This week, we will start with the ever popular USDA 100% Program.  Here are a quick highlights on the program:

• 100% Financing
• Seller Concession of up to 6%
• No PMI
• No Reserves Requirement
• Can Substitute Schooling for Experience

As with any program, there are guidelines and requirements that must be met.  With the USDA 100%, a borrower has to meet certain income levels while staying below a debt-to-income level threshold.  The property that is being purchased even has restrictions that are determined by geographical location.

To find out more about the USDA 100% Program, call us today at 352.308.7219 or click to Apply Now.

Normally, I would compare the difference, but who really cares what once was if new is better.  (If you really want to see the old values, click here.)  So here is what the new tiers with higher limits looks like:

AND TOTAL INCOME CAN BE MUCH HIGHER THAN THE ADJUSTED INCOME LIMITS

If you total income exceeds the limits, certain adjustments can be made, such as childcare expenses for children age 12 or younger. You can deduct $480 for anyone under 18 or a student who is not one of the applicants. Other deductions may be available. No need to memorize deductions. Use the calculator here <Click ‘single family’ under “Income Eligibility”>

Example: Lake County 4-person family (2 adults, 2 children) has a gross income of $84,560. Child care for the two children age 12 or less is $10,000 annually. Is the threshold income at or below the limit? YES! $85,860 less

$10,000 child care less $480 for each child = $74,900.  They are within the limit.

Want to see if you qualify or become pre-approved?  Call us today to get the process started, or simply click “Apply Now” on the right or top of the page and complete our short application.  By the way, check out today’s rates on USDA 100% guaranteed home loans by clicking on today’s date in the DAILY RATES Calendar.

Here are the guidelines to see if you qualify:

Borrower Eligibility

Current mortgage loan must currently be owned by FNMA (visit this site to see if you mortgage is eligible)

The new loan must benefit the borrower (IE – New lower Principal and Interest (P&I) payment or going into a fixed rate mortgage)

Existing mortgage loan must be current and must have been delivered to FNMA prior to March 1, 2009

Bankruptcies must be at least 4 years old and Foreclosures a minimum of 7 years

Minimum credit score of 620

Property Eligibility

Condo/PUDs – All (No project warranty required)

Owner Occupied (Primary Residence) on Single Family or Duplex

After May 2, 2009 – Owner Occupied, Second Homes, and Investment for Single Family, Duplex, Triplex, and Quadplex

Miscellaneous

Must be a 30 Year Fixed Rate Mortgage (No interest only option available)

Limited Cash Out – Can payoff current 1st mortgage, closing costs, and pre-pays (a possible of $2000 max or 2% of new loan cash back)

Existing 2nd mortgages must be re-subordinated – No maximum CLTV (Combined Loan-to-Value: First Mortgage + Second Mortgage divided by value)

All current borrowers must remain on the new loan, but new borrowers can be added

W2 income must be proved with only 1 pay stub and verification of employment

Commissioned or Self-Employed income must be proved with most recent years 1040

If current loan does not have Mortgage Insurance (MI), then new loan will not have MI (verified by current statement). If loan does have MI, then the new loan is eligible for refinance after May 2, 2009, at which time MI will allow for lower coverage

Appraisal Waivers are allowed – subject to FNMA approval

FEMA’s Federal Disaster List – if property was in a disaster ares within the past 2 years, then a drive-by appraisal is required to warrant no damage via photos

I know that that is a lot of information to swallow, but that is our job to make sure that qualify for this and other programs that may be available to home owners and prospective home buyers. Give us a call today to see if this program is right for you, or simply apply now to start the process immediately.

Before we compare these two programs, we are first going to disclose the following: Despite USDA being out of money, Knightlines has funding sources that are still able to close and fund the USDA Guarantee Loans with all the benefits of the loan.

As you can see there are a lot of similarities between the two programs, but each has its own uniqueness to make it more attractive than the other based on your, the buyer’s, needs.  Call us today to discuss your situations, or apply online now to secure your financing before time and money runs out.

Home Affordable Refinance is the second part of this plan, which is not to be confused with the modification program.  While there is much information out there on these programs, most of the information is very limited to the specific details to the programs.  The reason for this is because no one really knows until the programs are officially rolled out in April.

Here is what we do know at this time:

• Additional Flexibilities: Most borrowers refinancing an existing Fannie Mae loan will not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home’s value. Any existing mortgage insurance may be carried forward to the new loan. In addition, Fannie Mae can refinance loans up to 105 percent of a home’s value with this new flexibility, so even borrowers who are “underwater” — who owe more than their home is worth — may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
• Streamlined Processing: Beginning in Knightlines Mortgage Services, LLC will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.

To qualify:

• Your mortgage loan must be owned by Fannie Mae.
• You must have a solid payment history on your existing mortgage.

This program is for a limited time, as the expanded fexibility ends June of 2010.

If you want to take advantage this program, call us today to get your application ready for submission when April arrives.

I have heard it more than enough times that USDA has run out of money for this program until Congress grants them more money.  What this really means is that it is up to the individual bank if they want to fund the deal on their own tradelines, or wait till the money is given.  The banks that choose to fund are still protected by USDA in case of default on the loan.  The banks that do not fund are doing so because they either do not have their own tradelines or would rather use their lines to purchase other mortgages that they can sell immediately.

What does this mean for you?  This means that if you are found to be in a USDA approved area, you qualify for:

• 100% Financing – No Down Payment
• No Mortgage Insurance
• Up to 6% in Seller Concessions
• If appraisal is greater than purchase price, then closing costs may be financed
• No Minimum Credit Score – All applications are manually underwritten
• Not limited to first-time buyers

To find out if you qualify for a USDA Guaranteed Home Loan Mortgage, call us today or complete our application online now.  Home prices are low.  Interest rates are low.  Now is the time.  What are you waiting for?  Act today.

