Justin's Real Estate Blog

USDA Loan Eligibility is a very basic process.  A borrower's income and credit file must be underwritten just like any other loan program.  However, USDA rural development loans are far more lenient when it comes to down payment requirements and credit score requirements.  There are many great benefits to USDA Rural Development Loans.  This loan program enables a borrower to obtain a mortgage with the cheapest possible monthly payment when compared with FHA loans and 3.5% as a down payment.

STEP ONE:  Is your middle credit score above a 620?  If so, then you may proceed with USDA loan eligibility.  Do you have recent derogatory items on your credit report such as foreclosures, bankruptcies, judgments, tax liens, or collections?  If so, then call me to discuss the details.  For basic details, please see the following:

• Foreclosure- Must wait 3 years
• Bankruptcy- Chapter 7 must wait 3 years, Chapter 13 must wait 1 year
• Judgments- Must be paid and have none outstanding within 12 months
• Tax Liens- Must be paid and have none outstanding within 12 months
• Collections- May have one collection within the last 12 months

STEP TWO:  Is the property you are looking to purchase in a USDA rural loan eligible area?  Below, click accept, then select your state.  Find your county on the map or on the list.  If the county is not on the state list, then the entire county is INELIGIBLE for a USDA Rural Development Loan.  If the property is located in the lighter colored area, then it is located in a USDA Loan Eligible area.  The USDA loan eligibility map will state whether or not the property is approved for USDA.

STEP THREE:  Does your total household income meet the USDA Income Requirements?  There are two separate income levels.  The first level is for a household of 1-4 family members.  The second is for 5 or greater.  Every county varies on the total household income limit.  The limits typically range from 70,000 (1-4 members) to 110,000 (5+ members).  Below, enter your state, then enter your county and follow the next steps.

STEP FOUR:  Apply online, over the phone at 770-631-5750, or in person.  USDA Rural Housing Loans take approximately 30 days to complete.  If you have questions, contact me or visit TheUSDAhomeloan.com or contact your local loan officer.

Extended First Time Home Buyer Tax Credit for 2010.

The extended first time home buyer tax credit for 2010 will allow more borrowers to purchase a home and receive the $8,000 tax credit even if their income was ineligible in 2009.  The revision to the 2009 version has added $50,000 in qualifing income to single purchasers and $100,000 for married couples filing jointly.  This is HUGE.  If you thought you made too much money, or that the tax credit had expired, then you have ONE LAST CHANCE to take advantage of the government's free handout!  For now, the buyer must have a signed purchase sale agreement by April 30th and must close by June 30th. 

Please read below for further details including the new $6,500 tax credit for primary residence owners.  If you are thinking about buying, please go ahead and get pre-qualified by submitting asecure online loan application.  Why not, its free! 

Do not miss out on this amazing opportunity and take advantage of the extended first time home buyer tax credit for 2010!

USDA Rural Development is a fantastic avenue for to obtaining a mortgage in the United States.  Guaranteed Rural Housing Loans allow a home buyer to finance up to 102% of the appraised value, pay NO Private Mortgage Insurance (PMI), and have the lowest possible payment for a 30 year fixed rate mortgage!

USDA Rural Development Benefits:      

• Loan-to-Value:  Can finance up to 102% of appraised value.
• Guarantee Fee:  One time fee of 2% of the loan amount.  It is usually financed.
• Cash to Close:  Very little or zero cash needed to close in most cases, no minimum contributions.
• Mortgage Insurance:  NONE what so ever!
• Term:  30 Year Fixed Rates only
• Interest Rates:  Rates are typically in line with conventional and FHA rates. 
• Property Location:  Must be located in eligible "rural" areas.  Go to USDA Property Eligibility to see if an address qualifies.  If the site cannot find the location, then I can do a manual search for you.  New construction usually do not show up, but they do qualify.
  
• Household Income:  Must verify all income of all household members.  The adjusted total cannot exceed USDA Rural Development's Income Limits.  You will be surprised by how much the limits are for your county.  Generally, the income limits for USDA Rural Development range from $70,000 to $105,000! 
• Credit Scores:  USDA Rural Development requires a borrower to have a middle credit score of 620.  Credit qualifying is very linient and similar to that of FHA (Federal Housing Administration). 
• Derogatory Credit Items:  Cannot not have any federal tax liens or judgments.  Cannot have a foreclosure within 3 years, a Chapter 7 Bankruptcy with 3 years or a Chapter 13 Bankruptcy within 1 year.  Also, applicant must not have any 30 day or more late payments on a mortgage within the most recent 12 months.

