Archive for the ‘USDA’ Category

Have you refinanced? Act now before rates increase further!

Wednesday, January 6th, 2016

Refinance and feel like a financial genius

On December 16th the FED raised interest rates by 0.25%. This is the first of several FED interest rate increases we anticipate going forward.

If you’ve been thinking about refinancing your home loan, now’s the time to act. Just a 1% increase in interest rate can mean a substantial difference in monthly savings for you.

Refinance Example

That’s a monthly savings of $180, big ones , Benjamins , bones , clams , (you get the idea).

Even if you are not currently looking to refinance, you may know someone who is. Share this information with them.

Now’s the time to act – refinance and feel like a financial genius!

*Interest rates and annual percentage rates (APRs) quoted are based on a FICO score of 740 and were available on 12-23-15. Interest rates are subject to change without notice. Payments are estimates only and do not include taxes and insurance which will make the actual payment obligation higher. Payments are based on a $300,000, 30-year conventional loan at 75% loan-to-value (LTV). This is not a commitment to lend. Not all borrowers will qualify.

USDA Loans Soon To Have Monthly Mortgage Insurance

Friday, September 2nd, 2011

October 1, 2011 means more changes in the mortgage industry. Conventional and FHA High balance loan limits are going to drop, resulting in more expensive Jumbo loan pricing for many buyers. The popular USDA loans will be adding monthly mortgage insurance to the monthly payments, so qualifying will be a bit tighter for USDA buyers.
Homeowner Getting Their New Home's Keys
This is all because Fed’s have changed the structure of the guarantee fee for USDA guaranteed loans. The up-front mortgage insurance premium will drop from 3.5% down to 2% but there is now going to be Monthly Mortgage Insurance for all USDA Loans.

What does this mean to your cost, as a buyer of a home using the USDA Loan Program? Your down payment and closing costs remain the same. Your loan amount will be lower by having a lower up-front financed Mortgage Insurance premium but your monthly payment will be slightly higher, due to the monthly mortgage insurance premium of .3% added to the payment.

Below is a comparison of the USDA loan showing the previous costs vs the new guidelines. I have also shown how this compares to the current FHA loan program for those same costs.

Example: $300,000 Purchase Price*

USDA Loan Comparison

Even with the new changes, the USDA loan is hard to beat. Although the monthly payment is a bit higher than before and the ability to qualify is reduced by the amount of the mortgage insurance, it’s still a GREAT LOAN!

Look at the positive features of this program!

  • Maximum financing up to 100% of the appraised LTV + 2% for UFMIP
  • Maximum 6% seller contribution allowed
  • Eligible for Primary Residences (1 Unit) only
  • Maximum loan amount = $417,000
  • No cash reserves required
  • Eligible with fixed rate loan programs only (30 year terms)

To see if a property is eligible for the USDA Home Loan Program, visit the USDA website. Go to the property eligibility section on the left side and type in the property address to see if it is eligible. There are income limits as well and that information is available on the same website.

If you are interested in more information on the USDA or other loan programs, please contact us today!


Thinking of Buying a Home? Tip 7 of 10 to Help.

Wednesday, May 11th, 2011

Today I’m posting tip #7 of a 10-part series on things you need to know before you start your house hunt.

TIP #7. Choose your loan, before you shop for your home.

There are two main types of loan categories; Conventional Loans and Government Loans. The loan options available to you will be determined by:

  • Down Payment
  • Loan Amount
  • Loan to Value or need for Mortgage Insurance
  • Credit Score
  • Property Type

Down payment: If your assets allow a down payment of 10% or more, then a conventional loan may be a worthwhile consideration. The mortgage insurance (MI) costs will be lower and it may be possible to remove the mortgage insurance earlier than on government loans.

Loan Amount: If your loan amount will be $417,000 or lower and you are buying in the continental US, an FHA, VA, USDA or Conventional loan are all options for you. If over $417,000, then your transaction would fall into whats called a JUMBO loan. September 2011 is the latest that FHA loans may be funded up to the $417,000 loan amount. We will have to wait and see what the new maximum loan for FHA will be after that date.

Loan to Value: If your down payment will be less than 10%, then you will want to look at securing a government loan like FHA, VA or USDA. FHA still requires a 3.5% down payment, all of which could be a gift, or a combination gift/grant, etc. VA requires no down payment from qualified Veterans with full eligibility. USDA also provides 100% financing, however, the property must be located in a less populated or rural area.

Credit Score: Credit scores play an important role in your options for home-loan financing. The better your credit score is, the better your loan pricing and options will be.

Property Type: Not all loans are available for all types of properties. Most notably, condominiums. Condos need to meet certain requirements for both FHA and conventional loans. The approval requirements are quite stringent. Some condo’s meet FHA standards, some Fannie Mae, some both or some VA. Most condos will not be in an area that conforms to USDA requirements.

