ASK THE LOAN OFFICER
Home Buyers Ask
Loan Officers Answer
A continuing series of questions from consumers and answers from experienced loan officers about home finance. Homefinders.com will publish the mortgage questions and answers below. Stay tuned to find the answers to your questions. Or, you may submit a question to E-MAIL HOMEFINDERS, and we'll get the answer for you. Or, you can telephone Lenn Harley, Broker, Homefinders.com with your question. The answer will be published for your review.
ASK THE LENDER ABOUT THE 203(k) PURCHASE AND RENOVATION LOAN
Question: Will the USDA loan help me buy a home in the $250,000 price range in Prince George's County MD???
ANSWER: The USDA loan helps many home buyers in more rural areas of Maryland. However, Prince Georges County Maryland has very little USDA eligible areas due to the population density. Upper Marlboro in the south east region has an area east of route 301. The community of Marlton is eligible for the USDA loan.
MARLTON has several homes for sale in your price range. Marlton is located just south of Pennsylvania Avenue on the east side of 301. See Map below. Marlton will usually have several homes for sale in the $150,000 to $300,000 price range well suited for a USDA loan.
ABOUT THE USDA LOAN. In Prince Georges County the USDA income limit is $101,000 for 1-4 persons and $133,000 for 5-8 persons. USDA calculates income using total household income so everyone living in the home regardless of who is on the mortgage note is added together.
With mortgage interest rates at historic lows, many current renters are choosing purchasing over continuing to rent. One barrier to many people who would like to purchase is a down payment. With USDA there is no down payment and the seller can pay as much as 6% towards your closing costs. This will allow many perspective home buyers to purchase their first home.
If you are thinking about buying a home with a USDA loan I would love to answer your questions.
~Brian Mayer 443-624-9398.
If you are ready to tour homes for sale in Marlton, contact Homefinders.com, 800-711-7988.
QUESTION: Can I perform the work/repairs on the house that I purchase to renovate?
ANSWER: The short answer is “yes”, but I highly recommend using a licensed general contractor, and preferably a contractor who has experience with the 203K program. Experience has shown that projects where the homeowner does the work typically result in delays, confusion and increased costs. Because renovation projects are always more involved than originally estimated, homeowners can find themselves overwhelmed and end up paying a contractor to come in a finish the work. In situations where the borrower is in a trade, such as an electrician, he/she may wish to perform any wiring on the job. This is acceptable but costs for materials must be included, and costs for labor are not allowed. Generally speaking it’s always better to use an experience contractor to complete the project.
QUESTION: How do I know what needs to be repaired in order to get my FHA financing?
ANSWER: Once you have identified the property you wish to purchase, the lender will order a property appraisal from a certified FHA appraiser. The appraisal will indicate the items which MUST be repaired in order to meet FHA’s minimum property requirements. It is also highly recommended that the purchaser hire a qualified home inspector to do a thorough inspection of the home. The FHA appraiser is NOT a home inspector. His/her primary job is to determine the VALUE of the property and insure that the property meets FHA’s MINIMUM standards. A home inspector is trained to recognize deficiencies which the FHA inspector may not find. After these inspections are complete a contractor is selected to estimate the cost of the required repairs, as well as those items you may wish to change or upgrade. Those costs are added to the price of the home to determine the maximum loan amount available. Typically, the borrower needs only 3.5% down payment based upon the TOTAL cost (purchase price PLUS repairs).
QUESTION: Is it hard to get approved for the FHA 203K loan?
ANSWER: Actually, because the 203K loan is a government backed mortgage, it is perhaps the easiest mortgage to secure! Credit requirements are substantially more lenient than they are for conventional loans. The down payment is minimal and my be entirely gifted to the borrowers by a family member. The sellers are permitted to pay all of the closing costs as well. Finally, for those who may not qualify on their own, FHA allows co-signors on the mortgage and do NOT require them to live in the house! Perfect for a young person whose parents (or uncle/aunt/grandparents) are willing to provide a hand up! So there really isn’t an easier loan to get once all of these factors are considered. Finally, all of this is available for on a low, 30 fixed rate mortgage which is assumable. It’s the best of all worlds!
Matthew T. Donnelly, Manager
OlympiaWest Mortgage Group, LLC
QUESTION: I've been advised that an FHA loan is a good option for us now. We have reasonable credit but not very high credit scores. Also, can we get closing help with an FHA loan?
ANSWER: FHA is just hard to beat right now.
Rates are going down down down. Really if you look at it, for the last few years rates have been good, but with the recent 1/2 % or more drop it is helping clients buy more house for the same payment.
Remember buyers can receive up to 6% of their purchase price from the seller to go towards closing costs, escrows, and rate buy downs. You, with the help of your buyer's agent may be able to negotiate a 5 or 6% seller contribution this not only pays for the customers closing costs but helps give them a lower interest rate and payment for the 30 years they live in that house.
Using the services of an experienced Realtor is key to this savings the client has for years after the purchase is over.
Finally, not since around 12/06 have rates for FHA's been around 5.5%. We are talking real rates, not just the hype.. Consumers are getting 30 year, fixed rates, no penalties, easy qualifications, low down payments, and deductable MI (Mortgage Insurance) now!
Many customers are making purchase decisions this month and there is still time to take advantage of the lower FHA requirement of 3% down/. The FHA down payment is scheduled to increase to 3 1/2% January 1,2009.
