Sequim Home Loans and Mortgage News

I just read the following definition on conventional credit sent out by the USDA. This is the best explanation regarding this topic I have seen to date. Thank you USDA for the clarification.

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• the applicant was able to make a 20 percent down payment; and

• the applicant was able to pay all closing costs out of pocket; and

• the applicant’s total debt ratio was 36 percent or less; and

• the applicant’s debt ratio for principal, interest, taxes and insurance (PITI) was 28 percent

• the applicant had a good credit history consisting of at least two credit bureau trade lines

• the conventional mortgage loan term was for a 30-year fixed rate loan term without a

In December I personally closed on four USDA purchases here in the Sequim and Port Angeles Area.

What makes the USDA loan so attractive to homebuyers?

1. This loan requires no down payment. Some may say that homeowners need to have a little skin in the game and don’t like Zero down loans. While I do agree with this point my experience is that for many people in our area 5-10% down payment is sometimes out of reach for them; especially folks starting out or going through major life changes.

2. Compared to the FHA mortgage, USDA loans do not require Mortgage Insurance. On a $200,000 purchase price that saves you $91/month on your mortgage payment.

3. Closing costs can be seller paid or if the home appraises for more than the purchase price they can be added onto the loan and financed.

4. USDA loans also allow you to finance up to $10,000 in repairs to the home. Maybe you can only afford a $150,000 home and everything in your price range requires some kind of work.

5. Lastly, strict income and debt to income requirements. USDA loans are made to help homebuyers succeed and become long term homeowners. Careful attention is giving to your payments and the amount you qualify for so as to make sure you are not getting in over your head.

Buying a home with USDA financing is one of the best ways to purchase a home and get the lowest monthly payment. This is a true ZERO down no money out of pocket loan. Many of our residents who were priced out of the market two years ago are finding homes more affordable. Buying a home right now with historically low interest rates, lower home values, and a great loan is the beginning of solid financial future.

I hope this helps. If you have any questions or desire further information about USDA loans please email arthur@sequimhomeloans.com

Initially the first time home buyer tax credit didn’t seem like a motivational factor for residents here in Sequim and Port Angeles. However, since August, once people began to see time winding down on the tax credit; purchases began to increase quickly. For many locals who have be patient are now finding lower home prices, lower interest rates, and all this with an $8,000 credit on the horizon.

3 POINTS about the new Home Buyer tax credit that has been extended as of November 6th.

1. First time home buyer purchases between Jan. 2009 and April 30th 2010 may be eligible. If under contract by or on April 30th you have until June 30th to close on your home purchase.

2. Move up buyers may also eligible for a tax credit up to $6,500. For this you must have resided in your current residence for five out of the last eight years.

3. See this link http://www.irs.gov/pub/irs-pdf/f5405.pdf for the 2008/2009 form. It can be used if you purchased your home before and after Nov. 6th 2009. See http://www.federalhousingtaxcredit.com/ for more information.

There are unique scenarios that will disqualify you for the credit like purchasing the home from your parents. The home buyer tax credit is having a significant impact on purchases in little Ol’ Sequim, Washington. 70% of the home loans that I am currently working on are eligible for the tax credit. 40% of those are USDA Zero down purchase loans. Let me know if you have any questions.

Thank you for your positive comments.

Mary’s husband passed away a couple of years ago and Mary’s life, as she had known it, suddenly changed. The household income was cut by more than half and her responsibility to maintain her life more than doubled. Mary struggled to make the mortgage payments with her single income for two years and even came up short on the property taxes over the last two years. When Mary and I meet she had about a month left before she was going to lose her home.

It was hard to believe but she was about to let her home go and was about to walk away from over $100,000 in equity. See owed $110,000 on her home that was worth about $230,000 and was going to just let the bank have it or file bankruptcy. Mary had just turned 62 which is the first requirement for a Reverse mortgage. She also had a lot of equity in her home, which is the second requirement. After her mandatory counseling session, appraisal, and a lot of behind the scenes processing, we were able to close her new reverse mortgage.

We paid off all the back taxes, 9 months of mortgage payments, late fees, attorney fees, loan fees, and Mary still walked away with $1,500 in cash. She received an FHA fixed reverse at 5.65%. When Mary called to thank me after signing loan documents I sensed tears when she could not describe in words the burden that had been lifted. She was able to keep her home and focus on her full time job of helping others.

Want to go Green? Don't worry you will be able to get financing.

All lender agencies - Fannie Mae, Freddie Mac, and FHA - will have no problem funding a mortgage for a Green Built Home. Sometimes there might be incentives for such a home; however I haven't seen any of them.

The Energy Efficient Mortgage is where you get an energy audit of the home. Then based on the recommendations of the audit you can increase your mortgage to pay for improvements without it disqualifying due to higher income to debt ratios. By saving money on the utilities the borrower will then be free to pay for a slightly higher mortgage.

Another way to look at a Green Mortgage would be to look at where the monthly payments are going. Are they going to a corporately responsible company? Or is the mortgage being sold overseas to an oil barren? Does the company value human rights or is the other half of the company engaged in cheap Mexico labor?

Knowing that the home loan is going to a reputable company that values human rights, corporate ethics, and doesn't engage in polluting industries is a huge step forward to a greener mortgage. 

 Are there special programs that will help someone interested in improving the green quality of an existing "normal" home?

Several programs do exist where the borrower, either through a purchase or refinance, can improve the energy efficiency of the home and more.

1.Purchases -
  a. Both USDA and FHA have purchase programs that will allow the borrower to purchase a home and make certain repairs or upgrades to the property. All within one loan!

  b.Example repairs are as follows but not limited to: Weatherization, Insulation, Waterproofing, Mold removal, and Septic system and/or Well repair or replacement.

 c.Some programs also allow for adding on an addition and finishing out a basement.

2.Refinances -
Conventional, FHA, or USDA loans can be refinanced into a rehab or repair program to upgrade or repair the home.

To lean more about home repair and rehab loans CLICK HERE for a free informational PDF.