Wednesday, April 28, 2010
4/28/2010 04:23:00 PM | Posted by
Arbor Mortgage
One of the best, and most under appreciated, home purchase loans today is the USDA Rural Development Section 502 Guaranteed loan. This program is a $0 down purchase loan intended for rural America. These loans are for buyers with low to moderate income that are purchasing homes that fall within the USDA’s rural maps. The maps happen to be very outdated, meaning that there are many places you or I wouldn’t consider rural, that actually qualify for 100% financing.These loans aren’t just great for buyers, but for lenders, too. The lender funds the loan, but the USDA Guarantees it up to 90% of the original loan amount – that’s far and away better than conventional mortgage insurance. Guarantee funds aren’t unlimited, though. In the past, it has taken an act of Congress each year to appropriate funds for the program.
With credit becoming tighter every day, more and more people are turning to this (used to be) little know loan product to secure $0 down financing. As a result, those congressionally appointed funds are running out faster and faster. In 2009, the program ran out of funds midyear, only to be funded again by the stimulus package. Funds are again running low and are not expected to be available past May. Many lenders stopped taking applications a month ago, in anticipation of the funds being drained, with no hope for Congress to step in.
Luckily, there has been a new bill introduced to turn the USDA into a self funded program. H.R. 5017 has already been approved by the House of Representatives, but has not yet been introduced in the Senate. The bill authorizes up to $30 billion in loans during the 2010 fiscal year. In order to make the program self-funded, the Guarantee fee, paid by the home buyer, would be increased from 2% to as much as 4%. While this is a hefty fee increase, this is one of few programs with no monthly mortgage insurance, even at 100% financing.
This bill is more important than ever, because this loan program aids an under served community. Lower income families in rural communities often have less financing options than those in urban areas. This program is also the only option for many people to secure 100% financing. Loan guidelines allow buyers to finance their closing costs and even appliance purchases up to the appraised value of the home. There is no other loan program like it.
For more information on USDA Rural Development loans, Contact Us.
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Tuesday, April 20, 2010
Everyone understands that a foreclosure is bad for your credit. But, how bad? How long before someone will lend to you again? There’s a common misconception that it needs to fall off your credit report all together, which could take 7-10 years. Good news is the wait is actually much shorter than that.
Foreclosure/Short Sale Waiting Periods
Event | Wait for FHA | Wait for VA | Wait for Fannie Mae (FNMA) |
Foreclosure | 3 years | 2 years | 5 years |
Short Sale | 3 years (if late pays) No wait (if no late pays) | 2 years | 2 years (w/ 20% down) 4 years (w/ 10% down) 7 years (w/ less than 10% down) |
**These guidelines are as of the day posted, and are subject to change at any time without notice | |||
Exceptions can be made to gain an approval in a lesser period of time if the foreclosure event was due to extenuating circumstances beyond a borrower’s control. Death of a wage earner, or severe medical issue could possibly fall under that category. Whatever the event, be sure it’s well documented and that your current credit is in good standing.
Monday, April 12, 2010
Divorce is a rough time for anyone; causing squabbles over the tiniest of details. The home and mortgage, however, is not a tiny detail. It is likely the largest debt in play. If both spouse’s names are on a mortgage how do you remove the other spouse’s liability?
It is a common misunderstanding that if the marital home is awarded to one spouse in a divorce, the other spouse is free and clear of that debt. Not true at all. Even if you remove a name from title of the home, if that person is still on the mortgage note, they are still responsible for that debt. This means that the mortgage will remain on both credit reports making it near impossible for the other spouse to obtain a new mortgage. Or, even worse, if one spouse stops paying the mortgage, it will damage BOTH credit ratings.
Tuesday, April 6, 2010
Effective February 1, 2010, HUD has suspended the rule that prevented a buyer from obtaining FHA financing on a home which had been owned by a seller for less than 90 days. This guideline was commonly called “the anti-flip rule”. This suspension of the rule or “flipping waiver” is valid for 12 months and is a boon for real estate investors because they can now turn their flips much more quickly by opening up the huge pool of FHA buyers.
Now, this may seem like old news – it’s April already, and this has been out for 2 months. Yet, the lending canvas has been strangely silent on it. Many lenders just aren’t allowing it. They are refusing to honor the flip waivers, because they see the limited time the seller owns the home as a large risk, and possibly an easy area for fraud.
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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