USDA Rural Development is a division of the US Government that was established to help families achieve home ownership.  USDA home loans are fully backed and insured by the government and are the absolute best way to obtain a no down payment loan.  These Guaranteed Rural Development loans are cut and dry.  They are fixed rate loan programs with no fine print or deceiving terms.

APPLY NOW for a USDA Rural Development Home loan.

You may also visit USDA Loans for more information!

FHA, the Federal Housing Administration, has announce many changes for 2010.  The FHA wants to lower its market share in residential mortgages throughout the United States.  They are currently insuring around 40% of mortgages throughout the nation.  In an attempt to lower market share, they are increasing their UFMIP from 1.75% to 2.25% on all FHA loans.  A little over a year ago, this amount was only at 1.5%.  Most of the 2010 changes to FHA will not take place until April.  Althought these 2010 changes to FHA are positive, it will also slow any recovery to boost the housing market.  Odds are, they will only last for a couple of years.  For more information on other loan products, visit Justin Messer at GBCmortgage.com.

Many of Obama's housing refinance plans are still being worked on and might possibly fail to happen.  However, one program just became available to current home owners who have had trouble refinancing their current primary residence or second home due to market depreciation.  Many refinance transactions are turned down due to high LTV's (Loan to Value).  Any 95% or higher is unacceptable.  Anything great than 80% to 95% requires mortgage insurance.  NOT ANY MORE WITH THIS PROGRAM!

WHO IS ELIGIBLE?

Borrowers who are CURRENT on their mortgage payments and are having trouble refinancing because market depreciation has increased their loan-to-value which has made them ineligible to refinance. 

This new program will allow borrowers who currently have a FANNIE MAE or FREDDIE MAC owned loan.  The borrower can only refinance their high balance loans if they currently DO NOT have mortgage insurance.  So, when the borrower originally obtained financing, they would have had to put 20% down or have an 80/20 structured loan.  If the borrowers current mortgage statement reflects MI payments, then the borrower is ineligible :( .

This new program allows a loan-to-value of up to 105%.

WHO IS INELIGIBLE?

• Loans that currently have MI
• LPMI Loans
• Reverse Mortgage Loans
• Second Mortgage
• FHA/VA and USDA loans

PURPOSE

• May finance all pre-paids(escrows), closing costs, and points
• MAY NOT PAYOFF EXISTING SECOND LOAN, they must re-subordinate
• May receive cash back.  Lesser of 2% or $2,000
• May not add new second loans

LOAN PROGRAMS

• 15-40 year Fixed rates, full amortizing
• 5 year and 7 year fixed rate ARMS, fully amortizing

Basically, if you have tried to refinance your mortgage but have been unsuccessful due to a low appraisal, then now is your chance.  This program will allow you to refinance and continue WITHOUT PAYING MORTGAGE INSURANCE.  Please keep in mind that your new FIRST loan cannot exceed 105% of your current value.  There is no MAX after the second is added.  This program is only temporary so if you think that you fall into this category and meet the requirements from above, then please feel free to contact me.

Justin Messer

www.JustinMesser.com

770-631-5750

Obviously, the real estate market has many great deals.  For those that have the money, there are so many opportunities.  So, are the wealthy the only ones that can afford to take advantage of all the fantastic deals out there. NO!  Typically, for an investor to purchase a property at a foreclosure sale, or at the court house steps, they must have cash on hand to purchase the foreclosed property.  Or, if an investor plans to purchase a home to flip or to create cash-flow as a rental, then they typically need 20-25% down to get a loan.  For the general public that is interested in real estate investing but does not have the cash on hand to pursue it, then what can you do?

For those that are looking to get their feet wet in real estate, then now is the time.  There are tons and tons of reasons to buy today.  Add up all of those reasons and add one more thing to it.  USDA rural housing loans in Georgia, Alabama, Florida, or the rest of the southeastern states. 

With a USDA loan, a buyer of a primary residence can buy a new home or foreclosure with zero investment.  So, buyers and Realtors need to search for properties that have lots of equity in them.  Believe me, they are everywhere.  Once you find this particular property, I, Justin Messer, can help the buyer obtain mortgage financing for a 100% loan.  With this type of loan, the buyer can finance 102% of the "appraised" value.  They are not limited to the sales price.  They can also finance all of the closing costs, all of the pre-paid items, and any necessary repairs. 

EXAMPLE:

You and your real estate agent find a home that is for sale at $100,000.  Well, this property has been for sale for over a year and has been marked down 4 times.  The appraised value is currently $150,000.  I can give you a loan for the full $100,000 to buy the house.  USDA charges a 2% funding fee.  This is 99% of the time financed.  So, now you are up to $102,000.  Say closing costs are $3500 and pre-paids are $1000.  Lets also say that you would like to add a few touch-ups.  The touch-up costs are $5,000.  So, you are going to finance the full sales price, the 2% funding fee($2000), the closing costs ($3500), the pre-paid items ($1000), and the repairs ($5000).  You, the buyer, are financing $111,500.  Once you close on the home, you have instantly picked up $38,500 in equity for absolutely NOTHING.  You have merely found a house you would like to live in, signed your name, and receive tons of equity.

