Richard's Real Estate Thoughts

Be ready to be approved for your home purchase

Richard Smith FHA VA Rural Development in TN GA — Thu, 17 May 2012 13:16:47 -0700

Purchasing a home has never been more affordable, but purchasing a home may have never been more demanding.

The basic qualification requirements though have not really changed. You, as a home buyer, must document your credit, your income, and your assets.

The key for a smooth and on time closing is for you, the home buyer, to provide the documentation needed as quickly as possible, but also to know before you make application what your documentation should show.

In today's market most real estate agents and sellers require that your contract offer to purchase be accompanied with a lender preapproval letter.

It is difficult to fix any shortcomings in the three major qualification areas of credit, income, and assets, during the 30 to 60 day time frame allowed with most purchase contracts.

Best advice is to be qualified before you begin your home search.

Everyone understands credit and income. Everyone knows now that most lenders and programs have minimum credit score requirements. Everyone knows that stated income programs are no longer available. Your income must be documented and be sufficient to qualify for the new payment and existing obligations.

Assets though are not so well understood by everyone. Just having the money is not always enough.

All programs have allowed sources for funds to close. In today's lending environment many lenders are checking asset documentation closely to see that the funds to close exactly meet loan program guidelines.

All documents must show the beginning balance, ending balance, your name, the bank name, and all transactions. Basically you should provide full statements and all pages. Even that last page that is blank. If the statement indicates 1 of 5 pages, the lender will need all five pages!

Home buyers should be prepared to show 2 full months of asset documentation for all funds to be used for closing. Lenders may ask to have any unusual deposits explained or documented.

They are verifying that funds needed for closing come from borrower income or accumulated savings or other acceptable sources. It is best to avoid making any unusual deposits for the two months preceding making loan application, because the requirement to explain or document those deposits cannot be avoided.

Cash deposits are especially difficult.

Even after providing the bank statements for your application, take care to avoid unusual deposits until the updated statements are approved. You may need to update your asset documentation to show the earnest money check and the appraisal payment clearing your account.

Asset documentation is becoming more and more critical for your home purchase loan approval. It can be a cause for a delayed closing or a cause for annoying and unnecessary last minute documentation request.

Basic documentation for a quick and reliable pre approval.

One month's worth of paystubs

Last two years W2's and full tax returns, all pages

Two months full and complete statements for all asset accounts to be used

Any documentation for a bankruptcy or divorce

Driver's license and other identification (Social Security card)

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC).
Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

FHA announces another increase in mortgage insurance premiums

Richard Smith FHA VA Rural Development in TN GA — Tue, 28 Feb 2012 11:48:25 -0800

FHA has announced another increase in their mortgage insurance premiums.

These premiums are charged to borowers as insurance against default. FHA is required to maintain a certain level of capital reserves to protect against losses, and a consequence of some of the recent economic problems has been that the capital reserve levels have fallen.

FHA feels that it is necessary for another increase in the insurance premiums to bring more capital into its reserve accounts.

The changes take effect in April 1, 2012.

Effective

Annual MI Rate

Monthly charge for $150,000 loan

Up front

Mortgage Insurance

April 1, 2010

1.25%

$156.25

1.75%

April 1, 2011

1.15%

$143.75

1.0%

October 1, 2010

.90%

$112.50

1.0%

Before October 2010

.50%

$62.50

2.25%

This is the 3rd increase since October 2010, a 2.5X increase in the premium charge over the last 18 months.

This time the increase in the monthly premiums is accompanied with an increase in the upfront premium.

A subtle point in the news release is that "FHA will continue to permit financing of this charge into the mortgage." Financing the upfront premiums for mortgage insurance has been standard practice for government lending with FHA, VA, and USDA Rural Development lending.

I am taking that to mean the question of not allowing the upfront mortgage insurance to be financed was discussed. It suggests that the possibility that in the future the option to finance those upfront premiums might no longer be available.

FHA is considering also at possibly reducing the seller concessions allowed for a purchase. This change will have greater impact on families purchasing homes less that $100,000.

It looks like the push for tighter lending standards for government home financing programs will continue. FHA will still be a good home loan program option for many buyers, but it will be more expensive. Buyers should take advantage now of low rates and low home prices.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Bank failures, mortgage lending - another one bites the dust

Richard Smith FHA VA Rural Development in TN GA — Sat, 23 Aug 2008 21:45:00 -0700

Another bank failure was reported today. Again the FDIC was prepared with a buyer and acted swiftly to be ready to reopen on Monday.

