Refinance USDA Rural Home Loan

Why It’s Time to Refinance Your USDA Rural Home Loan.. Now..

Many Arizona home owners who have existing USDA Rural Home Loan may be eligible for the program allowing for a Streamlined Refinance of their existing USDA Rural Home Loan into a lower fixed rate monthly payment.

But waiting a few more months to refinance your USDA Rural Home Loan might not be a good idea.

Here’s why…

The Central Bank has been buying mortgage backed securities in an effort to keep mortgage interest rates artificially low for a sustained period of time.  Their goal was to buy $1.25 Trillion in mortgage backed securities by March 2010.

Fed Chairman Ben Bernanke reiterated last Monday that the Fed’s buying program will end in March.  The Feds currently hold just over $910 Billion in mortgage backed securities.

So once the Fed’s effort to keep mortgage rates low ends in March 2010, rates should rise.

Highlights of the USDA Rural Home Loan Refinance:

• Refinance of an existing loan can be either a USDA Guaranteed Loan or a USDA Direct Loan
• Grandfathered eligibility even if the property is no longer in a USDA Rural Home Loan eligible area
• The refinance interest rate of the new USDA Rural Home Loan MUST be at least 1% lower than the existing USDA Loan
• May be able to refinance even if you owe more than your home is worth – No Appraisal Option
• May be able to refinance without an appraisal in most circumstances

Find out today if you can quickly and easily refinance into a lower payment USDA Rural Home Loan.

To Refinance your USDA Rural Home Loan click on the Get Started tab above or click here.  You can also ask a question about getting a refinance for a USDA Rural Home Loan on Get Started tab.

What’s the best USDA Rural Home Loan, the Guaranteed USDA Rural Home Loan or the USDA Direct Loan?

It’s important to note that the USDA Rural Home Loan is gaining enormous popularity in Arizona.  Primarily because it allows home buyers in qualifying areas to purchase a home with absolutely zero down payment and without the added expense of monthly mortgage insurance.  In most cases, the USDA Rural Home Loan is the least expensive loan to obtain and to maintain. There are two types of USDA Rural Home Loans;

1. Guaranteed USDA Rural Home Loan
2. USDA Direct Home Loan

Let’s look at the Guaranteed USDA Rural Home Loan first.  It allows you to buy in a rural designated area and has a higher income limitation than the USDA Direct loan.  It allows for applicants to have a Qualifying Income of up to 115% of the area median household income.  All of our Guaranteed USDA Rural Home Loans are based on 30 year fixed rate loans that carry similar interest rates to an FHA Home Loan.

The USDA Direct Loan is not as common as the Guaranteed USDA Rural Home Loan.  One reason is that they carry very strict income limitations for qualifying applicants.  You must have a low income (80% of the area median household income) in order to qualify.  Applicants also must be without adequate housing and be able to afford the housing payment including taxes and insurance, which can be up to 26% of the applicant’s monthly income.

If you are a low income family with an interest in the USDA Direct loan, you can get more information from the USDA here.

To apply for a Guaranteed USDA Rural Home Loan click on the Get Started tab above or click here.  You can also ask a question about Guaranteed USDA Rural Home Loan on Get Started tab.

USDA Rural Development – Queen Creek Map

We’ve just updated the USDA Rural Development maps section to now include the map for areas of Queen Creek Arizona that are eligible.  Buyers and real estate agents looking for USDA Rural Development qualifying homes in the Queen Creek Arizona area can print this map out and bring it along in the search for a home.  If at any time there are questions about a qualifying home, please call (520) 225-0380 for immediate assistance.

The majority of Queen Creek is eligible for USDA Rural Development financing.  This is great news as it allows more buyers in that area to qualify for the 102% financing provided through a USDA Rural Development home loan.  Not only does it allow for zero down financing but there is not any expensive monthly mortgage insurance like you will find with FHA or Conventional financing.

Here is a direct link to the Queen Creek AZ USDA Rural Development Map.

To apply for a USDA Rural Development Loan click on the Get Started tab above or click here.

What The USDA Rural Development Underwriter Looks For When You Apply… Part 2

This is part 2 of a 3 part series where we will look at the 3 most important factors that a USDA Rural Development underwriter will look at when reviewing your file for loan approval. If you have questions that are not addressed here specific to USDA Rural Development Property Qualifying, please ask them in the comment box below.  Also be sure to spread the word about USDA Loans by hitting the “RETWEET” button on the right.  Most people don’t know about the USDA Rural Development option and what benefits it can provide for a qualifying home buyer.

