What is a USDA Loan? Where's the Beef?

The USDA home loan is fast becoming the first choice for many new home buyers, why you say?

Well first it allows 100% financing….. yep that’s 0 down payment to the home buyer. USDA also has a very low mortgage insurance requirement. Unlike the FHA that is falling in popularity due to the increases in mortgage insurance both upfront and monthly. Plus FHA does requires 3.5% down payment.

Ok let’s talk about the USDA Home Loan, of course just by its name you can probably guess that it’s offered by the USDA. USDA started offering 100% home loans back in 1991 to help boost the housing economy and it’s still doing its part today by helping our economy and families with low incomes to purchase a home.

Eligibility is both income and property related. Let’s talk about the property first. The loan itself is called the “Rural Housing Loan” or “Section 502” loan, which may have you thinking your new house has to be a farm or have lots of land. That couldn't be further from the truth. In fact many urban and suburban area nationwide qualify. Most towns with 20,000 or less eligible. With that said most properties in these area including single family resident, condos, townhouses and other types may qualify. The home must also be your primary resident.

On qualifying you must not exceed 115% of medium income in your area, here’s a link for you to see if you income qualify. Check USDA Income Limits

You also need a debt to income ratio 29%/41%, your credit score needs to be 640 and above.

You need to be 2 years out of a bankruptcy. For all the requirement call me or go to this link ……

Basic USDA Home Loan Rules

So Where's the Beef.....thought you'd never ask! 

If you are a smart home buyer you should be asking if you qualify for a USDA home loan, it’s fast becoming the new choice and pretty easy to qualify. Some say it’s fast becoming the new subprime option. It’s certainly worth getting all the information so you can make an educated decision before you buy. The rates are below 4% for a 30 year fixed at the time of the blog post, lower then both FHA and conventional.

With 100% financing and easy to qualify, this is a smart choice. Spread the word as many folks out there who are planning to buy don’t even know these loans exist. USDA can be used to purchase but also to refinance and remodel.  WE all pay into these programs so why not use them.

For more information about USDA and other home loans contact me for a FREE consultation. 

Thank you for stopping by my blog, please leave your comments or questions they are always welcome. 

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

The Four C's of Lending

Today I was asked what a lender is looking for in a borrower and why is it so hard to qualify anymore for a home loan?

It may seem like a complex question but really it’s comes down to the FOUR C’S OF CREDIT LENDING!

This is like your report card for lending. Your evaluation according to the Four C’s ..goes like this! 

Character... Refers to your financial history and if you are financially healthy.  What is your credit scores? The lender will look at a two year history to determine your stability for income, job history. Your income is averaged over a two year period. Alimony and child support can be used but is averaged over three years. Here are a few items considered when a lender evaluated your risk factors.

•    Have you made all your payments on time
•   Do you have any delinquent accounts or collection accounts
•   How much available credit do you have
• Total debt
• Income vs. debt

Capacity... This refers to amount you can afford and of course can you repay the debt. Lender’s look at your income verse your debt to see if you are already tapped out or if you can support any new debt and if you can how much. With the new QM in effect your total Debt to Income with housing and other debts cannot go over 43% of your income. I have seen very few exceptions to this rule since QM took effect back in January 2014.

Capital... How much money do you have in savings and what has your ability in the past been for saving. Do you have a retirement or pension plan, do you have investments, properties or other assets that could assist you or be sold if needed. Having these types of reserves proves you can manage your money. 

Collateral... This refers to the value of the house or property you are looking to buy and if this asset will be enough to pay back the debt should you default on the loan. In some cases you may be asked to pledge other assets to secure the debt.

As you can see this can be risky if all Four C’s are not in place. No one wants to put you in a home if there is a high risk of you losing it and the bank foreclosing. They are not in the business of acquiring real estate and when they do, it has to be included back in their inventory as bad debt. This limits how much money they can then turn around and lend out. So there is good reason they follow this evaluation of your ability to repay the loan.