The bank that failed this time is Columbian Bank and Trust Company out of Topeka, Kansas. The failed bank's assets will be taken over by Citizens Bank and Trust . This is the 9th bank to fail this year, and the 2nd bank to fail in Kansas.

Losses in residential real estate lending were cited as the cause for the bank's failure to maintain adequate capital reserves.

This new bank failure takes place as the Federal Reserve is holding its annual economist meeting in Jackson Hole, WY.

Inflation, the mortgage markets, Fannie Mae and Freddie Mac troubles are all being discussed. In July inflation figures reached 5.6%, the highest in 17 years. Because of this, the decisions to lower the federal funds rates to 2.0% are being questioned.

One bit of good news is the recent decline in oil prices, but the bad news here is that the price still remains high.

NPR interviewed New York University economist Nouriel Roubini, who was one of the economists who, a couple years ago, warned of the likelihood of a coming mortgage crisis. He asserted that the US economy is in a recession and he pointed to the strong potential for it to extend to an global recession. He puts the blame square on the lack of regulation that allowed overly risky mortgages to be made.

These issues bring a picture of a tough market ahead, one that will be even tougher than it is at present.

High inventory.
Tightening credit standards.
Loss of high loan to value loan programs.
Growing foreclosures.
Upward pressures on interest rates from inflation.
Losses at FNMA and FreddieMac causing increased adversed market charges to closed loans, effective Nov 2008.
Decrease in numbers of qualified buyers, from loss of programs and economic problems.

These, and more issues including increased federal regulation, will make the restoration of stability in the housing market difficult.

All these issues combine with the facts of the recent purchase boom brought about by the dramatic increase in the numbers of home buyers who became newly qualified to purchase. They were newly qualified because of loan programs with less stringent credit and income standards, low downpayment requirements, and various low payment options. These programs are no longer available, and these formerly qualified home buyers can no longer purchase.

The recent boom years impact in at least two ways. First, recent home purchasers are not normally ready to purchase so soon. Second, the boom was fueled by an increase in qualified buyers who in many cases are no longer qualified.

We have probably returned to the 1990's levels of eligible home owners. The pending loss of seller funded down payment assistance will be the final impacting change. And I think the impact of its loss will be significant.

As an industry we need to focus on getting more people qualified to purchase at these higher credit standards. For the self employed, make sure your accountant understands the credit impact of all those deductions, legitimate though they may be. Those tax savings may keep you from purchasing a home.

My message to those who want to purchase a home: Take the steps to become qualified - credit and savings.

We can then hope that the Federal Reserve can keep enough liquidity in the system to lend even to qualified buyers.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

FHA points to reduced seller concessions

Richard Smith FHA VA Rural Development in TN GA — Sat, 21 Jan 2012 14:07:41 -0800

FHA yesterday announced plans to increase lender requirements and to consider reducing allowed seller concessions.

The first announcement was about increased lender requirements which may lead to some further tightening in lender underwriting standards.

More significant for most consumers is the announcement about the renewal of plans to "reduce the maximum allowable seller concession from its current level to one more in line with industry norms."

This has been under consideration for a couple years or so. It was part of the reforms that were discussed in 2010 by then Asst Secretary David H Stevens.

"We are also proposing a third policy measure to reduce the maximum permissible seller concession from its current 6 percent level to 3 percent, which is in line with industry norms. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value."

The new announcement does not indicate a proposed level for seller concessions and it does not provide a definite time frame.

The biggest impact if seller concessions are reduced will be felt at the lower loan sizes. Seller concessions of 3% cover most of the closing costs for loan amounts over $150,000. For loan amounts under $100,000, buyers will see their required funds to close increase significantly. Or they will pay a higher rate in order to fund some of their loan costs in their interest rate.

FHA lending has seen numerous changes over the last few months. One of the most sigificant impacts on consumers has been with a series of increases in the monthly mortgage insurance premium.

