Tag: USDA Rural Development

Buy A House with a Small Down Payment

If you are a first-time homebuyer, getting a mortgage may seem overwhelming — especially with all the different options available. Maybe you don’t have a lot of money for a down payment or your credit isn’t great. The good news is, you can still qualify for a home loan. Here are 4 low or no down payment options that can help you, as a first-time homebuyer, get into the house of your dreams.

FHA Loan

With an FHA loan, all you need is a 3.5% minimum down payment to buy your first home. Because the Federal Housing Administration backs the FHA loan, the qualifications are a bit more lenient. People who have no established credit or small savings for a down payment, and even a credit score as low as 580 can qualify. The FHA loan is also available to immigrants who have a Visa or Green Card, as well as those who have gaps in their employment.

It’s also easier to qualify for an FHA loan if you’ve filed for bankruptcy. With a conventional loan, you have to wait four years after filing Chapter 7 to apply for a mortgage. With the FHA loan, you only have to wait two years. If you filed for Chapter 13, you only have to wait one year. You can also get an FHA loan three years after being foreclosed on your previous property.

VA Loan

The government created the VA loan to provide home ownership to veterans and military personnel. Like the FHA loan, the government backs the VA loan for extra security, so qualifying is easier. To qualify, you must get a certificate of eligibility from the Veterans Administration. Having bad credit may not hinder you from getting approved. VA loans require no down payment or Private Mortgage Insurance (PMI). Veterans can choose either a 30-year fixed VA loan or a 15-year fixed VA loan for up to $424,100. They may also get a cash-out refinance of up to 100% of their home.

USDA Rural Development Loan

For those wishing to buy a home in a rural area, the USDA Rural Development Loan requires zero down payment, making it great for first-time home buyers. The government also backs this loan for added security, so there’s low or no PMI attached to it. You only have to pay a 1% guarantee fee upfront and 0.5% each year after that. That’s less than the 1.75% up front and 0.85% each year with the FHA loan. If you’ve recently filed for bankruptcy or were foreclosed, you won’t have to wait too long to qualify for a USDA loan.

Conventional 1% Down Mortgage

Important Update! Last date for loan submissions is 5/31/2018. Program is being discontinued.

Riverbank Finance offers homebuyers a way to put only 1% down on a home and still get a conventional mortgage. In this case, the home buyer puts 1% down and the lender (Riverbank Finance) contributes 2%, giving home buyer 3% equity when closing on the home. Freddie Mac created this option to make homes more affordable for new buyers. It allows people to buy a new home for, essentially, the cost of one month’s rent and avoid PMI altogether or drop PMI in the future. Your 1% down payment may be a gift from someone, you must have at least a 700 FICO score, and your debt-to-income (DTI) ratio is limited to 43%.

For more information or to speak with a loan officer about any of these mortgage options, call Riverbank Finance at (800) 555-2098.

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The Government Shutdown is Over: Now Can I Close my Home Loan?

The government Shutdown is Over so when Can I close my loan?

12:51 AM this morning of October 17th, 2013, President Obama signed a bill extending the Federal Government debt ceiling and allowing the Government Shutdown to end.  The US House of Representatives voted 285 to 144 to pass the bill which allows the government to reopen.  The US Senate had also passed this bill with an 81 to 18 vote only a couple of hour prior.  Starting Thursday, the Government will be back in their offices and open for business. Government websites are now live online and ready to answer questions. Now that things are going back to normal what does this mean for homebuyers that were unable to close their loans due to the Government Shutdown?

Related Article: The Government Shutdown and Home Loans for Homebuyers

President Obama summarized our situation with one simple quote regarding the government shutdown, “There’s a lot of work ahead of us, including the need to earn back the trust of the American people that has been lost of the last few weeks.”

Checking my morning email at 6 AM, I have already had one home buyer and one real estate agent ask, “How soon we can close my mortgage now that the government shutdown is over?”  While I hope we will be able to quickly close up the lingering real estate transactions that have been delayed, I do not think the answer will be quite that easy.  With two weeks of the government employees furloughed and unable to do their jobs, there may be a large backlog of work when they arrive at their desks this morning.

Further Delays in Mortgage Home Loans due to 4506t IRS Transcript Verifications

The largest hold-up for most home buyers which affected many types of home loans, was the 4506T IRS Transcript Verification.  This is the official name of the standard document most home buyers are required to sign by their banks and mortgage companies to properly verify the income they have reported to the IRS for the previous tax years.  While most companies allowed home loans to close during the two week shutdown period with an executed document only, these IRS verification may now need to be processed.  A large influx of 4506T requests to the IRS could result in further delays as the IRS does their best to handle the backlog.

More Delays for USDA Rural Development Home Loans

Even more directly affected by the Government Shutdown was the USDA Rural Development Program.  This zero down home loan was immediately seized up as the USDA Rural Housing offices were closed and unable to review and process home loan applications. In Michigan, for example, prior to the government shutdown, the popularity of this no down payment mortgage has resulted in a 4-5 week backlog for review. This means that even before the shutdown, once a bank or mortgage company’s underwriting has fully approved a borrower for financing, the loan must be sent to the USDA office for final review and approval.  Add two additional weeks of backlog to this program due to the government shutdown and it is clear that homebuyers will be facing further delays in closing on their home loans.

Will My FHA Loan or VA Loan be Delayed?

Most banks and mortgage companies continued to close FHA loans and VA Loans during the government shutdown.  The time limit for the lenders to continue funding FHA loans with comfort was nearing however most companies were unaffected. Home buyers and home sellers should expect business as usual for FHA Loans and VA Loans. Even those that require IRS tax transcript verifications are not expected to experience significant delays in closing.

Will My Conventional Loan be Delayed due to the Government Shutdown?

Conventional loans are not government insured nor guaranteed mortgages such as FHA mortgages, VA loans and USDA loans. Most home loans were not delayed due to the shutdown however a select few that required 4506t tax verifications may still need to be processed. Assuming the IRS does not experience major issues with backlogs, significant delays should not be expected for home buyers using conventional mortgage financing.

The Light at the end of the Tunnel for Home Loans

America can sigh a breathe of relief knowing that the US economy is no longer facing the doom and gloom of the US not being able to pay its bills, however, the economic effects from the Congressional stubbornness and inability to compromise will have lasting effects on the US economy and homebuyers alike. If you are a home buyer or a home seller with a pending real estate transaction that has been delayed due to the government shutdown, we are now a step closer to a loan closing, however, we are not running through the finish line quite yet.

Advice for Dealing with Home Loan Delays from the Government Shutdown

The best advice is to practice continued patience and understand that these delays are not the result of the people on the other side of the real estate transaction. A well-qualified homebuyer will have their day at close, even if the delays continue as the backlog is dealt with by the government employees happily returning to their jobs this morning.  Continue to be flexible with all parties involved and keep a positive attitude; without this bill passing, we would all be in a much worse situation.

Contact information for questions on how the Government shutdown will affect home loans for homebuyers:

Anthony Bird / Owner / CEO
Email: media@riverbankfinance.com
Phone: 800-555-2098

Riverbank Finance LLC a Michigan Mortgage Company
1675 Michigan St Ne Suite E,
Grand Rapids, MI 49503