I hope this helps you in your preparation to buy a home.

I offer FREE Mortgage Coaching and a FREE Appraisal when you are ready to buy a home and when you are using my loan services, this credit is given at the time of closing. 

Here is the link To Learn more about my FREE Coaching Program

I hope you will follow my blog, ask questions and commenting is always welcomed and appreciated

Thank you for stopping by today

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

Homebuyers 6 to 12 Month Plan

If you are thinking of purchasing your first home it’s never too soon to get started with a plan.  It’s very important your plan is in place and you’re on the right track. Too many newbies in the market and making offers on homes that they are not qualified to buy. I have put together an easy guide to follow for getting started so you don’t find yourself in hot water with a seller.

Your first step should be to find a mortgage professional like myself to help you determined the best type of mortgage loan and the amount you can afford based on your personal financial situation. The mortgage professional can also help you review your credit report and history. It’s important to do this early on so if there are any errors they can be disputed and removed. It’s important to note that 80% of American’s have errors on their credit report and clearing them up can take a few months.

Once you are ready your mortgage pro will be able to give you a price range and you can go shopping. You can also figure out what type of home and area you can afford, this should help you speed up the process. Fine tuning your search will save time.  Most buyers start their search online, researching neighborhoods, home and agents. There are several good sites like Realtor.com and Zillow you can explore and narrow down your search or check with your local Board of Realtors for information.

Your next step is finding a good Realtor. My advice, would be to ask family and friends who they would recommend or your mortgage professional. It’s important you work with someone who has experience with first time homebuyers. A no-pressure and lots of patience agent. You will be high maintenance your first time, trust me on this one and it takes a special kind of agent to work with you. Interview several agents in the area you wish to purchase and choose one that is willing to go the extra mile with you. You’ll know soon enough if the agent you choose is the right one for you. If not move on but it’s important you don’t bounce around from one agent to the next and back again. Once you find a good agent hang on and be a loyal client, they work hard and only get paid when you close your purchase.

Open Houses are a great opportunity to explore and walk through some homes that are for sale. Meet the agents that represent the sellers and get information about the area, schools and parks. If you go without your agent be sure to tell the on-site agent you have a Realtor working for you, so there is no confusion about your representation.  

Now that you have a mortgage pro and a Realtor working for you, you need to trust in their knowledge and experience and listen to their advice. I am not saying you should trust blindly by all means do your research and educate yourself. They too should be helping to educate you along the way. Purchase offers are done differently depending on the market you are in and your professionals are your best ally to negotiating the best price and seller concessions. Many markets are seeing multiple offers and buyers losing out to more sophisticated investor buyers. Your agent is your professional negotiator looking out for your best interests. Most Realtors do this well so listen to their advice but understand you make the final decision when it comes to your offer and contract provisions. 

Remember how important this process is and start early, understand that your decisions will affect you for years to come, buying a home is a long term investment in most cases. Get as much information about the house before you make an offer. Buying a home in most cases will be your biggest lifetime investment so do it wisely and without rushing through the process.

Be sure to follow my blog for more information, my next article post will be Five Mistakes most commonly made by First-Time Homebuyers.

Thank you for stopping by and please leave your questions or comments I’d love to hear from you.  

If you are interested in my FREE mortgage coaching here is a link for more information. You will learn a wealth of information to prepare you for your journey to homeownership.

http://rredenbaugh.path2buy.com

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

Low Inflation Equals Low Mortgage Rates

Mortgage rates are closely related to inflation. Mortgage rates are based on the price of mortgage backed bonds. Inflation changes the value of mortgage-backed bonds.

We are experiencing some of the lowest levels so far this year. I don’t think most of us saw this coming and in fact prepared for higher rates thinking most of the refinances that could be done were done for now anyway… not true. If the mortgage rates drop below the expected 4% we could see homeowners taking advantage of these lower rates and refinancing once again. 