This is only the beginning.  For this loan, the current USDA mortgage rates are at 4.5%.  The monthly payment via the mortgage calculators from www.JustinMesser.com are $565.  If taxes are $150 and home owner's insurance is $35, then the total monthly payment is $750.  It is extremely hard to rent a home for as cheap as $750.  Also, there is ZERO MORTGAGE INSURANCE!  In this market, sellers are usually willing to contribute something.  The seller can buy your rate down for the first two years.  So, the first year, your rate could be 2.5% with a payment of $625.  The second year, your rate would be 3.5% with a payment of $685.  The 3rd year through 30 would come back to the original $750.

Last, the real estate market is on the verge of bouncing back.  History will prove that immediately after any downturn in housing, it always explodes higher.  So, to make your ZERO investment even better, I would suggest keeping the home for a couple years.  Now, you will be able to take advantage of yearly real estate appreciation and TAX FREE profits.

This is a fantastic way for a person that is looking to buy their first home or their primary residence to enter the real estate investment market and contribute nothing.  My advice would be to follow this scenario, build wealth, and save your money and invest it somewhere.  Live in the home for at least two years.  Sell the home and collect your TAX FREE profits.  Do it again.  If you did this every 2 years, with the same numbers in the example, then you would earn around $115,500 in 6 years.  This is approximately $19,250 a year.  These profits would actually be much greater because I am not including any appreciation, any principle reduction from making your mortgage payments, or any tax write-offs. 

I almost forgot, if you purchase a home as a first time home buyer before July 2009, then you will get a $7500 tax credit next tax season.

For more information, please contact me at www.JustinMesser.com/contactus.  You may also contact me to see about refinance mortgage rates.  Email me at JustinMesser@Northstarmg.com.  This post may be viewed on www.Wordpress.com, or www.JustinMesser.com/myblog.

Exactly a week ago, I read an article USA Today posted by the concerned citizen Dennis F. Paulaha.  He makes one of the greatest points and offered an incredible solution to halt our downward spiraling economy. 

His idea states that the US government offer every US citizen a 30-year fixed rate mortgage of 1.5%.  All financially qualified (new standards) citizens could have the ability to finance a current or new mortgage at this low interest rate.  Currently, the government is lending billions of dollars to firm across the country at low interest rates.  Why not lend it to the people.

Paulaha believes this plan will work and benefit many areas of our economy. 

1.  It will stop home prices from falling.  It should prevent many foreclosures and turn the housing market around.

2.  It will cause everyone with a mortgage to save tons of money a month which as we all know will cause us to spend more.  Americans spend money.  Face it, we are not the best at saving.  Here is his example.  If you refinance a $200,000 mortgage at 7% to 1.5%, then the monthly payment will go from $1330 to $690.  That is a saving of $690 per month.  Now, can you imagine receiving a stimulus check like most of us did last April every month!  We will all take these saving and invest it back into our economy, thus, stimulating it greatly. 

3.  It will increase credit availability.  After mortgages are refinanced, mortgage holders will have a massive influx of cash and capital.  This will help them to de-leverage which will help their capital ratios.  Also, now that everyone have cheaper payments, they will have more money.  Now, citizens will be more qualified for more credit.  This will help to stimulate the economy by starting with the people rather than government.

4.  Now that everyone with a mortgage will have more purchasing power, they will begin purchasing.  All of this increased purchasing will create a need for companies to produce more.  In order to increase production, jobs must be created.

5.  Families that would like to purchase a home can now afford it.  Currently, there are tons of reasons to buy real estate today.  There are even more benefits as a first time buyer.  If these low interest rates cannot get someone off the fence, then nothing will.

6.  The national deficit will not increase.  There will be no spending.  Mortgagee would actually being paying the government back.

7.  Lowering rates will turn around the economy and create massive tax revenues by all the spending which will begin to reduce our national deficit.

I believe that this idea of lowering mortgage rate is a huge key to the turnaround for our economy.  Finally, Uncle Ben and Hank Paulson got it right.  1.5% is actually a little outrageous.  I think that if rates could come down to 3.5% or even 4%, then there would still be plenty of room growth.  The Fed actions to continue to buy even more mortgage backed securities was a great step in the right direction.

Thank you Uncle Ben and Mr. Paulson for helping to spark our wonderful industry and save our great nation!