In today’s financial climate first time homebuyer’s are really stuck having to come up with a down payment to purchase a home or get a sizable gift from a relative that is loosing money in their own portfolio.

I have had many requests for more information from the Kansas City Area Realtors that need this type of program to get starving potential homeowners into a mortgage.  This will help boost sales and provide a home loan that will benefit a person over the long term.  No adjustable rate, No PMI.

This post is for consumers/homebuyers, Real Estate Professionals and Mortgage Professionals that may not have a good working knowledge of the features and benefits of the US Department of Agriculture’s  Guaranteed Rural Housing program. In the last 14 years I have one of a very few lenders closing these Guaranteed USDA home loans in Johnson County, Kansas.  I have always known that it is one of the most under-utilized mortgage loan programs in the United States.

For purposes of this Posting Most the information below pertains to the Kansas City Market, and most importantly to the Gardner, KS area.  There are links to help you find more information directly from the USDA.

Many Advantages of this home loan are:

•1.      No down payment required.
•2.      No Mortgage Insurance.
•3.      No cash reserves required.
•4.      No seller contribution limit.
•5.      No Prepayment Penalty
•6.      Loan up to 102%* of appraised value allowed…not the lesser of Sale Price or Appraisal
•7.      Loan amount can include closing costs and prepaids up to appraised value.
•8.      No stated maximum loan amount; maximum loan based on repayment ability
•9.      No First Time Homebuyer Requirement
•10.  New and existing homes OK
•11.  Fully amortized 30-year fixed rate loan
•12.  No minimum credit score required…common sense underwriting allowed.
•13.  No minimum cash contribution required from borrower.
•14.  No limit on CLTV when soft second financing.
•15.  No limitation on source of funds for closing costs. No seasoning requirement.
•16.  100% gifted closing cost or down payment assistance is permitted.
•17.  Non-traditional credit may substitute for lack of traditional credit history.
•18.  No derogatory credit explanations required when credit score is 660 or above.
•19.  Rent is not verified with FICO of 660 or more.
•20.  Qualifying ratios of 29%/41%…29% PITI to Income and 41% Total Debt to Income, however standard ratios may be exceeded with documented compensating factors.
•21.  Conventional type loan packaging with only 1 extra form required.
•22.  Competitive rates (set by underwriting lenders) As of 1/19/2008 rates for loans above 85,000 are 5.25%

*Appraisal may be exceeded by amount of Guarantee Fee

Determining if property is in a Rural Development designated rural area:

http://eligibility.sc.egov.usda.gov/ 

Determining if applicant(s) have an acceptable credit history:

•1.      Credit history must indicate a reasonable willingness to meet obligations when due.
•2.      Streamlined credit approval when primary applicant has a middle credit score at 660 or above.
•3.      No minimum credit scores.
•4.      Lack of credit is not derogatory. Alternative credit verifications are allowed, typically 3 lines.
•5.      Lenders make the credit decision.

Income eligibility:

Project the cumulative gross income of all adults in the household.

THE GROSS INCOME LIMITS CAN BE MUCH HIGHER THAN THE ADJUSTED INCOME LIMITS SHOWN IN THIS TABLE

If the projected dependable income exceeds the limits, certain adjustments can be made, such as childcare expenses for children age 12 or younger and paid to someone outside the family. You also can deduct one $480 annual deduction for anyone under 18 or a student who is not one of the applicants. Other deductions may be available (see FL/VI Handbook or RD Instruction 1980-D, www.rurdev.usda.gov/regs

Example: Johnson County 4-person family (2 adults, 2 children) has a gross income of $89610. Child care for the two children age 12 or less is $10,000 annually. Is the threshold income at or below the limit? YES. $89,610 less $10,000 child care less $480 for each child = $79,650.

See the easy to use calculator at: http://eligibility.sc.egov.usda.gov/eligibility  Click on “Single Family Housing” under “Income Eligibility”

Applicant(s) repayment ability:

Ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI). Rural Development generally allows expanded repayment ratios if recommended by the lender’s underwriter. 31%/43% automatic for dwelling built after 1/1/2000.

Other eligibility criteria:

•1.      Do not own a suitable dwelling.
•2.      Insufficient resources to secure conventional 80% loan without the guarantee.
•3.      U.S. citizen or permanent resident or qualified alien.
•4.      Financed dwelling will be primary residence.