Also in favor of the homeowner and our economy Obama has extended the HARP program to 2015, so if you are still underwater (owe more then your home is worth) this is for you, contact a mortgage professional and learn how this program can help you.

If your mortgage is 4.75% or above you should analyzed your mortgage and see you can benefit from refinancing.

Now if you are a potential buyer and have been sitting on the fence undecided about what to do… wow is this a good time for you.  Mortgage experts are getting accustomed to the new Qualified Mortgage rules or QM but this could potentially limit your buying power and specially if higher rates became an reality but we got lucky for at least the time being, so call a mortgage finance expert or myself and get pre-

qualified to purchase a home while we are in this downward rate motion.

Thank you for checking out my blog, I hope you found some value and will leave a comment or question behind. I welcome your input and will get back to you ASAP. Don’t forget to follow my blog by adding your email or following by Facebook or blogger.

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

808-637-0011

Renting Vs. Buying

Homeownership is still the American dream, the reality of owning a home is still within the reach of almost 70%, the highest figure ever. Still many Americans don’t think they can or will ever be able to purchase a home. I am here to tell you that is just not the case. With some education under your belt and the right tools anyone can purchase a home if they want it enough to follow the steps and take the time to set a plan in motion. YOU can do this! One of the most common questions I get asked by renters and the first time homebuyer, should I rent or buy? I put together some Pros and Cons for Renting Vs. Buying.

Renting:

PROS    

·         Normally is less expensive in terms of Rent and Deposits initially.

·         More flexibility – you can move in a short period of time i.e. 30 day notice

·         Free of Maintenance costs, you can just call when something breaks and someone else will fixed it.

·         No financial obligation for taxes, insurance, flood insurance

CONS

·         When you write that check for rent its GONE, money down the drain you can never get it back.

·         NO control over the rising cost of rent.

·         You can’t be creative and make it your own, paint, remodel etc.  

·         You are at the mercy of your landlord when it comes to renewing your lease, if they will even allow you to renew.

·         Restrictions like NO pets, No BBQ’s RULES, RULES and more RULES

Buying:

PROS

·         Buying a home is an investment and should appreciate over time. This should be considered a long term investment.

·         You can lower your income tax liability both federal and most states, by deducting mortgage interest paid each year. You can also deduct your property taxes. This will save you money each year.

·         Your credit rating will go up and banks will be more likely to lend you money

·         You are free to do most any decorative thing you want to your home, make it your own, and let your style shine through.

·         Long term security, you won’t have anyone telling you when to move. You can laid down roots and raise your family, stay as long as you want.

·         Providing you have a fixed rate mortgage your payment each month will be the same for the complete term of the loan, in most cases 30 years. This is a BIG plus!

·         You can finally have that big dog you have always wanted without having to ask permission or pay an extra deposit.

·         You can also plant a garden or trees and make the yard or your dreams.

There are many freedoms when you own your own home, too many to list. But for most it's a sense of pride and security for your family. Priceless!

CONS

·         Well the cost of course, money-money-money! Down payment, closing costs etc., etc.

·         Taxes, Insurance, Maintenance

·         BIG dreamer, little budget, most first time homebuyers probably can’t start off with their dream home but instead start out small and move up to a bigger and nicer home at some point in the future.

·         Commitment, you will probably not be able to pick up and move at a moment’s notice.

·         The housing market and economy will determined your gain, it’s not always going to be a windfall. You could get stuck buying your way out of a home.

·         Worst case scenario is short sale and foreclosure if you are not able to make your financial obligations

I hope this list of PROS and CONS helps you with your decision to buy vs. rent. I am a true believer that the dream of homeownership is alive and well. I see it all the time in those who dare to dream and set their sights on homeownership. If you too would like to jump in the ring and learn more about how you can become a homeowner there are many programs designed around the first time homebuyer. Most counties in the US have programs to help you, including down payment assistance.

