USDA Home Loans In North Carolina

USDA Rural Development Program announced that it is rolling out a “Streamlined” refinance process.  In their announcement they indicate that the new program will not require an appraisal, and that it will not require that credit reports and credit scores be checked.  This program is being designed to refinance USDA home loans to USDA Home loans.  If your current mortgage is a FHA loan, for instance – the program does not apply.

We are currently waiting to see what the Banks are saying about their underwriting “overlays” for this streamlined refinance program.  Just because USDA Home Loans offer the program, and will guarantee the Bank (Lender) against part of the risk, doesn’t mean that the Banks will offer the program exactly as USDA has it outlined.

The real question will be how much the mortgage insurance is for this program.  The USDA Home Loan Program recently started charging a monthly insurance fee – if the fee stays in place for the new refinance program, the “make sense” number to refinance will be a little higher… meaning, the spread between what your current rate is compared to what your new rate will be, could need to be more than the traditional 1.5%.  So if your current mortgage is 5.75%, and the new mortgage is less than 4% APR then it might save you money.  We will be glad to compare the difference for you, and let you know the real apples to apples comparison of payments  once you calculate in the additional money you will be charged in USDA “Monthly PMI”.

As soon as we have confirmation about the details to this refinance opportunity – we’ll pass it along!  Call Steve Thorne, Mortgage Loan and USDA Home Loan Expert in NC  919 649 5058 for more details!

** Program Update** Under a new program released to homeowners in NC for a LIMITED TIME, USDA RD Home Loans now have a STREAMLINE USDA REFINANCE Program available.  This program has several restrictions, but might be of benefit to those who currently have a USDA Home Loan in NC, and who have made their payments on time for the last 12 months or more.  There’s NO APPRAISAL Required  (More Info on this USDA Streamline Refinance)

“Regular” Refinance Guidelines are Below

If you purchased your home using the USDA Home Loan Program, and your interest rate is currently over 5% – you might be pleased to learn that USDA does allow for the refinance of current USDA Guaranteed or USDA Direct Mortgages.

The USDA Refinance is designed to lower the interest rate on a current USDA Home Loan and is only available in a fixed rate. A USDA Refinance Loan can be performed quickly and easily. USDA Refinance Loans require no property inspection, however you do have to qualify for the new mortgage – meaning that you must have a credit score of at least 620, you can not be late on your mortgage payments, and you must be able to verify your income.  If you think you qualify for the NC Housing Finance Agency Program, we can do credit scores down to 600.

If you do not currently have a USDA Mortgage on your home, you are not eligible for a USDA Refinance and you may want to consider an FHA Refinance, Conventional Refinance or VA Refinance. For an FHA refinance, you will need at least 3.5% equity in your home, Conventional loans can be done with as little as 5% equity.

What are the basic requirements for an USDA Refinance?

• The mortgage to be refinanced must already be a USDA Loan (Guaranteed or Direct).
• The mortgage to be refinanced should be current (not delinquent).
• The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
• No cash may be taken out on mortgages refinanced using the USDA loan refinance process.

Maximum Loan Amount

The is no set maximum loan amount allowed for a USDA Loan. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.

Maximum financing

The maximum USDA Rural Loan amount will be 103% of the appraised value of the home (100% plus the 3% USDA loan guarantee fee).  USDA is changing it’s Guarantee Fee in October 2011

If you want more information about refinancing your USDA Home Loan in NC – please call Steve and Eleanor Thorne in Cary NC 919-649-5058 we have the best rates and know the ways to make this program work!

People are moving to Raleigh, and staying in the Triangle because we have jobs. Folks who are considering putting down roots here, and getting a North Carolina Home Loan need to learn more about how their Student Loans will be viewed by Underwriting Guidelines.

Whether it is a USDA Home Loan, an FHA Loan, or a VA Mortgage Loan – if you have have existing student loans, first off they need to be current. If you are past due – call TODAY and see what can be done to create a payment plan.   Once you’ve made 6 to 7 payments on the new plan – you will be closer to being able to buy a home in NC.

The USDA Loan Program is very popular among recent graduates, and a couple reasons are because there’s not a down payment requirement and it is the simplest home loan to get with credit scores of 620 being used to qualify.

Because you don’t need to fork out a ton of cash to get into the USDA Home Loan Program it has gotten VERY popular over the last few years… and it’s our understanding that Johnston County, NC is one of the HIGHEST Counties in the Country when it comes to people who buy a house using the USDA Rural Development Loan!

Student loans come in two classes: deferred and not deferred.  And one thing to keep in mind when looking at the USDA Loan Program is that it does treat student loans differently than the other loan programs available.  At first glance you would intuitively think that a deferred student loan would not be considered in qualifying for your new home loan.

The rule changed slightly with the publication of Administrative Notice 4543.  Now, any student loan whether it is in repayment or deferred must be included in the qualifying calculations.

So, Even though the payment may be deferred, USDA Home Loan Underwriters in NC will still consider this to be a long term debt. This means that if you have 6 payments or more left on a student loan – we will calculate that payment in qualifying you for a mortgage loan.

The maximum total debt payment ratio for USDA is 41%.  This means that your credit card payments, student loans, car payments (etc) plus your mortgage, taxes and insurance on the house should not represent more than 41% of your GROSS (before taxes) monthly income.  We have seen a few cases where this was bent by an underwriter… but not often.

If you do have student loans that are in deferred status and plan on getting a USDA Loan, be sure you know exactly how much the monthly payment will be once the loan is back in repayment status.  If you do not have that information, the USDA Underwriters will use 1% of the loan balance as the monthly payment.

See what part of your county qualifies for USDA Mortgage Loans!

To find out if you qualify for a USDA Home Loan in NC call Steve Thorne (919) 649-5058.  We work with hundreds of families using this program each year here in NC!

When clients contact us  they are usually looking for the lowest monthly payment – or the easiest way to get into the property with the least amount of money tied up in the transaction.

Most prospects only ask one question… “What’s your rate???”  In truth, there are MANY other questions to ask!

One of the variables consumers should ask more about it Mortgage Insurance.  There are multiple forms of Conventional Mortgage Insurance – running from Lender Paid, to Financed to Monthly.  If you are purchasing in NC Conventional lending currrently requires PMI if you have less than 20% equity in the property.

Government loans also carry mortgage insurance.  For FHA loans this is called MIP, VA and USDA call these Guaranty Fees. One of the major differences in GOoernment Mortgage Insurance programs and Conventional MI programs is equity investment.  With a government loan you mortgage insurance is required- no matter how much money you put into the initial transaction.

Please note that FHA allows MIP/PMI to “age off” if at least 5 years of payments are made and there’s a 78% equity position.  This is a significant program enhancement agents often forget.

Don’t forget that USDA is changing it’s PMI (Guarantee Fee) Starting in October of 2011.

If you are looking for the lowest mortgage payment in Wake County, contact Steve and Eleanor Thorne.

919-649-5058