Loan-To-Value (LTV) and Loan Limit:

•1.      102% LTV for the guaranteed first mortgage loan when including the guarantee fee, 100% LTV without the fee included.
•2.      Loan amount can exceed appraised value by the amount of the guarantee fee.
•3.      There is no loan limit

http://www.RonYarbrough.com

Topeka, KS – Darla Buckman, Acting State Director for USDA Rural Development, announced that the Guaranteed Rural Housing (GRH) Loan Program fund usage has already reached an all-time high in Kansas for this Fiscal Year (FY09). This record funding surpasses previous annual records occurring in 2006, 2007, and 2008. So far during FY09, the Agency has funded 1,358 GRH loans for $125,775,739. Applicants for this residential housing program are low to moderate income persons or families who work with a loan broker or mortgage lender approved by USDA Rural Development. The Agency guarantees the loan made by the Approved Lender.
Acting State Director Buckman commented, “The Agency and our Approved Lenders are firmly committed to helping families become homeowners of safe and economical housing. This amount speaks well of the dedication that our Agency staff and Approved Lenders have for making this program successful in Kansas. Fund usage also shows how popular the GRH program has become. The three year total to date in Kansas alone, 329,505,343 has been approved to help 3,904 families buy their own homes.”
Available in towns of less than 20,000 in population and in rural areas, the GRH loan is fairly unique in being a home purchase mortgage that can finance up to 102% of appraised value without the costs or requirements of mortgage insurance. No down payment is required, and the loan is a 30-year, fixed rate mortgage based on current Fannie Mae or VA rates. Although many applicants are first time homebuyers, it is not a requirement.
Tim Rogers, Housing Programs Director said, “The Agency is pleased to provide this record level of housing assistance for Kansas. Whether it’s guaranteeing a homeownership loan in Hiawatha, helping with needed home repairs in Cowley County or providing rental housing assistance in Atchison, USDA helps thousands of Kansans each year improve their quality of life along with helping communities expand their local economic development opportunities.”
USDA Rural Development’s mission is to increase economic opportunity and improve the
quality of life for rural residents. Rural Development fosters growth in homeownership,
finances business development and supports the creation of critical community and technology infrastructure.

Ron Yarbrough
Certified Mortgage Planning Specialist

One of the issues for refinancing is equity nationwide.  Fha has a Streamline Refinance Option and many other Government Home Loan Programs do as well.  No Appraisal Required and if you have a second mortgage above the current value of your home you can still refinance.

Last week rates dropped to 5% and below for Streamline Refinances on USDA and Fha home loans.  For a 4 hour period we were able to lock 2 million in volume and we even paid 100% of the closing costs associated with the loan.

Many clients waited and lost out on the no cost option.  There is no reason to catch the absolute bottom of the market if the lender is paying the closing costs.  You can catch a low rate and a few months down the road if rates fall further you can refinance again.

I suggest to everyone that if you want a Certified Mortgage Planning Specialist watch your loan you get on the list.  Take action now and when the next 4 hour window arrives you can be sure to lock in.

http://www.RonYarbrough.com

http://www.Getamortgageplan.com

In today’s financial climate first time homebuyer’s are really stuck having to come up with a down payment to purchase a home or get a sizable gift from a relative that is loosing money in their own portfolio.I have had many requests for more information from the

This post is for consumers/homebuyers, Real Estate Professionals and Mortgage Professionals that may not have a good working knowledge of the features and benefits of the

Many Advantages of this home loan are:1.      No down payment required.2.      No Mortgage Insurance.3.      No cash reserves required.4.      No seller contribution limit.5.      No Prepayment Penalty6.      Loan up to 102%* of appraised value allowed…not the lesser of Sale Price or Appraisal7.      Loan amount can include closing costs and prepaids up to appraised value.8.      No stated maximum loan amount; maximum loan based on repayment ability9.      No First Time Homebuyer Requirement10.  New and existing homes OK11.  Fully amortized 30-year fixed rate loan12.  No minimum credit score required…common sense underwriting allowed.13.  No minimum cash contribution required from borrower.

14.  No limit on CLTV when soft second financing.

15.  No limitation on source of funds for closing costs. No seasoning requirement.16.  100% gifted closing cost or down payment assistance is permitted.17.  Non-traditional credit may substitute for lack of traditional credit history.18.  No derogatory credit explanations required when credit score is 660 or above.19.  Rent is not verified with FICO of 660 or more.20.  Qualifying ratios of 29%/41%…29% PITI to Income and 41% Total Debt to Income, however standard ratios may be exceeded with documented compensating factors.21.  Conventional type loan packaging with only 1 extra form required.22.  Competitive rates (set by underwriting lenders) As of 12/12/2008 rates for loans above 85,000 are 5.50%*Appraisal may be exceeded by amount of Guarantee FeeDetermining if property is in a Rural Development designated rural area: http://eligibility.sc.egov.usda.gov/   Determining if applicant(s) have an acceptable credit history:1.      Credit history must indicate a reasonable willingness to meet obligations when due.2.      Streamlined credit approval when primary applicant has a middle credit score at 620 or above.3.      No minimum credit scores.4.      Lack of credit is not derogatory. Alternative credit verifications are allowed, typically 3 lines.5.      Lenders make the credit decision.Income eligibility:Project the cumulative gross income of all adults in the household.THE GROSS INCOME LIMITS CAN BE MUCH HIGHER THAN THE ADJUSTED INCOME LIMITS SHOWN IN THIS TABLEIf the projected dependable income exceeds the limits, certain adjustments can be made, such as childcare expenses for children age 12 or younger and paid to someone outside the family. You also can deduct one $480 annual deduction for anyone under 18 or a student who is not one of the applicants. Other deductions may be available (see FL/VI Handbook or RD Instruction 1980-D, www.rurdev.usda.gov/regs Example:

