Good news for home buyers needing a zero down loan! The USDA has just announced that
funds are now available for 100 percent financing — and at better pricing than last year! Here are the details.
No down payment. 30-year fixed rate, no prepayment penalty. Interest rates are competitive with conventional loans.
The USDA Fee (now 1%, previously 2.75%) is financed into the loan. Other eligible closing costs may also be rolled into the loan, or you may use gift money, grant money, or a seller contribution to pay for the closing costs. This means you need very little out-of-pocket cash to become a home owner.
The monthly mortgage insurance (MI) fee has been reduced to only .35% (previously .5%).
Credit and Debt Ratio
Perfect credit not required. If you had a late payment, collection/charge-off, bankruptcy, or even a foreclosure in the past, you might still qualify. In general, underwriters want to see at least 12 months of good credit to show you have recovered from the past and are on track.
Debt-to-income ratio should not be over 41% unless your credit score is over 660. In that case, there is more flexibility. (DTI is calculated with your gross income before any deductions, using your proposed housing payment plus minimum required payments on your credit report. You do not count living expenses such as transportation, cell phone, food, etc.)
You can earn up to 115% of the area median income. Number of people in the family is taken into account.
97% of the U.S. is USDA-eligible. Homes located in large metropolitan areas are ineligible. Many suburbs, charming towns, as well as rural areas qualify.
To check both income and property eligibility, click here. Or, speak with your state licensed mortgage loan officer. If you are in WA or CA, I am available to help you.
Take a look at this list one of my book readers sent me today. She is buying a home in Southern California. The title and escrow company was chosen by the real estate agent, even though federal law says it is Buyer’s choice.
See if you can pick out the unnecessary fees:
Lenders Policy for $844,000 — $1,074
E Recording Service Fee — $15
Sub Escrow Fee — $100
Messenger/Overnight — $30
Endorsements — $150
Escrow Fee — $2,302
Loan Tie-In Fee — $250
Email Document Fee — $100
Archive Fee — $50
Document Handling — $50
Notary/Sign up Fee — $200
Wow!!! What a lot of fees, right?
This is like going to a restaurant and ordering a hamburger. Then you get charged extra for mayo, ketchup, lettuce, pickle, salt, and the bun. I mean, come on! Isn’t your $15 hamburger enough without collecting more for every tiny thing that is standard and should be included?
Response to the Objection
When the home buyer objected to the real estate agent (the one who chose this over-priced title and escrow company), here is what the agent said:
“The escrow officer is an amazing person. I would trust her with my kid.”
That’s fine if you’re looking for a babysitter! But what’s that got to do with all her needless fees?
The only thing I’d find amazing about her is how she can get away with over-charging home buyers and convince real estate agents to send her business! Makes one wonder… as in illegal kickbacks…? Just musing, not accusing.
Folks, it doesn’t matter if the seller’s agent has already opened title with a certain company. FEDERAL LAW says you, the Buyer, get to choose the title and escrow company.
It’s easy to do a Google search for “title insurance” + zip code. Then make three phone calls and get a quick quote right over the phone. No need to ask for anything in writing. If you shop with three, you should find a good, fair title company to work with.
Don’t bother asking Yelp or other review sites. People who post there are like the real estate agent who chose this high-priced title company because the person is “amazing” or “friendly” or “good with kids.”
As always, thank you for stopping by my blog. If you have a topic you’d like me to write about, send your request here.
No interest, no payback. This is a true gift for buying a home.
Here are the guidelines:
- Available in all 50 states. The home does not need to be inside the boundaries of the Chicksaw.
- Any loan type: FHA, VA, USDA, conventional.
- As long as you meet the credit, income, and other requirements for the loan type you want, you qualify for the grant. However, some lenders have overlays. For example, Envoy Mortgage requires a 640 credit score.
- Owner occupied homes only, cannot be used for a rental property.
Simply show your Chicksaw Citizenship card when you apply for your mortgage pre-approval. Your loan officer will process the grant for you.
If you know a Chicksaw member, pass this great news on to them. I will post about other grant money in the future, so feel free to subscribe to the blog.
- Your parent is on a fixed income and cannot afford to buy his or her own house.
- You have an adult child with disability income that is insufficient to qualify.
- You have another family member who is tired of renting but is on a fixed income too small to qualify.
How It Works
You present the family member’s income documentation to show they need help in qualifying for a mortgage. (The family member must be on a fixed income, not a low-paying job that could soon change into a higher paying job.)
You are then eligible get approved to buy the home using your own income and credit–without having to take the higher interest rate and larger down payment required for a non-owner occupied or investment property.
- The house is owned and occupied by family.
- You do not pay any more for the loan than if you were going to occupy it yourself.
- You can put as little as 3% down.
- You enjoy the tax benefits of ownership.
- Your family member stops paying for someone else’s mortgage in the form of rent.
- You benefit from increased equity.
- In the future, you may be able to sell at a profit or rent the house to someone else.
- You must be able to afford the payment, along with your own obligations. However, with 26% of Americans owning their homes free-and-clear, this option becomes a realistic opportunity. (Statistic Source: StatisticBrain)
Would You Like My Help?
I can help home buyers in the Western states. I am personally licensed in California and Washington (NMLS # 1284134) and I work with colleagues in Oregon, Idaho, Nevada, and Colorado. You can contact me here. If you are in another part of the U.S., contact your local full service mortgage lender.
There are two types of title insurance. Simply explained:
Lender’s Title Insurance protects the lender’s money they are loaning to you. If a previous owner fails to pay taxes or other obligation, the creditor may file a lien against the property. If the previous owner has an heir who says they own a piece of the property, that could be a problem. If someone with the same name or a similar name as yours owes for back taxes, child support, has a bankruptcy, or other financial mishap, that person’s lien might get attached to your property. (It happens fairly often, especially if you have a common name.)