Let’s begin with the issue on credit score.  The advertising that I am seeing is that this program is available for people with credit score as low as 580.  True… at 580 a borrower does qualify for the program, but only at 80% loan-to-value.  To get the 95-97% loan-to-value, the mid-score must be at a minimum of 660.  Now, before someone tries to argue this, yes 95% combined loan-to-value is available for a 580 credit score.  Problem… unless the seller is willing to do a 2nd mortgage for the 15% or you can get a grant/aid (IE S.H.I.P.) to help cover that difference, then you are just plain out of luck.  Sorry, but the lender will not budge.  It is all or nothing.

Now, on to the closing costs concession.  The program allows for up to 6% of the purchase price to be given by the seller towards closing costs and pre-pays.  This means that you have to convince FNMA to give up money to help you get into the home.  GREAT NEWS!!! So far, I have seen FNMA consistently give $5000 to help.  In one case, this was over the 6%, so we had to cut the concession back.  In most cases, the $5000 has covered all the closing costs leaving the buyer to just bring money for their down payment.

The no appraisal feature has been getting mixed reviews.  Some critics to the program are saying that this is bad because the homeowner does not know what the home is really worth.  In fact, they are claiming that the home is already overpriced and that is why they are willing to give the concession towards closing costs.  In my honest opinion, good for FNMA if they can sell the home at a slightly higher value.  My reasoning is that this is their way to stall declining housing prices.  If they can sell at least three of these homes in a neighborhood, then they have set the bar for new comparisons.  Those that were below this bar are now under valued and will either sell faster or raise their prices in hopes of getting the new higher price.

HomePath is available to not just home buyers, but also investors and those looking to purchase a second home.  Again, good for FNMA.  They are doing what they can to stimulate the housing market by offering a program to all potential buyers with a program that requires little down, low monthly payments, and the elimination of potential deal killers (closing costs and appraisals).  What FNMA is doing right is that the borrower HAS to QUALIFY!!!  They are very strict on the guidelines when it comes to the individual borrower.  As I pointed out earlier, the credit score is a big one.

What makes a qualified borrower?  The basics: good credit, good income, low to moderate debt.  The mysterious black box of FNMA’s Desktop Underwriter holds the answers to what QUALIFIED really is.  With all the tightening of guidelines and President Obama’s Homeowner’s Affordability and Stability Plan, borrowers that qualify are those that historically can pay their mortgages.

And before I forget, double-wide mobile homes are eligible for this program (provided they are on the HomePath website).  And should you be looking at a home that is worth more than the conforming limits of $417,000, FNMA does allow for financing through their High Balance product line.

Home prices are down.  Mortgage rates are down.  Now, is the time to buy.

Call Knightlines today at (352) 308-7219 to get your financing reserved, or click here to apply online.

Just what are these twists?:

• No appraisal required.  LTV is based solely on the purchase price.  They already hold the mortgage on the property (or own it), so they know what the property is worth to them.
• No Mortgage Insurance.
• 6% (not 3%) contributions towards closing costs or pre-pays (cannot be used towards down payment).

There is however one main catch… yes, everything has a catch.  The property that you are trying to buy must be on “the list.”  That is right, the house must be designated by FNMA on the Home Path website.  Not on the list, got to go with another program.

Just remember, Eusits, Tavares, Mount (Mt) Dora, Lake County, and all of Florida is deemed to be in a declining market.  However. this program overlooks that issue.  You can come to the table with as little as 35% to put down on the property.  This 3% can come from a family member in the form of a gift, if you are unable to put the money down yourself.

Time is running out, as home prices are starting to go back up.  Buy a new home today before rates start going up, too.

I have talked to clients about this in the past and 9 times out of 10, my client has listened to my suggestion.  And I am willing to bet that in today’s economic situation, they are thanking me a million times over.

So, what is this Option Mortgage?  Quite simply it is a 15-year Fixed Rate Mortgage (FRM) with a 30-year FRM payment option.  Whaaaaat?  Whenever I have a client that wants a 15-year FRM, I suggest to them a 30-year FRM that has NO PRE-PAYMENT PENALTY and give them an amortization schedule with a 15 year payoff.

As of lately, the rate for a 15-year FRM has been almost the same as a 30-year FRM.  So there is not a real savings in the interest rate like what used to noticeable.  Since the rate is the same, the only difference is the amortization of the loans.  The longer the term, the lower the monthly payment.

If a person takes the 15-year term, they are locked into that payment for 15 years or until they refinance or sell.  If they take the 30-year term, they are locked into that payment for 30 years or until they refinance or sell.  However, with the 30-year term, they can pay the 15-year term payment without penalty.

Now, let’s look at someone that took out a 15-year term FRM a couple years ago.  Their payment is fixed at the higher monthly payment.  Fast forward to today… money is tight.  Their employer is doing some cutbacks.  They did not get that Christmas or year end bonus.  Whatever it is, money is tight.  They still have to make that 15-year payment.

Now, let’s put that same person into a 30-year term FRM.  They have been making the 15-year payment for the past couple years.  Money is tight.  Unlike the option above, this borrower can make the lower payment of the 30-year FRM until money starts coming back in when they were able to make the 15-year payment.

As you can see, this is a very safe option because there is no change in interest rate.  There is no negative amortization.  There is no real change in monthly payments.  Everything is fixed.  The only difference is that a borrower is acting upon their right to payoff the mortgage early without penalty and has the peace of mind knowing that if they cannot afford the payment for the early payoff term that they are not forced to make that payment.

To learn more ways on how you can take advantage of a FRM, call today.