FHA 30 Yr MMI Rates

Premium

MI Payment for

$150,000 Loan

Since April 2011

1.15%

$143.80 monthly

After Oct 2010

.90%

$112.50 monthly

Before Oct 2010

.50%

$62.50 monthly

Another of the changes discussed in the proposals made in 2010 was an increase in the minimum downpayments to 5%. Fortunately, I have not seen anything further on that.

Please leave your thoughts on this possible change. There will be a comment period announced when the specifics of the proposed changes on seller concessions are published.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Home Purchase To Not Do List

Richard Smith FHA VA Rural Development in TN GA — Fri, 23 Dec 2011 13:33:35 -0800

Some Do Nots of HomeBuying

It is important for you , as a home buyer, to know that the documentation used to support your loan approval can be re-verified even until the day of closing.

You may be asked for updated pay stubs and bank statements. Most lenders verify you are still employed within a day of your loan closing.

Credit updates are also generally repulled just prior to your closing date.

As loan approval requirements get tougher and tougher, it is important to remember these lender rechecks.

Nothing is worse than going from an approval to a denial only days before your loan closes because of something you could have waited to do.

And it does happen.

So with that in mind here are Some Do Nots.

Do not make bank deposits other than regular pay income deposits in the bank accounts you are using to qualify for your purchase. If you need to deposit anything unusual, be sure to discuss with your loan officer the documentation that may be needed.

Do not bring account balances below the amount used for the approval. Your bank accounts will be checked again prior to closing. The lender may require to see the most recent statement. Generally the lender will ask to verify that your earnest money and appraisal/credit report charges have cleared the account. Your funds to close must remain in your account, and the needed funds to close may very well include a minimum amount in reserve.

Dropping your account balance to a level below that used for your approval is risky business.

Do not have return checks or overdraft protection. This is an extension of the previous DoNot. The lender considers your financial management ability as part of the loan approval. It does not look good for your bank statement balance to fall into the negative just prior to closing your home purchase. Even if you have overdraft protection, take special care to avoid going negative. Even if it does not impact your actual approval, it could cause closing delays or require unnecessary last minute documentation.

Do not incur additional debt. This is probably the biggest loan closing killer. A new car. Some new furniture for your new home. Discuss with your loan officer any new debt - before you apply. Also mention any debt that has not shown up on your credit report when you apply.

Do not open new accounts. This is the same as opening new debt, but I list it separately because some people might not consider a department store charge card as a new debt. Any new account, even if you might not charge anything to it, should wait. The inquiry or the new account itself might impact your credit score. Plus it will just be additional, and unnecessary, documentation at the last minute to show that you have not used the new card.

Any change to your finances - income, employment, bank account charges, bank account deposits, new credit, even new credit inquiries - should be discussed with your loan officer before they take place.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Home purchase in Hixson - Compare FHA and Conventional Financing

Richard Smith FHA VA Rural Development in TN GA — Sat, 01 Oct 2011 18:43:28 -0700

Mortgage rates continue to be historically low. This home for sale in Hixson, TN, is a great example of how affordable your new home payment can be. Terri Rule with Re/Max Properties North is the listing agent for this property.

The payments shown are for a conventional 5% down payment with standard mortgage insurance and with lender paid mortgage insurance. You can compare these payment options with an FHA loan that has a lower down payment requirement.

Many home buyers indicate that they do not like mortgage insurance, but mortgage insurance is what makes it possible to purchase a home with less than 20% down payment. Many home buyers though are not aware of the different options for mortgage insurance premiums.

By considering the different options home buyers can select the mortgage insurance option that best suits their budget and long term plans.

Terri Rule is having an open house for this home on Sunday, October 2, 2011. Call her at 423-994-3993 with any questions about this great home for sale in Hixson.

Call me, 423-280-0345, with any questions about your home purchase financing and your different mortgage insurance options. Visit my HomeBuyer YouTube channel to learn more about home buying programs.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Mortgage rates and home prices combine to give homebuyers great affordability

Richard Smith FHA VA Rural Development in TN GA — Sun, 25 Sep 2011 21:34:54 -0700

Home mortgage rates have reached new lows in response to the recent announcement from the Federal Reserve to work to keep long term rates as low as possible.

These low rates have increased the push for existing home owners to refinance their mortgages. And if you are able to refinance your present mortgage, the new lows in interest rates offer you a great opportunity for maximum saving.

For excited home buyers though these low rates may provide an opportunity for home prices to begin to edge upwards.