Some customers forget though that while they will need 3 1/2% for the down payment, that money can come from lots of places. A customer can get there money from savings, retirement accounts, a gift from family..friend..employer..church..community organization..or even borrow from their 401k or family member.
There are so many ways to make this, the FHA loan, work to a customers advantage and that is where having the right loan officer and company will payoff as well. All the news would make someone think that loans are not available, or that no one is buying homes. That is NOT our experience. Our borrowers are closing on home purchases every day.
I cannot stress this enough...now is the most exciting time to buy a home. Remember the FHA loan is for anyone, not just first time home buyers. If you have bought a home before or are a first time buyer you can qualify. The only restriction is that you can have only one FHA insured loan at a time. With the great low rates and low home prices....now is a beneficial time for anyone to buy a new home.
Have a Great Day!
Premier Mortgage Company, LLC
A George Mason Mortgage Managed Company
12150 Monument Drive Suite 425
Fairfax, VA 22033
Apply Online at Apply Online Directly With Me click apply.
Question: My husband took a job at NASA. We'll be at Executive House for 2 months. What kind of documents do we need to get approved for FHA. Our agent is sending us homes in the $400,000 price range.
Answer: July 18, 2008
Great News! The documents needed for a FHA loan are VERY similar to those you would need when applying for most other types of financing these days! Here's our "Scavenger Hunt" list!
- Most Recent pay stubs for 1 full month.
- The name, address and telephone number of someone who can verify employment. (We will be sending them a form to complete) We will be verifying your income for the last 2 years.
- If either of you are now, or have been self-employed, or earned income OTHER THAN W-2 income in the last two years, we will need full copies of your tax returns. If you ONLY earned W-2 income, we will need a copy of the W-2s for the last 2 years.
- Any data regarding the relocation package, and specifically what NASA is covering.
- If you owned property, and you've sold it, we'll need a copy of the HUD-1 Settlement Statement. If you own a property that is leased, then we will need a copy of the lease agreement. We need to document 2 full years of residence.
- If you've been renting during the last 2 years, we will need the name, address and telephone number of the landlord.
- We need copies of bank statements for the last 2 months. If you are changing banks, remember that we will need to verify the money going out of one account and into another! (PLEASE try not to have any NSFs!) We will need ALL pages of the bank statements.
- If you are receiving a gift for the your down payment - we will provide you with a gift letter to have completed. We will also need to verify that the person giving you the gift has the money in their account. In the event that you, or the donor, do not keep money in a bank - we do have other options, so you will need to speak with us directly about that situation.
- In the event that you do not have sufficient "lines" of credit, we can look at "alternative lines." This means that if you have only 1 credit card, and no other credit, we will likely need to use your cell phone, and your insurance (for instance) to establish that you pay your bills on time. If you think you might be in this situation, please have the last statement available for us.
In every single loan file, there are other items that we might also request... it's difficult for me to anticipate every different situation... for instance, if you sold a car before moving, and deposited $5000 from that sale - we are going to ask for evidence of the sale... but for the most part... this should be a VERY complete list.
In addition to gathering items for your loan officer, there are a few things you should NOT DO while you are waiting 60 to 90 days to purchase a new home.
- Do NOT close a credit card without speaking with a mortgage lender who has reviewed your credit.
- Do NOT apply for ANY new credit without speaking with a mortgage lender who has reviewed your credit.
- Do NOT even purchase a refrigerator until AFTER you close on your home and have the keys... without speaking with a mortgage lender who has advised you about the purchase.
- Do NOT quit your job, buy a new car, or invest in a new business (all things I've seen people do that made a MESS of closing!) without speaking with a mortgage lender who has advised you about these options.
Congratulations on your move, and your new opportunities! I know this is an exciting time! I strongly encourage you to choose a real estate agent who can guide you towards a mortgage lender that is familiar with the laws and underwriting guidelines in your new area!
Steve and Eleanor Thorne
Question: I'm eligible for VA benefits and would like to buy a home in Prince William County, VA.
I've never purchased a home before. What are the benefits if I finance my home purchase with a VA loan?
VA Loans happen to be the only program out there today that provides 100% financing. In addition to this, it allows the seller to pay all the closing costs. What this means for you is that you may be able to close on the purchase of your first home with little to no money out of pocket. This allows you the opportunity to have money in the bank (reserves) to make any applicable home improvements and/or provide you a financial cushion for other expenses.
In a nutshell, a VA Loan could provide you a wonderful financing outlet to help you buy your first home. Best of luck and have a wonderful week!
The best answer to this question is that the VA allows Veterans to purchase a home with no down payment, although there are many benefits to using your eligibility.
The VA is fairly strict about it's qualifying guidelines - both for the property and the Veteran. This means that the appraiser is going to be a "little" more picky than other appraisers about the condition of the home. The VA considers items like child care costs, and heating and utility costs when qualifying you for a home. This is important, because you can feel confident that once you qualify for a VA loan, you will probably be able to make your payments and won't run into problems later on!
Remember - the VA does not actually make loans - they guarentee them. They charge a fee for this insurance, commonly referred to as a "Guarantee Fee." For this reason, if you are able to make a three to five percent down payment on a home, there are other financing options that might better meet your long term goals.
Also - because you will be borrowing a little more than the purchase price (due to the Guarantee Fee), it's vitally important that you seek the services of an experienced real estate agent. A realtor will help you negotiate the best terms, and give you the best information regarding market conditions!
Steve and Eleanor Thorne