In the last post we looked at the first thing that a USDA Rural Development underwriter will look at when reviewing your loan application for loan approval, your credit.

Today we’ll look at the 2nd most important factor;

2.  The Collateral

While it may seem as simple as finding a house and buying a house, it isn’t.  The USDA Rural Development home loan has some specific collateral requirements that are unique when compared to FHA or Conventional loan financing.

Most importantly, the property must be located within a USDA eligible community.  The USDA relies on a combination of census data and/or the distance from urban areas when they determine if a community is eligible or not.  Under the USDA Rural Housing tab above, you can find a list of USDA Rural Development qualifying property maps for Arizona as well as a resource where you can check a specific property address (in any state, not just Arizona).

First let’s look at what collateral is generally acceptable for the USDA Rural Development home loan.

Eligible USDA properties include:

• Existing or New Construction homes
• Townhouses and Condominiums
• Existing or New Modular Homes
• Existing property in need of minor repairs (see notes below)
• Properties with swimming pools (see notes below)
• Properties with a shared well (An acceptable recorded HUD shared well water agreement will be required if the well is not on the subject property)

I know what you are thinking and I hear this question quite a bit;  “What about Manufactured Homes?”

While the USDA will issue a USDA Loan guarantee for a brand new manufactured home, there are very few lenders who will actually underwrite and fund a manufactured USDA Loan.  So if you have a manufactured home on your mind, check with your lender first to avoid a last minute disappointment.  Currently, we do NOT finance manufactured USDA Rural Development Loans.

An existing property that is in need of some minor repairs may still qualify for a USDA Rural Development home loan but there are some things you need to know, just in case you rush out and find a bank owned property in need of some fixing up.  They can be financed up to the “AS-IMPROVED” value of the home (as determined by a real estate appraisal) but the important factor is that the repairs and improvements must be completed before the final USDA Rural Development Guarantee can be issued.  This means that you would have to work with the seller to complete the repairs before funding.

Properties with swimming pools are allowed however the USDA Rural Development Loan amount will be based on the property value minus the value of the swimming pool.

Ineligible USDA Rural Development properties include:

• Farms and hobby farms
• Existing manufactured homes
• Income property such as a duplex (no 2-4 unit properties)
• Property located on a dirt road (all weather surface for the road is required)
• Property with Hauled Water (allowed on Indian Reservations)
• Property where the site value is more than 30% of the total appraised value

In summary, when considering a USDA Rural Development loan to finance your home purchase the first thing to do is to verify that the property is in a qualifying area (use the tab above).  The second thing to do is review the eligible property types and confirm it qualifies.

In the next post we will discuss the 3rd most important factor that the USDA Rural Development Underwriter will be looking at in your loan application file.

Please be sure to help get the word out about USDA Rural Development home loan financing options by hitting the “RETWEET” button above.  Thanks for reading and if you have any questions, please ask them in the comment box below.

To apply for a USDA Rural Development Loan click on the Get Started tab above or click here.

What The USDA Rural Development Underwriter Looks For When You Apply… Part 1

This is a three part series where we will look at the 3 factors that a USDA Rural Development underwriter will look at when reviewing your file for loan approval.  If you have questions that are not addressed here specific to USDA Rural Development Credit Qualifying, please ask them in the comment box below.

The USDA Rural Development Loan is not as familiar to people as other mortgage types.  Additionally it’s natural to be concerned about what an underwriter will be looking for when they delve into the depths of your personal Loan application.  After all, you’re supplying them with personal information in your quest to buy a home.  So I’d like to provide some quick insight as to the 3 things that a USDA Rural Development Underwriter is looking for when they review your loan application for that Loan approval.

1.  Your Credit

Yes, your credit is an obvious number 1 and it is the most important aspect of your loan decision.  It is one factor that you can actually have control over.  In an earlier post I wrote about USDA Credit Qualifying, but will go into more detail here.

Credit tends to come in three categories:

1. Good (Currently defined as a 620 middle credit score or better)
2. Bad (Less than a 620 middle credit score)
3. Thin (A lack of credit history often with no credit score)

While most USDA Rural Development lenders require a 620 middle score, some have been elevating that requirement to 640 or even 660 over recent months.  Credit Score Optimizing is beyond the scope of this post, but good advice may be all you need to boost your score enough to qualify.  If you have concerns about your score you should review your credit report with an experienced mortgage professional as some good quality advice may be all you need to get a few extra points.

Collections and bankruptcies are the predominate issues that the can cause concern.  The age and size of a collection will determine if it would need to be paid off or not.  AND different USDA Rural Development lenders will have their own specific requirements determining if a collection must be paid or not before closing.

