Hugh W. Page, M.B.A.

Senior Mortgage Consultant
(919) 874-7557 Direct
hpage@fmlending.com
www.fallsofficeloans.com http://www.fallsofficeloans.com/

Don Davidson
Senior Mortgage Consultant
(919) 747-5947 Direct
ddavidson@fmlending.com
www.fallsofficeloans.com

Falls Office Mortgage Center Market Update

Need a zero-down mortgage? Look outside the city

If your home is in a designated rural area, and you meet income
requirements, you may qualify for a loan with no down payment.

By Michele Lerner of Bankrate.com http://www.bankrate.com/msnre/

(c) Dana Hoff/Beateworks/Corbis

The zero-down mortgage is still alive through the Agriculture
Department’s rural-development housing program.

People buy houses without down payments or mortgage insurance with USDA
loans. The catch? The property must be in a designated rural area. The
surprise? Some eligible properties are in places that most people would
not consider rural. (Bing: What is mortgage insurance?
http://www.bing.com/search?q=mortgage+insurance&go=&form=MSREAL )

“The terms of eligibility for a USDA loan are twofold, because not only
does the borrower need to qualify, but so does the property,” says Tommy
Xintaris, a senior mortgage banker with Envoy Mortgage in Houston, which
lends throughout Texas. “It’s a small box that borrowers have to fit
into, but it’s a great program if they do.”

Do you qualify?
First, to be eligible, the property must be in a designated rural area.
The USDA website
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
lists counties designated as rural. But some properties are eligible for
USDA loans in counties that are not designated rural, Xintaris says.
There are eligible homes on the outskirts of Austin, Texas, for example.

“The best way to find out about property eligibility is to enter an
exact address (on the USDA site),” Xintaris says.

After the home’s location is deemed eligible, the borrower must meet
income and credit standards.

Read: 7 ways first-time homebuyers can avoid a lemon
http://realestate.msn.com/article.aspx?cp-documentid=27522974

“Borrowers must have a low to moderate income and yet be able to afford
the payments on the property,” says Paul Defngin, a mortgage planner
with Apex Home Loans in Rockville, Md. “USDA has established income
limits. Borrowers can enter their ZIP code, income and number of members
of the household and will know immediately if they qualify for the
program.”

To check on income limitations by county, go to the USDA’s
income-eligibility site
<http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction
.do?pageAction=state&NavKey=income@11> .

Defngin says borrowers must demonstrate they can afford the mortgage
payments by meeting the USDA debt-to-income ratios
http://www.bing.com/search?q=debt-to-income+ratios&go=&form=MSREAL of
29% for the housing payment and 41% for the overall debt to gross
monthly income.

Additional rules
The borrower pays an upfront guarantee fee of 3.5% of the loan amount,
which most people opt to roll into the loan. In some first-time-buyer
programs, borrowers can have their closing costs paid.

USDA loans are not available to investors. The home must be the
borrowers’ primary residence. Most construction types are eligible,
including manufactured and modular homes, as long as they meet condition
standards.

Nick Serrano, sales manager for Greater Nevada Mortgage Services in
Carson City, Nev., says the program is for people who do not own homes.

“The program isn’t limited to first-time buyers,” he says, “but if
someone owns a house and wants to buy another with this loan, (that
person has) to sell it first and pay off the mortgage in full.”

Unlike most low- or no-down-payment loans, Defngin says, USDA loans do
not require mortgage insurance.

Lenders qualify borrowers based on their credit score and their
debt-to-income ratios. USDA does not set a minimum credit score, and
lender minimums vary. Xintaris says Envoy Mortgage requires a minimum
score of 600, while Serrano says Greater Nevada Mortgage Services
requires 620. Defngin says Apex Home Loans requires a 640 credit score.

“A lot of people are frightened by the idea of zero percent financing,
but this loan is very different from subprime loans,” he says. “First,
the loans are guaranteed by the government. Also, the loans are stable,
30-year fixed-rate products, and borrowers must fully document
everything and qualify for the loan.”

Serrano also says: “USDA loans used to be the best-kept secret, but now
this loan program has momentum. It’s so popular that they ran out of
their budget earlier in 2010, although Congress has restored funding
now.

“The only negative to this loan at all is the fact that not every
property and not every individual qualifies. But if someone does
qualify, there is no reason not to take advantage of this program.”

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Hugh W. Page, M.B.A.
http://www.mortgagenewsdaily.com/members/hpage/default.aspx

Senior Mortgage Consultant, NMLS# 93420
http://www.nmlsconsumeraccess.org/EntityDetails.aspx/INDIVIDUAL/93420

(919) 874-7557 Direct

(919) 595-9707 eFax

hpage@fmlending.com

www.fallsofficeloans.com