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USDA Funds Running Low
Feeling rested and refreshed, I've returned from vacation to news of changes to my second favorite loan program (VA is my favorite).
One of the best loan programs out there for first time buyers is the USDA Guaranteed Rural Housing Program. This program is designed for owner occupied single family properties located in Rural areas.
Congress appoints a certain amount of money every year for the program. For 2010, the available funds are $13.5 Billion. As of March 15, $9.5 Billion has already been used. That means only $4.0 Billion left which USDA anticipates will be depleted by the end of April. The new fiscal year does not begin until October.
What does this mean to you and I?
Unless you already have a property under contract and the loan is in process, it is unlikely that you will be able to utilize the USDA program for your home purchase. USDA will only honor loans that have received a final loan commitment from USDA at the time that the program runs out of funding.
If you are currently looking for a home and had planned on using the USDA for your loan program, be prepared that you may have to switch your loan to FHA. That's not a bad thing however, it does mean that a down payment of 3.5% of the purchase price will be required as compared to the zero down that USDA allows.
Not to worry, the funding will be back in October. It is actually very common for USDA to run out of funding before Congress renews the appropriation. Usually, it happens just a few days before the the new fiscal year so we never notice. This time its six months before hand so we'll have to make adjustments.
The Smooth Loan Process lesson for today: Be prepared to switch your loan to FHA if you are currently looking for a home and planned on using USDA.
Bonus Lesson: Spring break is not the time for a family vacation if you are going somewhere that college kids go for spring break. Call me if you want details on that.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Monday, March 29, 2010
Thursday, March 11, 2010
The Smooth Loan Process #2010-25
Good Will Always Win Over Evil
Luke Skywalker, Spiderman and Jack Bauer. What do all of these characters have in common? They are the good guys and they always win. Granted, the last three Star Wars movies, Spiderman 3 and the last couple of seasons of 24 have all been awful but that does not diminish the basic truth that good wins over evil.
Let's add home buyers and home owners to this list of good guys. If you are a home buyer or home owner with good intentions, you will win. There is no doubt that you will have your challenges along the way. Short sales, bank owned properties and lower home values have been the evil that we've all had to contend with over the past couple of years but in the end, those of us who stay true to our principals and to our budgets will prevail. Despite all of their power, Darth Vader, The Green Goblin and assorted terrorists all got their comeuppances.
Perhaps you had to short sale your home or you have lost your house to foreclosure. This does not make you a bad guy. Your challenges are different but in the end, you will win too if you make the right choices.
If you can afford the home you are purchasing, you will qualify for the loan. If you can be patient while the bank negotiates your short sale offer, you offer will be accepted. If you are realistic about the bids you are making on a bank owned properties, your bid will be accepted. In reward for your diligence and effort, you get a wonderful home for you and your family. You may not win the first time and that's okay. What's important is that you win the last time.
Be honest, reasonable and patient. Don't give up! Don't swear at your Realtor because the bank negotiator has a heavy workload (that actually happens). In the end you will be rewarded. Sure, there are fewer loan programs available today and more challenges from sellers then there were a couple of years ago, but I have yet to see an application be declined from someone who could truly afford the home he wanted to purchase. And I have yet to see a qualified buyer that was not able to buy a house that suited him.
The Smooth Loan Process lesson for today: Be the good guy and you will win.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Luke Skywalker, Spiderman and Jack Bauer. What do all of these characters have in common? They are the good guys and they always win. Granted, the last three Star Wars movies, Spiderman 3 and the last couple of seasons of 24 have all been awful but that does not diminish the basic truth that good wins over evil.
Let's add home buyers and home owners to this list of good guys. If you are a home buyer or home owner with good intentions, you will win. There is no doubt that you will have your challenges along the way. Short sales, bank owned properties and lower home values have been the evil that we've all had to contend with over the past couple of years but in the end, those of us who stay true to our principals and to our budgets will prevail. Despite all of their power, Darth Vader, The Green Goblin and assorted terrorists all got their comeuppances.
Perhaps you had to short sale your home or you have lost your house to foreclosure. This does not make you a bad guy. Your challenges are different but in the end, you will win too if you make the right choices.
If you can afford the home you are purchasing, you will qualify for the loan. If you can be patient while the bank negotiates your short sale offer, you offer will be accepted. If you are realistic about the bids you are making on a bank owned properties, your bid will be accepted. In reward for your diligence and effort, you get a wonderful home for you and your family. You may not win the first time and that's okay. What's important is that you win the last time.