The same can be said about prior bankruptcies.  Most USDA Rural Development lenders will require that a bankruptcy be discharged for 3 years before you can be considered for a USDA loan.  However with a high enough credit score, some lenders will allow you to qualify for a USDA Loan after only 2 years.  Consult your mortgage professional.

Length of Credit History

While the talk of the town on the credit front is mostly about credit scores and optimizing your credit to get that magical 620 middle credit score, there is one other credit factor that is often overlooked; Length of Credit History.

A credit score is supposed to be an indicator of the quality of your credit, but many times a “Thin” credit profile may artificially skew a score.  For this reason most USDA Rural Development lenders do have a minimum requirement for the Length of Credit History.

Most lenders will require a credit history to have:

• 3 credit trade lines (auto, credit cards, etc.); and
• 12 month active history for each of those three trade lines

Here it is important to note that the 3 trade lines do not currently need to be open or even active.  This requirement helps to assure that the credit scores reported are indeed accurate.

But I Don’t Have A Credit History…

If you are one of the many Americans with a Thin credit profile, meaning that you just don’t have a credit history, you can still get a USDA Rural Development Loan.  You can actually “build” a credit profile by providing a history of four sources of alternative credit that have been active for at least 12 months.

What qualifies as Alternative Credit?

• Increasing consistent deposits to a savings account
• Rent and Housing payments
• Utilities (electricity, water, gas, cable, phone, etc.)
• Insurance (medical, auto, life, renters, etc.)
• Local stores (department stores, furniture, etc.)

In the next post we will discuss the other 2 important factors that the USDA Rural Development Underwriter will be looking at in your loan application file.

To apply for a USDA Rural Development Loan click on the Get Started tab above or click here.

Apply online for a USDA Loan and get pre-qualified today.

USDA Loans CNBC Video

USDA Loans are gaining popularity as people find they can buy with Zero Down by using a USDA Rural Development Loan.

It’s a strange thought, but you can effectively use USDA Loans to get paid to buy a house.  Just put the USDA Loan to work for you AND if you are a First Time Home Buyer then you can qualify for the Tax Credit.

Check out the CNBC USDA Loans video.

Did you know that USDA Loans are less risky and have a lower default rate than FHA Loans?

In this video, CNBC shows why USDA Loans are gaining popularity with home buyers and also why builders are welcoming the USDA Loans as well.

To apply for a USDA Loan click on the Get Started tab above or click here.

Apply online for a USDA Loan and get pre-qualified today.

USDA Loans ARRA Refinance Funds NOW Available!

The USDA released a Notice of Funding Availability for USDA Loans Refinance Assistance under the American Recovery and Reinvestment Act of 2009.

USDA Loans Refinancing by using ARRA funds is more restrictive than typical USDA Loans.

USDA Loans ARRA Refinance Requirements:

• The new USDA Loans must have an interest rate at least 1% lower than the current interest rate.
• On the USDA Loan Refinance the new maximum loan may be no more than the principal on the existing USDA loan plus the guarantee fee.  The new USDA Loan including the guarantee fee cannot be more than the original loan amount.
• If there are more than one borrower on the existing USDA Home Loan and one of them wants to relinquish their interest in the property, the remaining borrower must prove ability to repay.
• The existing USDA Home Loan must be current for 180 days prior to the new USDA Loan Application.
• If the loan amount of the new USDA Loan is to be larger than the existing principal of the original loan, then an appraisal will be required.
• If the existing USDA  loan is more than 12 months old, a new appraisal will be required.
• The maximum loan origination fee allowed for the new USDA Loan is 1%.

To apply for a USDA Loan Refinance, click on the Get Started tab above or click here.

Apply online for a USDA Loan and get pre-qualified today.

USDA Rural Development monthly mortgage payments

Did you know that for the same loan size and a similar rate that the USDA Rural Development Home Loan will ALWAYS have a lower payment than FHA?  Sometimes the USDA Rural Development payment will be substantially lower.

Let’s talk rates and payments…

When most people shop for a USDA Rural Development Mor

tgage the first thing they ask is… “What’s the rate?”  The problem is that they are often comparing rates for a USDA Rural Development home loan to an FHA Mortgage Loan or Conventional Loan.  Some of the time, the USDA Rural Development rate will be slightly higher, but not much.

You pay your monthly mortgage payment, whether it is USDA Rural Development or FHA or Conventional you do not pay a rate.  You make a payment based on Principal, Interest, Taxes and Insurance.

