USDA Pilot Refinance Program

USDA has created a “Pilot Refinance Program”  for borrowers located in what are considered the “hardest hit” areas of the country.  The eligible states are Arizona, California, Georgia, Nevada, New Mexico, Oregon and Tennessee.

Eligible borrowers must:

Meet the current income eligibility requirements (not exceed USDA’s income limit based on family size and area the property is located in),  they must reside in an eligible area or an area that was eligible at the time the home was bought, and they must be current on their mortgage for at least the last 12 months.

Other features include:

The new rate must be at least 1% lower than the existing rate on the current loan.

New appraisals or property inspections are NOT required.

Updated credit reports are not required, just proof the last 12 months mortgage payments have been on time.

Closing Costs can be financed into the new loan.

No qualifying ratios are calculated, so there is no “qualifying” for the loan as long as the requirements above have been met.

The expiration date on the program is March 31, 2013. For California home owners, if you would like more information, please feel free to contact me at the e-mail address or phone number below.  If you reside in one of the other eligible states, contact a participating USDA lender in your local market.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370. He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act. Terms and conditions apply, all loans subject to underwriter approval. Subject to change without notice. Guild Mortgage Company NMLS #3274

Swimming Pools and USDA loans

If you are purchasing a home using USDA financing, and the property has a swimming pool, there a specific guidelines that must be followed by the appraiser with regards to how the final appraised value is determined.

USDA will finance properties with pools, but they distinguish between above ground and in-ground pools.  If a pool or jacuzzi is above ground, there is no issue.  However, if the pool is an in-ground pool, then the underwriter will deduct the value of the pool from the final appraised value.

For example, if a property has a sales price of $200,000, and has an in-gound pool, the appraiser must find other comparable sales with swimming pools like the subject property.  If he or she determines the value of the pool is $10,000, then this amount will be deducted from the final appraised value of the property.  If the appraiser determines the value of the property is $210,000, then the USDA underwriter will reduce the value by the amount of the pool ($10,000) and the final value used for loan purposes will be $200,000.  If the appraiser determines the final value is at sales price, or $200,000 in this example, then the USDA underwriter will reduce the appraisal down to $190,000, and this is the value that will determine the final loan amount available to the borrower.

So as you can see, if the property appraises high enough, the deduction for the pool wont be an issue, as the appraisal will still be at or above the sales price.  However, if the property appraises at or near the sales price, the buyer could have an issue with a “low appraisal” after the value of the pool is deducted, even though the actual appraised value came in at or around the sales price.

When getting a USDA loan on a property with an in-ground pool, make sure the lender, agents and appraiser are aware of this guideline going in so they can try to address any potential issues surrounding the USDA guideline.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274            

Credit Repair – The Real Facts

We have all seen the credit repair advertisements hawking all sorts of services with promises of higher credit scores, cleaner credit reports and getting “pesky creditors” off our backs.  If all of this sounds a little to good to be true, it’s because most of the time, these credit repair companies can’t do anything that the consumer can’t do on their own.

If you hire a credit repair company, be leery of spending too much money up front.  Also, realize that if the company is legitimate, what you are hiring  is their expertise on working with the creditors and the credit bureaus on how to remove or repair things legitimately.  If you’re pressed for time, it may be a good investment to hire a legitimate company to help you.  If you are looking for miracles, you may want to go to church this weekend instead.

For a good overview of the process, click here “Credit Repair – How to Help Yourself” from the Federal Trade Commission.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274             

USDA funding for fiscal year 2011-2012

I continually get questions from borrowers who are being held up from closing transactions because USDA has not gotten funding yet for the fiscal year 2011-2012 (October 1st 2011 to September 30, 2012).  While it is true that USDA funding approval is tied up in the rest of the budget debate, (as of November 17th, 2011) that does not mean that USDA loans cannot be closed in the interim.

On the guarantee program through USDA approved lenders, some lenders are able to close on what are called “conditional commitments,” meaning they can close the loans in anticipation of the funding being approved by Congress.  I don’t know if we are one of only a few lenders closing USDA loans this way, but I continually hear from real estate agents and borrowers their belief that loans cannot be closed until funding is approved.  This is not the case.