Be honest, reasonable and patient. Don't give up! Don't swear at your Realtor because the bank negotiator has a heavy workload (that actually happens). In the end you will be rewarded. Sure, there are fewer loan programs available today and more challenges from sellers then there were a couple of years ago, but I have yet to see an application be declined from someone who could truly afford the home he wanted to purchase. And I have yet to see a qualified buyer that was not able to buy a house that suited him.
The Smooth Loan Process lesson for today: Be the good guy and you will win.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Wednesday, March 10, 2010
The Smooth Loan Process #2010-21-A
Pure Fitness on Warner and McClintock Still Sucks!
I've never done a supplemental episode before. Thanks to Pure Fitness, you get one. In #10-21 http://bit.ly/TheSmoothLoanProcess10-21 , I told the story of my adventures with trying to cancel my membership with Pure Fitness on Warner and McClintock. The saga continues.
After cancelling my membership for the second time, I was assured that there would be no more charges to my credit card for their services. I was also given the cancellation form signed by the manager Katelin. On that cancellation form, she wrote very clearly that there would be no future billing. Excellent! This is what I wanted.
The next day, my card was charged double! Not excellent. I went back to the gym with my cancellation form to dispute this. I talked to the receptionist at the front desk and she told me that I would need to talk to a manager but there was not a manager in the building at that time. That was weird because Katelin was in the office behind me. I saw her. So I said, "Katelin is in the office behind me. I see her." The receptionist then informed me that I needed a different manager to handle this.
Wow! I've never been so angry so I left.
This morning I called my bank to dispute the charges for the past two months. When the customer service person got on the phone, I informed her that I wanted to dispute two of the charges on the account. Her response was very telling. She said, "Let me guess, Pure Fitness for $39?" I was astonished and asked her how she knew that. I hadn't said anything to her yet and it's not like those were the only charges on my card. I use that card for everything. She said she just kind of figured that's what it would be.
So it would appear this is not just me. The funny thing to me is that I have spent more time in the gym disputing the charges than I ever did working out. Maybe I'm getting in too much of a tizzy about $39 but I'm not one to let bad customer service get a free pass. You shouldn't either.
The Smooth Loan Process follow up lesson for today: Pure Fitness on Warner and McClintock still sucks!
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
I've never done a supplemental episode before. Thanks to Pure Fitness, you get one. In #10-21 http://bit.ly/TheSmoothLoanProcess10-21 , I told the story of my adventures with trying to cancel my membership with Pure Fitness on Warner and McClintock. The saga continues.
After cancelling my membership for the second time, I was assured that there would be no more charges to my credit card for their services. I was also given the cancellation form signed by the manager Katelin. On that cancellation form, she wrote very clearly that there would be no future billing. Excellent! This is what I wanted.
The next day, my card was charged double! Not excellent. I went back to the gym with my cancellation form to dispute this. I talked to the receptionist at the front desk and she told me that I would need to talk to a manager but there was not a manager in the building at that time. That was weird because Katelin was in the office behind me. I saw her. So I said, "Katelin is in the office behind me. I see her." The receptionist then informed me that I needed a different manager to handle this.
Wow! I've never been so angry so I left.
This morning I called my bank to dispute the charges for the past two months. When the customer service person got on the phone, I informed her that I wanted to dispute two of the charges on the account. Her response was very telling. She said, "Let me guess, Pure Fitness for $39?" I was astonished and asked her how she knew that. I hadn't said anything to her yet and it's not like those were the only charges on my card. I use that card for everything. She said she just kind of figured that's what it would be.
So it would appear this is not just me. The funny thing to me is that I have spent more time in the gym disputing the charges than I ever did working out. Maybe I'm getting in too much of a tizzy about $39 but I'm not one to let bad customer service get a free pass. You shouldn't either.
The Smooth Loan Process follow up lesson for today: Pure Fitness on Warner and McClintock still sucks!
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Thursday, March 4, 2010
The Smooth Loan Process #2010-24
Buying A Home After A Short Sale
Remember playing the post office game in grade school? The first person whispers something in the ear of the person next to him. The next person repeats what the first person said and so on. By the time the phrase gets to the last person in the game, it's completely different from what the first person said. Click the link for my favorite example of this from The Simpsons. http://bit.ly/5kBggd
The post office game is being played when it comes to HUD's guidelines on purchasing after a short sale. I've heard everything from one end of the spectrum to the other. This morning, KTAR reported "good news for all that have had a short sale."
