In the past, one of the most popular programs asked for by my customers is the 100% loan program. As you have heard, the government has been tightening the qualifications and requirements on all mortgage home programs. The “Rural Development Program” has been a mainstay, as not only do they do the hundred percent programs, they manually underwrite each application. That means that people who are borderline has a better chance to get their application approved.
Here’s an excerpt from the letter I received concerning this:
“The USDA Section 502 Guaranteed Rural Housing (GRH) program has experienced
unprecedented demand over the last several years. Based on concern for available
funds, USDA Rural Development has announced that funding for the USDA GRH
Program will likely be exhausted by the end of April 2010. In order to provide assistance
to your organization during this time, we have addressed the following key areas:
Loans Approved by USDA Rural Development
Once a loan is approved by USDA Rural Development and a Conditional Commitment for
Single Family Housing Loan Guarantee (RD Form 1980-18) is issued, the loan will not be
impacted by the lack of funding, provided the loan closes before the expiration of the
1980-18. (As a reminder, Lenders may request a 90-day extension of the 1980-18 from
USDA Rural Development.) This projected lack of funding will only impact loans in
process that have not received a USDA Rural Development approval (RD Form
1980-18.)”
Every year, Rural Development has to get their funding approved, which normally happens in April. The concern is that Congress MAY not provide the funding on these loans, which means that there will no longer be this program allowing to buy a home without a large down payment.
Another issue that may be facing us is that HUD (talking mainly about FHA)is discussing an idea that would increase the amount a potential buyer would need for a down payment, and would not allow the seller contribute as much towards the closing costs. We’ll know more about this sometime this summer.
We already know that FHA will increase the lump amount MIP premium in April, but keep the monthly percentage the same.
So with all these changes, what do we do? With all of this uncertainty, many people that are in the market to buy a home are sitting on the sidelines until the rules are clear. The problem now is that people that are waiting for clarity may end up paying thousands of dollars more that they would today.
If you’re in the market to buy a home in the next few months and you are looking to find as close to a hundred percent program as possible, you need to secure the Rural Development loan guarantee. Essentially, the moment you find a property, you need to have your lender secure the guarantee from Rural Development.
These are tumulus times for homebuyers. On one hand, people want to make sure that they are getting the best price and best deal on a home purchase.
On the other hand, people that are being too exact are not only going to have to put more money down, but if they close on their home after May 1st, they will also loose thousands of dollars in tax credits.
So what do you do if you one of those guys that are home shopping and haven’t found the perfect home?
T he first point is simple. Statistics say that t most people on average buy five homes over their lifetime. This means that your first home is NOT your final home. Most of the time it’s a starter home, one that needs TLC, but it’s a lot better to have that starter home, rather than pay your hard earned money in rent each month. When you pay rent, your landlord is getting money to pay his mortgage, and enjoying the benefits of that. You’re getting nothing out the deal.
Don’t be penny wise and dollar foolish. If you wait six months, and have to put 10% down on the home, and lose the tax credit, you’ll be out tens of thousands of dollars.
My suggestion is this, wouldn’t it be better to be a homeowner, with little money out of pocket on the not so perfect home, our pay ten to thirty thousand dollars out of pocket more by delaying?
Real simple.
Find a house.
Buy it with as little money as possible.
Find your perfect home in a few years.
Use the equity in your old home for the down payment.
Home prices are at an all time low, and you’ll be in a better position as a home owner, rather than a renter.
We’re coming on tough times in the real estate market, but those people that can take advantage of this are the ones that will come out ahead.
I have a link to not only rural development website; I also have links to the FHA programs, the repo programs, and more. Check us out at
http://www.networkfundingla.com/
Thanks, and see you on the other side.
Mitch Champagne
