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USDA $0 Down Home Loan
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AMS Rural HousingAMS Rural Housing
We are financing 102% of the We are financing 102% of the American dream!American dream!
AMS Rural HousingAMS Rural Housing
Justin VaughtJustin Vaught
Sr. Mortgage BankerSr. Mortgage Banker
JustinVaught@amsaz.comJustinVaught@amsaz.com
(480)299-8565(480)299-8565
www.JustinVaught.netwww.JustinVaught.net
AMS Rural HousingAMS Rural Housing
The AMS Rural Housing program is dedicated to the preservation of rural communities. We partner with Rural Development, a division of the US Department of Agriculture, to help thousands of mortgage originators throughout the country put their customers into a Guaranteed Rural Housing (GRH) loan.
This program, administered through the US Department of Agriculture, features 102% financing for qualified moderate-income families looking to purchase single-family homes. For borrowers with little or no cash, it’s ideal since they need no down payment and no funds for closing.
AMS Rural HousingAMS Rural Housing
Guaranteed Rural Housing (GRH)Guaranteed Rural Housing (GRH)
Guaranteed Rural Housing – Guaranteed Rural Housing –
New Construction Pilot New Construction Pilot
GRH Program BenefitsGRH Program Benefits
No Money, No No Money, No ProblemProblem
Borrow more and Borrow more and pay lesspay less
15 Basic Rules15 Basic Rules Rurally Nice Rurally Nice
HomeHome
Borrowers Cash to Borrowers Cash to CloseClose
Average Cash to Close $158.75Average Cash to Close $158.75
Loans with $0 Cash to Close 60%Loans with $0 Cash to Close 60%
How do we do that?How do we do that?
No Down paymentNo Down payment
Finance Closing Costs and Finance Closing Costs and PrepaidsPrepaids
Unlimited Seller ContributionsUnlimited Seller Contributions
Unrestricted Gift FundsUnrestricted Gift Funds
What closing costs Can What closing costs Can be financed?be financed?
Lender feesLender fees
Escrows and first year insuranceEscrows and first year insurance
Third party feesThird party fees
How much can be How much can be financed?financed? 100% LTV of Appraised Value100% LTV of Appraised Value
AppraisalAppraisal $150,000$150,000Purchase PricePurchase Price $$145,000145,000Closing costs/pre-paids Closing costs/pre-paids
$5,000$5,000
Borrow More Pay Less Borrow More Pay Less Guaranteed!Guaranteed!
Guarantee Fee = Guarantee Fee = Loan amount x 2.0%Loan amount x 2.0%
Guaranteed to Pay Guaranteed to Pay Less!Less!
One time, up-front at closingOne time, up-front at closing
May be financed into loan amount May be financed into loan amount ** Above the Appraised Value **** Above the Appraised Value **
No monthly MI premiumNo monthly MI premium
FHA vs. GRHFHA vs. GRHPayment ComparisonPayment Comparison
FHAFHA GRHGRH
PurchasePurchase 98,000 98,000 98,000 98,000
Loan AmountLoan Amount 97,132 97,132 100,000 100,000
P&IP&I 679.16 699.21 679.16 699.21
MIPMIP 39.87 39.87 0.00 0.00
TotalTotal 719.03 719.03 699.21 699.21
GRH Program BenefitsGRH Program Benefits
15 Basic Rules15 Basic Rules
Rules 1-4 Borrower Rules 1-4 Borrower EligibilityEligibility1)1) Make enough, but not too muchMake enough, but not too much
http://eligibility.sc.egov.usda.govhttp://eligibility.sc.egov.usda.gov
2) House is in the right place2) House is in the right place
http://eligibility.sc.egov.usda.govhttp://eligibility.sc.egov.usda.gov
3) No other real estate owned3) No other real estate owned
4) Pay their own way4) Pay their own way
Rules 5-7 IncomeRules 5-7 Income
5) Full documentation, or ALT Doc5) Full documentation, or ALT Doc
6) 24-month employment history6) 24-month employment history
7) 12 months ancillary income7) 12 months ancillary income
-Bonus/Overtime/Part-time-Bonus/Overtime/Part-time
-SSI-SSI
-Disability-Disability
Rule 8 - RatiosRule 8 - Ratios
8)8) 29 and 41%29 and 41%
- Limited compensating factors- Limited compensating factors
- All debts > 6 months counted- All debts > 6 months counted
2/1 Buy Down2/1 Buy Down
Qualify at the start rateQualify at the start rate
Must have compensating factorsMust have compensating factors
– Similar housing paymentSimilar housing payment– History of savingsHistory of savings– Post high school education or technical trainingPost high school education or technical training– Verifiable history of salary increasesVerifiable history of salary increases– Debt to be paid off between 7 and 12 monthsDebt to be paid off between 7 and 12 months– Lender or Seller paidLender or Seller paid
Rule 9 Credit ScoresRule 9 Credit Scores
Tri-merged or Full RMCRTri-merged or Full RMCR
620 is the magic score!620 is the magic score!
