Quick Guide to USDA Rural Development Loans

Not every community qualifies—but if it does, it’s the best thing since sliced bread!  Check your listings to see if the property location qualifies http://eligibility.sc.egov.usda.gov. Generous household income limits also apply and you can check them out at this link as well. Generate phone calls by letting everyone know 100% financing is still available for eligible properties and borrowers. Add an additional note to the listing info and mention it in your ads. 

Buyer Qualifications Highlights

·         No Down Payment Required and Zero Move-in cost is possible

·         30 Year Fixed Rate Loan

·         100% Loan plus you can add the 3.5% Guarantee Fee on top of that

·         Finance Closing Costs & Prepaids if Appraisal Is Higher Than Sales Contract

·         No stated maximum loan amount; maximum loan based on repayment ability

·         No monthly Mortgage Insurance

·         No cash contribution required from borrower.

·         Liberal Income Limits (by county)

·         Gift funds and grants allowed.

·         No Cash Reserve Requirements

Property Qualification Highlights

§  Existing Home

§  New Construction

§  New Manufactured Homes (Existing MH not allowed)

§  Modular Homes

§  Town homes

§  Condos (Must be approved projects)

Prohibited Loan Purposes

·         Co-signors not residing in the household

·         In-ground swimming pools unless waiver granted

·         Furniture and personal property

·         Income producing property

·         Excess land typically exceeding 30% (Site Value) of total property value

·         Previously occupied manufactured homes

Credit Repair Fact or Fiction???

Credit Repair Fact or Fiction?

You are the trusted real estate advisor so it’s likely that past clients will contact you when they are struggling with their mortgage payment or experiencing a short sale, foreclosure or deed-in-lieu that will show up on their credit report.  Here’s some credit reporting facts you can share:

The Credit Bureaus are a branch of the government, infallible, and above reproach.  FICTION - The credit bureaus are publicly & privately traded companies in business to impress stockholders. They are not government agencies. They are one of the most heavily regulated industries. The strict regulations stem from a public outcry of abuses and mistakes.

A recent survey by an independent research group revealed more than 70% of credit reports contained mistakes or errors.  The prevalence of errors has lead to consumer protection legislation that allows consumers to challenge the bureaus and force the removal of inaccurate, outdated or unverifiable information. 

Is Credit Repair Legal?   FACT - You bet it is! As a consumer you have rights under the Fair Credit Reporting Act (FCRA) passed in 1970.  Essentially this gives you the right to have the information about you reported accurately, the information can be verified and if you dispute an item they have 30-40 days to respond.  The other law that protects you is CROA, the Credit Repair Organizations Act.  If credit repair was illegal then there would not be a law governing Credit Repair Organizations!

 When I pay off a past-due account, such as a charge off or a collection account, it will show “paid” and no longer be negative.  FICTION - It is difficult to fully restore your credit without paying your outstanding debts. However, paying off a debt can actually hurt your credit. Negative items on your credit report are allowed to stay on your credit report for up to seven (7) years, except for bankruptcy that can stay for up to ten (10) years. This 7 or 10-year clock begins ticking at the date of last activity. When paying an outstanding debt, you will change the account status to paid collection, paid charge-off, satisfied judgment, so now it scores like a brand new paid collection, charge off or judgment and the 7 year reporting clock starts all over again!  

It is illegal for creditors to take a negative trade line off my credit report. The law requires that these items remain on the credit report for at least seven (7) years.   FICTION – There is no law that states negative information has to stay on your credit report for 7 or 10 years!  The law sets an upper limit that negative information can’t stay on your report for UP TO 7-10 years. The credit grantor or credit bureau may choose to delete the item whenever they see fit.

97% LTV Conventional Loans Making a Comeback!!!

97% LTV Conventional Loans Making a Comeback

The 97% Fannie mortgage is a great alternative to FHA financing and probably a better overall option for some homebuyers given the increased monthly MIP on FHA.  Here are the details:

Fannie 97 LTV

• NOT limited to first time homebuyers
• NO income or sales price limits (loan limits do still apply)
• Seller concessions are limited to 3% of purchase price
• Single family primary residences only (including eligible condo’s)
• Purchase or Rate Term Refinances
• Lender paid MI allowed (monthly, single and split premium options).
• No homebuyer counseling required.
• Fixed rates mortgages only
• 3% down must come from Borrowers own funds

Tips on Avoiding HUD Home Foreclosure Headaches

Avoiding HUD Home Headaches:

Tips On Buying HUD Foreclosures!

Bidding & Buying HUD homes—it seems to be the hot ticket in town. 

However - Remember these key points to avoid problems and advise buyers:

• Only primary residence buyers allowed in the first round of bidding.
• Advise buyer that if home is being offered as eligible for FHA financing it: has an existing FHA appraisal that must be used (unless expired)    

 AND

• The sales price has usually been based on the existing appraised value.  Bidding above the sales price may result in them paying the difference out-of-pocket between their bid and appraised value.

• HUD does not automatically provide title insurance.  Explain this to your buyer and make sure that the lender has disclosed this additional expense to them if they want to purchase it to avoid surprises at closing.  Only if HUD has agreed to pay closing costs, could the insurance be provided at HUD’s expense.
• If HUD is offering a repair escrow, explain to buyers that this amount can be ADDED to their FHA loan, but HUD doesn’t pay for it.  
• Lender documents must be to the title company up to 10 days prior to closing date in some states.  Make sure the buyer’s lender understands and can accommodate the requirement.
• HUD signs closing packages first.  Then once the loan proceeds and the title company receives buyer down payment and closing costs, the buyer is allowed to sign.  Make sure that the lender is aware and has the ability to fund the loan BEFORE they have a completed loan package.
• Closing delays are common due to “title clearing” issues.  Foreclosed homes can have several liens due to utilities, taxes; etc that must be dealt with before closing can take place.  Prepare the buyer in the beginning and discuss potential challenges, such as rescheduling of moving trucks, and possible rate lock extension fees.

Buyers will appreciate your proactive approach to making their dream come true!