I offer FREE Mortgage Coaching and will be doing classes both online webinars for those in other states and LIVE seminars in my local area during the month of March and April. I welcome you to contact me directly for more information.

Thank you and I encourage you to ask questions and leave comments.

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

808-637-0011

What is a Mortgage Credit Certificate?

This program was authorized by Congress in 1984 and is designed to help the first time home buyer or anyone that hasn't owned a home in three years. But what is a mortgage credit certificate?  The Mortgage Credit Certificate or MCC will offset a portion of their mortgage interest over the term of the loan as a way to help home buyers qualify for the loan. It is a tax credit and not a tax deduction.  So it reduces the amount of federal income tax you would have to pay and thus increases your income and enables you to qualify…. Pretty cool right?

Here’s some requirements;

1.    Buyers must not have owned a home in the previous three years.

2.    Buyers must meet income and purchase price restrictions.

3.    Buyers must intend to use the new home as a primary residence.

4.    The federal government considers the MCC tax credit to be a subsidy so you may be subject to federal recapture tax IF you sell your home within the first 9 years, you sell at a gain or your income increases above the allowable limits.

Yes there are some income limitations, but they seem to be pretty high so I don’t think that will be an obstacle for most, you’ll have to check your county to see what they are in your area. Plus there are purchase price limitations but overall this is a fantastic program for the first time home buyer.

For more information on what is a mortgage credit certificate and how it can help you qualify for a home loan contact your local state or county housing department or a qualified mortgage professional in your area or by all means please call me. 

IRS link for even more info;

http://www.irs.gov/publications/p530/ar02.html#en_US_2013_publink100011906

Roxy Redenbaugh

ACMC Loan Consultant

Certified Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

First Time Home Buyer Help

It's very important to know where to start the process of purchasing a home and it's critical that your starting point be a professional evaluation of your personal situation by a mortgage professional. First time home buyer help is available to you.

This can be in the form of a FREE PRE-APPROVAL analysis done after you provide your income and asset information. You may be a perfect buyer now and ready to hit the pavement and shop for a home OR you may need assistance and coaching to get you ready, either way it's important not to skip this step or analysis. 

Why you might ask; 
1. You want to be certain in the ever changing mortgage market you meet all the guidelines and most importantly know how much of a loan you can qualify for with your current income. 

2. Most Realtors won't take you out shopping until you have been Pre-Approved and have a letter from a lender or bank stating the amount you are approved to purchase.

3. You can also determine what type of loan best fits your situation, FHA, VA, USDA or conventional. Some of these factors can make your offer more presentable to a seller as well. 

4. If you are competing with other buyers on the same property listing, having a Pre-Approval letter will help strengthen your offer because by having this done you are telling the seller and their agent you have been responsible and have completed this in advance. Certainly more desirable then someone who has not gone through the pre-approval process. You don't want to be the buyer who puts in an offer that is accepted just to find out later while in escrow and under contact you don't qualify. Trust me when I tell you NO one will be happy with you. 

Another first time home buyer help available to you FREE is coaching. Everyone needs a little help now and again. Why not the first time home buyer?
The Path2Buy Coaching program is a great program that is FREE to the buyer. As a Certified Path2Buy Coach, I will work with you for one month or 5 years however long it takes for you to reach your goal of homeownership. I'll be here to answer any questions and to prepare you to purchase your first home. 

The first thing you will want to do is register for an 18 minute Path2Buy webinar. This webinar will give you an overview of the program and I will contact you after you have attended to start your personal analysis if you chose to participate in the program. You are under NO obligation and again it's FREE to you.

www.path2buyconsumer.com

My direct link to Path2Buy  http://rredenbaugh.path2buy.com

You will be asked who referred you please fill in my name. I hope to talk to you soon. 

Thank you

Roxy Redenbaugh

ACMC Loan Consultant

Certified Path2Buy Coach

Branch Manager

NMLS #269926

www.roxyloans.com

808-637-0011