Here are the facts. You can check it out on HUD's website. http://bit.ly/mortgagee09-52 . In order to be eligible to purchase a home with an FHA loan after a short sale, you must have been current on the mortgage for the 12 months prior to the short sale. The rest of your credit must meet FHA standards. The new home must not be within a reasonable commuting distance from the property that was sold. That last bit is the kicker. Essentially, It means that reason for your short sale must be because you were relocated by your company to a different metro area. It's not HUD's intention to reward people for short selling a property to improve their equity position.
There are also provisions for drastic increase or decrease in family size.
Unless you have been relocated to another city by your employer, or you are the Octo-mom, your short sale is going to be treated very similarly to a foreclosure when it comes time to purchase the next home. For FHA loans, that means three years from the date of the short sale.
The Smooth Loan Process lesson for today: It is very unlikely that you will qualify to purchase a home within three years of a short sale.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Remember playing the post office game in grade school? The first person whispers something in the ear of the person next to him. The next person repeats what the first person said and so on. By the time the phrase gets to the last person in the game, it's completely different from what the first person said. Click the link for my favorite example of this from The Simpsons. http://bit.ly/5kBggd
The post office game is being played when it comes to HUD's guidelines on purchasing after a short sale. I've heard everything from one end of the spectrum to the other. This morning, KTAR reported "good news for all that have had a short sale."
Here are the facts. You can check it out on HUD's website. http://bit.ly/mortgagee09-52 . In order to be eligible to purchase a home with an FHA loan after a short sale, you must have been current on the mortgage for the 12 months prior to the short sale. The rest of your credit must meet FHA standards. The new home must not be within a reasonable commuting distance from the property that was sold. That last bit is the kicker. Essentially, It means that reason for your short sale must be because you were relocated by your company to a different metro area. It's not HUD's intention to reward people for short selling a property to improve their equity position.
There are also provisions for drastic increase or decrease in family size.
Unless you have been relocated to another city by your employer, or you are the Octo-mom, your short sale is going to be treated very similarly to a foreclosure when it comes time to purchase the next home. For FHA loans, that means three years from the date of the short sale.
The Smooth Loan Process lesson for today: It is very unlikely that you will qualify to purchase a home within three years of a short sale.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Tuesday, March 2, 2010
The Smooth Loan Process #2010-23 (Birthday Edition)
1973 or 2010? The 70's Are Back In Style
It's the day of my birth! It happened in 1973. At least, that's what they tell me. I don't really remember it. Here are some other fun facts (according to the internet) about 1973. The average home price in the US was $32,500. The average annual household income was $12,900 and 30 Year mortgage rates were about 7.5%. The most fun of all, a gallon of gas was 40 cents and 94% of all people over 18 smoked cigarettes. Okay, I made up the last one about smoking, but it was a lot.
Oh, how things have changed. How sweet would it be today to have a $228 house payment on your $32,500 mortgage? Or fill up your car for $8.00? One thing that has changed since the 70's but has now come back in style is the way we qualify for our mortgages.
My dad remembers the home buying process for our family home in the 70's. He still lives there, by the way. He had to provide two years W-2's and tax returns, one months pay stubs and two months bank statements. His monthly debts could not exceed 41% of his gross monthly income. And he had to have had a history of paying his bills on time.
Sound familiar? If you said yes, you're right. These are essentially the guidelines today to qualify for a mortgage. If we look back at 1973, the foreclosure rate for all mortgages under these guidelines was about .5%. We hear in the news how difficult it is now to obtain financing. It's not that it's difficult, it's just back to how it used to be. Maybe that's not a bad thing. Is it unreasonable that we are expected to have the ability to repay the money that we borrow?
The Smooth Loan Process lesson for today: Your lender is going to ask you for more paperwork than they did a few years ago. Please don't be offended.
Bonus Lesson: The Sting was Best Picture of 1973. Avatar is the favorite this year. Avatar had better special effects.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
It's the day of my birth! It happened in 1973. At least, that's what they tell me. I don't really remember it. Here are some other fun facts (according to the internet) about 1973. The average home price in the US was $32,500. The average annual household income was $12,900 and 30 Year mortgage rates were about 7.5%. The most fun of all, a gallon of gas was 40 cents and 94% of all people over 18 smoked cigarettes. Okay, I made up the last one about smoking, but it was a lot.
Oh, how things have changed. How sweet would it be today to have a $228 house payment on your $32,500 mortgage? Or fill up your car for $8.00? One thing that has changed since the 70's but has now come back in style is the way we qualify for our mortgages.