All FHA Mortgage Loans have an additional payment component, mortgage insurance.  USDA Rural Development Home Loans do NOT have this additional monthly expense.  It’s easy to calculate how much the monthly FHA Mortgage Insurance payment will be.  Here is the formula:

Loan Amount    x    0.55%     =    Annual Mortgage Insurance (divide by 12 for the monthly FHA Mortgage Insurance Payment)

Example:

A $200,000 USDA Rural Development home loan at 5.5% would have a monthly Principal and Interest payment of $1135.58.

That same $200,000 FHA Mortgage Loan would have that same Principal and Interest payment of $1135.58 but would also have the additional Mortgage Insurance Payment of $91.67 EVERY MONTH.  The USDA Rural Development Home Loan saves over $90 bucks a month over an FHA Mortgage Loan with the same loan amount and rate.

Have some fun and play around with our USDA Rural Development Mortgage Calculator and see for yourself the massive savings you can have with USDA Rural Development.

To find out how much USDA Rural Development Home Loan you qualify for today and how much you can save over an FHA Mortgage Loan, click on the Get Started tab above or click here.

Apply online for a USDA Rural Development Home Loan and get pre-qualified today.

The $8000 First Time Home Buyer Tax Credit is set to expire soon and is available for Rural USDA Loans.  The deadline to fund your home is November 30th.  That isn’t even 60 days from today to qualify for the Home Buyer’s Tax Credit.

The average AZ Mortgage is taking 35-45 days to close.

The home search takes about 2 weeks minimum… right?

Here are some things you need to know about qualifying for the $8000 First Time Home Buyer Tax Credit with your Rural USDA Loan:

1. The Home Buyer’s Tax Credit is for the First Time Home Buyer only.  If you have owned a home within the last 36 months, you are not a First Time Home Buyer.
2. The Home Buyer’s Tax Credit has income limits.  $95,000 for single filers and $170,000 for joint filers.
3. The amount of the $8000 First Time Home Buyer Tax Credit is the lesser of $8,000 or 10% of the purchase price.
4. The purchase must be an arms length transaction, meaning that the buyer and seller cannot be related.

Here is an enlightening and entertaining video on the $8000 First Time Home Buyer Tax Credit that my colleague from Portland Oregon, Dustin Hughes at Northwest Mortgage Advisors, put together.  Please watch and leave a comment!

To find out how much USDA Rural Home Loan you qualify for today, click on the Get Started tab above or click here.

Apply online for a Rural USDA Tucson Loans and get pre-qualified today.

The Rural USDA AZ Mortgage – How to find Tucson property that qualifies

How do you know if the real estate you are looking at in Tucson AZ, qualifies for the now popular Rural Development USDA Tucson Loans?  Let’s take a look at a few ways to find out if the AZ Mortgage for the property you’re looking at qualifies as Rural USDA.

There are three ways to see if the property you are looking at qualifies for the Rural USDA AZ Mortgage.

1. Download the Tucson Loans Rural USDA map.  It has street names and boundaries marked so it will make determining what qualifies for the Rural USDA AZ Mortgage a snap.  Download the map right here off my website under the Maps tab.
2. Still not sure if the Tucson real estate you are looking at qualifies for Rural Development USDA?  If you know the street address and zip code for the property you can look it up in the USDA Rural Property Eligibility Database.  Warning – the Rural USDA property database does not recognize all addresses.
3. The final way to determine if the property qualifies is to compare the Rural Development USDA database map to a google map.  If that sounds a litte daunting, just hit the Get Started on USDA tab above and send the property address to us and we can tell you quickly if it qualifies for the Rural USDA AZ Mortgage.

Finding a property that qualifies for Rural USDA financing is just the second step to home ownership.  Getting qualified for the Rural Development Tucson Loans would be the first step.

There is a lot of confusion about what type of property qualifies for USDA Home Loans.  The first impression is that it needs to be a farm… on acreage… in the middle of who knows where.  Rural USDA loans do not finance working farms, but USDA Home Loans do finance Tucson Real Estate that is located in subdivisions.  So that established subdivision may be the perfect property for your Rural Development USDA Home Loans.

If you have a question about what types of Real Estate qualify for AZ Mortgage USDA Home Loans, just shoot me an email and I’ll answer it in a new post.

Download the Rural Development USDA Tucson Loans map here.

To find out how much USDA Rural Home Loan you qualify for today, click on the Get Started tab above or click here.

Apply online for a Rural USDA Tucson Loans and get pre-qualified today.