Middle of 3, or lower or 2Middle of 3, or lower or 2
Unacceptable Credit Unacceptable Credit History IndicatorsHistory Indicators More than 1/30 in last 12 monthsMore than 1/30 in last 12 months
Bankruptcies/Foreclosures in last Bankruptcies/Foreclosures in last 36 months36 months
Outstanding tax liens or Outstanding tax liens or government debtsgovernment debts
Outstanding judgments in last 12 Outstanding judgments in last 12 monthsmonths
Unacceptable Credit Unacceptable Credit History IndicatorsHistory Indicators
Collections opened in last 12 Collections opened in last 12 monthsmonths
Unpaid collections w/o repayment Unpaid collections w/o repayment planplan
Debts written off in last 36 Debts written off in last 36 monthsmonths
Clouded CAIVR’s numberClouded CAIVR’s number
Mitigating Mitigating CircumstancesCircumstances
Circumstances were of temporary Circumstances were of temporary naturenature
Beyond the applicants’ controlBeyond the applicants’ control
Circumstances have been Circumstances have been removedremoved
Mitigating Mitigating Circumstances- Circumstances- ExamplesExamples
Loss of jobLoss of job
Delay or reduction in government Delay or reduction in government benefitsbenefits
Increased expenses, illness or deathIncreased expenses, illness or death
Dispute over defective goods or Dispute over defective goods or servicesservices
Things that make the Things that make the underwriters really underwriters really mad!mad!
Late pays after bankruptcyLate pays after bankruptcy
Bad credit with a bad letter Bad credit with a bad letter (or, no letter)(or, no letter)
Never had a housing payment, Never had a housing payment, already have credit problemsalready have credit problems
Rules 10-12 - CreditRules 10-12 - Credit
10)10) Explain and support adverse Explain and support adverse creditcredit
11)11) Housing – get 24, verify 12Housing – get 24, verify 12
12) First time homebuyers, 12) First time homebuyers, studentsstudents
Rules 13-15 Cash to Rules 13-15 Cash to CloseClose
13)13) Verify any cash to close > 2% Verify any cash to close > 2% oror
$1,000 whichever is lower$1,000 whichever is lower
14) Submit gift documentation14) Submit gift documentation
15) Provide terms of unsecured 15) Provide terms of unsecured loanloan
Rurally “not so” nice homeRurally “not so” nice home
Rurally “not so” nice homeRurally “not so” nice home
Rurally “not so” nice homeRurally “not so” nice home
Rurally “not so” nice homeRurally “not so” nice home
Rurally Nice HouseRurally Nice House
Rurally Nice HouseRurally Nice House
Rurally Nice HouseRurally Nice House
Escrow Holdback for Escrow Holdback for RepairsRepairs Determine as-improved appraised Determine as-improved appraised
valuevalue
Obtain itemized bid from a licensed Obtain itemized bid from a licensed
contractorcontractor
Itemize repairs on 1003 and 1980-21Itemize repairs on 1003 and 1980-21
RD approvalsRD approvals
Set up escrow at closingSet up escrow at closing
Complete repairs and inspectComplete repairs and inspect
(Minimum Repair Amount = $250, Max = (Minimum Repair Amount = $250, Max = lower of 10% or 10K, and must be completedlower of 10% or 10K, and must be completedwithin 30 days. All lender premiums are within 30 days. All lender premiums are held in escrow until the work is completed. held in escrow until the work is completed. Chase Administration Fee of $150.00) Chase Administration Fee of $150.00)
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