My dad remembers the home buying process for our family home in the 70's. He still lives there, by the way. He had to provide two years W-2's and tax returns, one months pay stubs and two months bank statements. His monthly debts could not exceed 41% of his gross monthly income. And he had to have had a history of paying his bills on time.
Sound familiar? If you said yes, you're right. These are essentially the guidelines today to qualify for a mortgage. If we look back at 1973, the foreclosure rate for all mortgages under these guidelines was about .5%. We hear in the news how difficult it is now to obtain financing. It's not that it's difficult, it's just back to how it used to be. Maybe that's not a bad thing. Is it unreasonable that we are expected to have the ability to repay the money that we borrow?
The Smooth Loan Process lesson for today: Your lender is going to ask you for more paperwork than they did a few years ago. Please don't be offended.
Bonus Lesson: The Sting was Best Picture of 1973. Avatar is the favorite this year. Avatar had better special effects.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Monday, March 1, 2010
The Smooth Loan Process #2010-22
I Don't Need To Read That. I Trust You.
I have a birthday coming up and for the first time in my life, I'm realizing that I'm not a part of the younger crowd anymore. Last week, I took an application and pre-approved a buyer that was born in 1989. How is that possible?!?! It will be no time at all before my oldest son would be old enough (but not responsible enough the way he's going) to buy a house. Crazy!
The thing that struck me about the 20 year old that is buying a house is that he was so impatient. He was interested to know what his payment would be. And how much money he would need for down payment. Other than that, everything else was extraneous to him. He didn't care about the loan program or why I was recommending it. He just wanted to be done with the meeting. Or so I thought.
At first, I thought that maybe I had done something to offend him or that I had not built a good rapport with him so I asked him if he would like me to explain the application documents. His response was "I don't need to read that. I trust you." I just met him that morning. We had only spoken on the phone once. I realize that I'm charming, but I couldn't let him leave without explaining the paperwork. I have a responsibility to our clients to make sure they understand what they are getting with their financing.
Then he answered a text on his phone for the fourth time since our meeting started and it hit me. The way he gets his information is very different than the way I get my information. Admittedly, I'm nearly (but not quite) twice his age. Not old by any means, but not young either. I did not have a cell phone until I was in my 20's. I had a kid before I ever sent my first email. This buyer grew up with internet, texting and cell phones. The information is more instant and mobile now. I was showing him a bunch of paper. Not his style.
I stopped the meeting. I told him I would email all of the applications documents to him and asked him to sign and fax or email back to me. His face lit up with excitement. This was more his style. I made him promise to read all of the documents that I had emailed and he agreed.
By the way, this all happened in less than 30 minutes. Kids these days...
The Smooth Loan Process lesson for today: You have to read all of your documents. There's important information there. When, where and how you read it is up to you.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
I have a birthday coming up and for the first time in my life, I'm realizing that I'm not a part of the younger crowd anymore. Last week, I took an application and pre-approved a buyer that was born in 1989. How is that possible?!?! It will be no time at all before my oldest son would be old enough (but not responsible enough the way he's going) to buy a house. Crazy!
The thing that struck me about the 20 year old that is buying a house is that he was so impatient. He was interested to know what his payment would be. And how much money he would need for down payment. Other than that, everything else was extraneous to him. He didn't care about the loan program or why I was recommending it. He just wanted to be done with the meeting. Or so I thought.
At first, I thought that maybe I had done something to offend him or that I had not built a good rapport with him so I asked him if he would like me to explain the application documents. His response was "I don't need to read that. I trust you." I just met him that morning. We had only spoken on the phone once. I realize that I'm charming, but I couldn't let him leave without explaining the paperwork. I have a responsibility to our clients to make sure they understand what they are getting with their financing.
Then he answered a text on his phone for the fourth time since our meeting started and it hit me. The way he gets his information is very different than the way I get my information. Admittedly, I'm nearly (but not quite) twice his age. Not old by any means, but not young either. I did not have a cell phone until I was in my 20's. I had a kid before I ever sent my first email. This buyer grew up with internet, texting and cell phones. The information is more instant and mobile now. I was showing him a bunch of paper. Not his style.
I stopped the meeting. I told him I would email all of the applications documents to him and asked him to sign and fax or email back to me. His face lit up with excitement. This was more his style. I made him promise to read all of the documents that I had emailed and he agreed.
By the way, this all happened in less than 30 minutes. Kids these days...
The Smooth Loan Process lesson for today: You have to read all of your documents. There's important information there. When, where and how you read it is up to you.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
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