If you are in California, and you are being held up closing a loan on the USDA guarantee program, please feel free to contact us if you need help.  If you are in another state, just ask around to find out who is closing USDA loans currently on conditional commitments.  We are currently closing USDA loans so their has to be other lenders out there doing the same.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274             

USDA monthly Guarantee Fee now in effect, still cheaper than FHA

Annual Fee and Decreased Upfront Fee now in effect.

Effective October 1st, 2011, USDA home loans now have a 2% up front Guarantee Fee (reduced from 3.5%), and an annual fee of 0.3% of the outstanding balance (paid monthly).  These two changes effectively raise the monthly payment on a $200,000 purchase price by roughly $36 per month.

When compared with FHA financing, the increased monthly fee still makes USDA a less expensive option.  For that same $200,000 sales price, the USDA loan with the higher fee is still $87 per month less than FHA with its minimum 3.5% down payment.

The addition of this annual fee is to make the program “revenue neutral” and have it no longer be supported by government funding.  Hopefully, this will also make the program less dependent on congressional approval for annual funding.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274             

USDA Strengths and Limitations

The USDA home loan program is a great resource for potential home buyers looking to buy a property with no money down.  But like any other program, it has its strong points and limitations that agents and potential borrowers should know about.

The benefits of the program include: no down payment required, the seller can pay some or all of the closing costs (up to 6% of the sales price), no cash reserve requirements, borrowers do not have to be first time home buyers, there are no loan limits or sale price limits and closing costs can be financed into the loan if the appraised value comes in higher than the sales price.

The limitations on the program include: the property must be in what is considered a “rural” area (see eligible areas section on the navigation bar above), there is a maximum income limit based on family size and the county that the property is located in (these limits are fairly liberal though), and properties with second units, granny flats, barns or other large structures aren’t allowed.

Fortunately, the program strengths far outweigh its limitations, and if you find a property in an eligible area, and you are within the income guidelines, USDA financing will give you a lower payment and require less money out-of-pocket than just about any other low or no money down loan program available.

If you have specific questions that you can’t find an answer for, or you have questions about qualifying about a USDA loan in the state of California, please feel free to contact me at the e-mail address or numbers below.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274    

$15 Billion available for USDA residential lending!

 

SFH Origination News

From the National Office in Washington DC

 May 26, 2011

 GUARANTEED LOAN FUNDING UPDATE:  HELP WANTED! 

$24 BILLION DOLLARS ALLOCATED FOR SINGLE FAMILY HOUSING LOANS! 

$24 billion dollars is available in Fiscal Year 2011 (through September 30, 2011) in the Single Family Housing Guaranteed Loan Program (SFHGLP).  To utilize these available funds, WE NEED YOUR HELP!   

SERVE RURAL HOMEBUYERS!  In the past, funding shortages due to overwhelming volume and program demand may have prohibited some homebuyers from utilizing the SFHGLP.  Fiscal year 2011 will be different!  Congress responded to lender requests for more funding and delivered $24 billion for the current fiscal year!     

LEND WITH CONFIDENCE!  Future Guaranteed Loan Funding Updates will continue to be released in order to keep our lending partners informed of available funding levels.

As of May 26, 2011:

TOTAL $ OBLIGATED:      $9.2 BILLION

TOTAL # LOANS:                 70,759  

OVER $15 BILLION REMAINS TO SERVE RURAL HOMEBUYERS!   

Thank you for your support of the Single Family Housing Guaranteed Loan Program!

If you would like more information on the USDA home loan program, or you have questions about qualifying about a USDA loan in the state of California, please feel free to contact me at the e-mail address or numbers below.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370.  He can be reached at bscruggs@sdmn.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Corporations under the Residential Mortgage Lending Act.  Terms and conditions apply, all loans subject to underwriter approval.  Subject to change without notice.  Guild Mortgage Company NMLS #3274