Lender’s Title Insurance protects the money the lender has put out for your house. As you pay down the loan, the amount of protection is reduced accordingly. When the loan is paid off, the lender’s title insurance is finished and over.
So at the point when you have complete equity in the house, lender’s title insurance no longer exists. Lender’s title insurance does not protect your equity.
Owner’s Title Insurance protects you, the new home owner. It protects your equity in the home against false liens and judgments, false and undisclosed heirs, forgery and fraud, errors and omissions.
In some states, the home buyer pays for both title insurance fees unless otherwise stated in the Purchase Agreement. In the West where I do loans (California and Washington states), the current owner/seller pays for your owner’s title insurance; and you pay for the lender’s title insurance. Since the Owner’s Title Insurance is more expensive, this is good for you, the home buyer.
As you can tell, both types of title insurance are important. I do not know of any lender that does not require Lender’s Title Insurance. I do not know of any home buyers who have been too foolish to protect their precious home equity with Owner’s Title Insurance.
So no, title insurance is not a rip-off. What is a rip-off is when title insurance companies over-charge and add a boatload of junk fees. Unfortunately, that happens a lot, and I have taken a public stand against it! As a home buyer, it is YOUR LEGAL RIGHT to shop and choose the title insurance company. It is not the right of the real estate agent nor the seller to choose; nor do they have the legal right to bully you into using the services of a title company you do not want. If you are getting coerced or pressured, please send me an email with all the details, including the name of the companies here.
I hope this information helps, and thank you for subscribing to my blog.
Thank you, Kristina Mastrocola, writer, for the interview.
In case you can’t read the article here, it is on page 26, the August 22 issue, which is on newsstands now.
I hope these tips will help people understand that they can take control of their credit and create the score they desire. There is no need to be a victim when it comes to your credit profile.
What’s more, you are not required to have perfect credit in order to get a home loan. Recently, I helped a first-time home owner who had six open collection accounts close on a charming three-bedroom, ranch style home–and she did not have to pay off the petty collections (total under $2,000) in order to do so.
As always, thank you for subscribing to my blog. If you have a topic on mortgage, home buying, or credit that you’d like to see, please email me here.
Can we assume the best choice is the discount agent with the lowest commission? The agent who wants to list at the highest price? Or are there other considerations?
Recently, I contacted three Realtors about listing a property for sale. I asked for a written CMA (Certified Market Analysis) to be provided within three days. Here’s what happened.
Both the Coldwell Banker Danforth and the Windermere agents provided their CMAs on time. Both expressed passion for the house. Both projected the same selling price. Both included ideas for marketing.
The Refin agent did not provide the CMA nor did she call or email to say why she was not delivering it as promised.
Nevertheless, I decided to give the Redfin agent another chance, so I sent an email asking. By now it was over a week late. Her assistant replied that she would be leaving on a vacation soon; therefore, I should reach out to a different real estate agency if I wanted a CMA in a timely manner. She did not suggest another real estate agent within her own company; but rather, she sent me off to a competitor.
I then contacted an agent from Berkshire Hathaway who provided a CMA within three days. His projected selling price was higher than the other two, by about $30,000. (Tax assessed value is $485,000.) He used larger, two-story and tri-level homes to arrive at the price; whereas, the subject property is a one-level ranch-style home.
Several more days pass and then, surprise — in came an email from the Redfin agent. It included no apology or explanation for being over two weeks late. There was no formal CMA, but she listed 12 houses in the neighborhood that had sold. Of these 12 homes, 11 had four to five bedrooms. My subject property has two bedrooms. She used price per square foot to project a higher selling price than the other full service real estate agencies, by $100,000! She also included an attachment that showed her company would charge a lower-than-standard commission.
Let me ask you this:
Which agency will provide me with the best service?
Which agency will list for the most realistic selling price to actually get the house sold?
This story is ongoing. As of today, the house is not yet listed. But it will be soon, so stay tuned for the outcome. (Feel free to hit the Follow Blog button, top right.)
FHA – Federal Housing Administration
(Often referred to as a first-time home buyer’s loan; although, you needn’t be a first time buyer to get it.)
580 to 620 (depending on the lender and other credit factors)
(Program designed for first-time buyers with average or below incomes.)
Conventional 3% down
VA – Veterans Administration
500 to 620 (depending on the lender and other credit factors)
USDA – U.S. Dept. of Agriculture
640 (most lenders)
No score required with sufficient down payment (Usually 30% to 40% down payment required. Interest rates from 8% to 12%.)
IMPORTANT TO KNOW
- Lenders use your mortgage credit score, not the consumer credit score you get from a free site.
- Lenders use the middle score of three. Scores are not averaged together.
- When there are two or more people on the loan, the score of the person with the lowest score is used.
- Credit score is only one factor in credit qualification. Other factors are public records (such as foreclosure, bankruptcy, judgements, liens), last 12 months’ pay history, etc.
BUY NOW OR WAIT FOR A HIGHER CREDIT SCORE?
Is it better to buy a home with a low score and higher interest rate, or does it make sense to wait until your credit has improved?
That depends, but in general, if you can raise your score in three
months, it is better to wait and take the lower interest rate. On the other hand, if it is going to take a year or longer to raise your score and if house pricing are rising in your neighborhood, then I would buy the house now and refinance in a year or two. That way, you can build wealth in equity while your credit is improving. Most people cannot save money as fast as prices are going up. That said, it is an individual situation that you should discuss with your loan officer.