For all of the above reasons it is wise for buyers to start early with an informed lender before beginning their home search. It is important to work with a lender that will help you understand all options available to you. Getting pre-approved first, is as much about finding the right loan options available to you, as it is about satisfying the home sellers that you have the necessary financing in place to successfully and quickly close your home loan.

As always, I am here to answer any of your home-loan questions!

Photo of Ingrid Pierson

Ingrid Pierson
(530) 885-1545
Licensed – NMLS # 233666

Thinking of Buying a Home? Tip 6 of 10 to Help.

Monday, April 25th, 2011

Today I’m posting tip #6 of a 10-part series on things you need to know before you start your house hunt.

TIP #6. Meet with a qualified lender to review program types BEFORE choosing a home

It is important to know what type of loan(s) will be best suited for you and your family’s needs before going home shopping, to avoid disappointment.

Essentially there are two types of loans; Conventional and Government. From there, they break down into sub categories. The conventional loans fall under Fannie Mae, Freddie Mac and RFC (Jumbo) guidelines. Government loan categories include FHA, VA, CalVET and USDA. These programs all have different types of mortgage insurance for loans with down payments of less than 20%. Conventional loans work with private mortgage insurance companies, government loans utilize government mortgage insurance (FHA) VA guarantee Fee; USDA government Mortgage insurance, CalVET – Guarantee Fee.

Each of these loans has different requirements. Some, such as USDA, have geographical restrictions. The loans also have varying property requirements. For these reasons alone, it is critical that a buyer knows which type of loan they are pre-approved for before house hunting, since some properties may be excluded due to condition or location.

It is therefore wise to know which loan type will work best for you and your family, and then have a “back up” loan or program that would also work, IF your primary loan is not an option. But, if as a first-time homebuyer you really only have one option, say 100% VA financing, then you will want to ensure clear communication between your lender and your real estate agent on that loan program type. Understanding the property types and specific nuances required for your specific loan program, will help your upfront negotiations on your home purchase to ensure it will be successful and make your home-loan dreams a reality.

As always, I am here to answer any of your home-loan questions!

Photo of Ingrid Pierson

Ingrid Pierson
(530) 885-1545
Licensed – NMLS # 233666

Thinking of Buying a Home? Tip 4 of 10 to Help.

Thursday, February 24th, 2011

Today I’m posting tip #4 of a 10-part series on things you need to know before you start your house hunt.

TIP #4. Cash to Close

Buyers typically tell me they have a certain amount of money ($5,000, $10,000, etc.) to put down on their new home purchase. After learning this amount, I always ask, “Is this the total amount you have to invest towards your home purchase, or is it just the amount you have designated for the down payment.” This is important for buyers to understand, because they will need to have funds designated for closing costs.

When you talk to a lender, you want to make sure to let them know how much in total you have to invest into your new home purchase. This along with your income and debt, will determine how much house you can afford.

Let’s separate the two; down payment and closing costs.

  1. Downpayment refers to the required investment amount for the loan program used for your purchase. Examples:
    • VA – No down payment required for Veterans with 100% entitlement.
    • USDA – Zero down payment required in qualifying areas
    • FHA – 3.5% down payment required
    • Conventional – 5% minimum down payment required
  2. 2. Closing costs are charges for services related to the closing of your real estate transaction. They include but are not limited to:
    • Lender Fees – Origination (typically 1% of the loan amount), admin, appraisal, inspection, credit report
    • Mortgage Insurance – Some pre-paid some financed
    • Title Policy Issuance Fees – Charged by title companies to insure the chain of title for the buyer (CLTA) and for the lender (ALTA).
    • Escrow Fees – Charged by the company acting as the neutral third party in the transaction. Commonly referred to as an Escrow Company.
    • Fire or Home Owners Insurance – (Possibly Flood Insurance if it is determined that the property is in a flood plain.)
    • Recording Fees – Paid to the local county recorder’s office. These fees are charged per page of your loan document.
    • Drawing Fees, Notary and Over Night Delivery Fees – All part of the escrow transaction.

Your lender should be able to give you a summary of what to expect for total costs including both recurring and non-recurring closing costs.

A knowledgeable lender will know how to help you cover some of these fees through grants. Grants can provide you extra money to cover closing costs, if you meet certain income limitations for your county. For more information on downpayment and downpayment assistance click here.

Some restrictions do apply, so contact me for more details.

Photo of Ingrid Pierson

Ingrid Pierson
(530) 885-1545
Licensed – NMLS # 233666

We'll walk you through each step of the loan process.
Contact us today to get started!