loan commitment. This is the step where USDA basically checks the lenders work and insure everything meets their requirements.  As mentioned above, this step takes about 1-3 days to complete.  Please note, the USDA turn times can/do change.  If you have questions about the status of a USDA loan already in process with another mortgage company, you will need to contact them directly for updates.
  4. Once the loan file is completely approved and signed off by USDA, the file is sent back to the lender with the finial loan commitment. The home buyers will generally close about 3 days later depending on the state.  The entire process from purchase contract to closing takes about a month to complete. These times can fluctuate depending on the mortgage company processing the loan, home buyer and state.

Please note – the USDA refinance process is generally a little quicker as most of these loans do not require the appraisal.

USDA Mortgage Source is a leader in USDA loans across the nation.   If you have questions,or want to more information on the program? Please  just submit the short Info Request Form on the right side of this page for quick service. Mobile phone users can find the Info Request at the top of their page.   You can also call us 7 days a week at  ph: 904-302-6060

March, April, May 2016 USDA closing turn times

Posted in General USDA Information, USDA Homebuyer Q&A, USDA Program Updates, USDA Rural Refinance | Tagged , , , | Leave a comment