55050 62900 70800 78650 84950 91250 97550 103800

See the easy to use calculator at: http://eligibility.sc.egov.usda.gov/eligibility  Click on “Single Family Housing” under “Income Eligibility”Applicant(s) repayment ability:Ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI). Rural Development generally allows expanded repayment ratios if recommended by the lender’s underwriter. 31%/43% automatic for dwelling built after 1/1/2000.Other eligibility criteria:1.      Do not own a suitable dwelling.2.      Insufficient resources to secure conventional 80% loan without the guarantee.3.     

http://www.RonYarbrough.com

I know I have blogged about the opportunity in the past but I cannot believe more potential homeowners have not taken advantage of the Zero Down Mortgage program.  I have been closing USDA RECD home loans for over 12 years and they have always been zero money out of pocket, and no PMI.

The bulk of the clients I have helped have been in the Gardner, Edgerton, Springhill, Desoto, and Bonner Springs, Kansas Area.  This mortgage does have some income limits but they are very agressive.  For a family of 4 with 2 children under 18 the max income is 79,610 a year per household.  In addition you can get credit for Child Care paid.

What this means is that a home buyer would qualify for a 1923 a month house payment if they were at the maximum Income.  With an interest rate of 5.5% this would purchase a 265,000 home with Zero Down.

Do the math.  There is no better program with a low funding fee of 2% financed into the loan, Veterans don’t even have it as good. 

http://www.RonYarbrough.com

If one of the biggest fears for our economy is deflation, why would the Fed come out boasting a 4.5% conforming rate.  To the masses this keeps potential homeowners on the fence.

Many of my clients have decided to go ahead with a no cost refinance now to hedge their bets on the interest rates.  No cost refinancing allows a homeowner to refinance, lower their rate and not increase their mortgage balance. 

As a Certified Mortgage Planning Specialist in Gardner, Kansas, I have been helping clients manage their mortgage for over 13 years.  I literally pay all the closing costs and the client takes their savings and either applies it to their principal balance or directs the funds into an investment account.

If rates continue to fall then we have an opportunity to lock in at the lowest rate without paying closing costs multiple times.

Ron Yarbrough

Well at least for homeowners that need to lower their interest rates.  With the Fed injecting money into Mortgage Backed Securities we will see the interest rates improve.  Yesterday we saw a 1/2 pt drop in conforming and Government loan rates.  True no cost refinance rates were as low as 6% on a 30 year Fixed.

A True no cost refinance does not raise the principal balance on the mortgage. 

Ron Yarbrough

Have you lived by the old school of pay off your mortgage early for retirement and now your retirement fund is cut in half.  Well you are not alone.  As a Certified Mortgage Planning Specialist, we have helped our clients manage their mortgage for retirement, education costs, life events, healthcare and anything in between.  We can do that for seniors as well.  You can tap the equity of your home or create an income stream.  Your estate won’t care if you use some equity for quality of life.  You will not be giving away your home.

FirsTrust Mortgage in Leawood, KS, will help you get a reverse mortgage without charging the excessive fees that other companies charge.  Mortgage planners adhere to a strict code of ethics. 

For more information about reverse mortgages, call Ron Yarbrough today.

Effective January 1st Seniors can use a reverse mortgage to purchase a home.  There is no longer a need to liquidate falling retirement accounts and seniors can avoid mortgage payments on the balance.  Reverse mortgages are a growing segment of business for mortgage companies and a way to help suppliment retirement.  Social Security is typically not enough to support a mortgage payment.

Before the mortgage implosion no doc loans and no ratio loans helped seniors with large retirement account get a traditional mortgage with good great and assets.  Today those assets have declined in value and there are no such loan products.�

This the 1 year treasury falling below a .25% who would want to invest in such a SECURE/SAFE investment?  With treasuries falling out of favor, it is more important now to work with a Mortgage Planner.  As mortgage planners know and understand that the mortgage backed securities come in favor and out of favor sometimes oposite of the Treasury index.  A person who has a mortgage planner watching their mortgage on a daily basis, they have the opportunity to save when the mortgage backed securities dip for those couple hours in a day.

I have over 25 million under management now with an average rate of 6.25%  During the 2003 refinance boom my clients were able to take advantage of 30 year fixed rates in the 5% and under range with zero closing costs rolled into the mortgage.

http://www.RonYarbrough.com