This market right now gives home buyers the best combination of low home prices and low interest rates.

From 2000 until 2007 home prices went through a period of rapid growth with the housing bubble. Since that bubble, prices had seen a fairly steep decline, pushed in a large degree by the many foreclosures.

This year and especially in the last few months, home prices seem to have reached a bottom. It looks like home prices may even be enjoying a bit of a recovery.

This is good news for us all - to see home prices back on the mend. This chart is from the recent FHFA home price survey.

What is shows is the home prices are beginning to rebound. They have fallen to the level that matches what might be expected to have been a normal appreciation increase from pre housing boom times.

But what it means for home buyers, the time is now. Home prices are probably at the bottom, and home mortgage rates are also at bottom.

For information about home purchases please visit my Home Buyer Series videos. A good start is with this video.

You can call me at 423-280-0345 or visit my website at www.RichardSmithHomeLoans.com.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Rural Development home purchase loans remain great choice in TN and GA

Richard Smith FHA VA Rural Development in TN GA — Fri, 09 Sep 2011 16:34:50 -0700

We are approaching the deadline for the new fee structure for Rural Development Guaranteed Home Loan program. I spoke with the USDA area director earlier this month and he clarified that the new monthly fee structure will be applied to all loan submissions that do not receive a Rural Development commitment by September 30, 2011.

This means all files should be sent to Rural Development probably by September 25 or earlier. For Georgia properties, the files will need to be submitted even sooner.

For home buyers who may not know, Rural Development loans must receive a commitment from the area Rural Development office before the purchase transaction can close. This commitment is issued after the lender has completely finalized their loan approval.

This Rural Development commitment typically adds a few days up to an extra week or so to the loan closing time frame.

Even with this extra few days, and even with the new monthly fee, Rural Development is an excellent choice for qualified and eligible home buyers.

The basic eligibility requirements are:

Household income below the maximum level (in the Chattanooga area, for 1 to 4 member families this maximum is $74,050 total household income)
the property must be a primary residence and be within the Rural Development eligible areas. (This can be checked on the Rural Development website.)

The new fee structure that is effective October 1, 2011 adds an annual fee of .3% of the anticipated average balance. This fee is lower each year, but will be in place for the entire loan amortization. With this fee, Rural Development is lowering the initial up front fee from 3.5% to 2.0%. This upfront fee is generally added to the loan amount.

So Rural Development loan allows eligible buyers to purchase a great home with no down payment. And even with the new fee structure, payment remain lower that most other purchase options. You do not need to be a first time home buyer to take advantage of this great purchase program.

FHA

Rural Development

Purchase Price

$150,000

Down Payment

$5,250

Loan Amount

$144,750

$150,000

Up Front Fee

$1,447

$3,000

Payment

$697.97

$730.45

Monthly Fee

$140.11

$38.25

Total Payment

$838.08

$768.70

Rate/APR

4.0%/4.902%

4.0%/ 4.412%

Call me with any questions about your home purchase, or specifically about qualifying for a Rural Development purchase. You can also start your purchase approval at www.RichardSmithHomeLoans.com.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Importance of Assets for your Home Purchase

Richard Smith FHA VA Rural Development in TN GA — Sun, 31 Jul 2011 12:03:30 -0700

Most clients recognize the importance of credit and income to qualifying for a mortgage. Assets though are as important, and for many clients it becomes the most important simply because it is the qualifying requirement that they missed.

All programs have specific guidelines stipulating what funds are required for closing and importantly what sources are allowed to supply those funds.

Conventional home loan programs typically require that home buyers must have their own funds to close.

Government home loan programs typically allow other sources for funds to close, such as a family gift.

Funds to close include the required down payment, closing costs, prepaid and tax/insurance escrow costs, and if required reserves funds that must be available after the purchase closes.

More and more, lenders are reviewing asset accounts very closely to check that all funds being used for closing (down payment, closing costs, prepaids/escrow costs, and reserves) are from acceptable source.

Once a deposit is made, that record is established. Any deposit from a source that is difficult to document or that is not allowed for the loan program, may mean that you cannot qualify for that program, or at least that you must delay your home purchase.

When you are preparing to purchase, take time, ahead of time, to understand the funds that will be required, and what sources are acceptable.

In today's market, prospective buyers are well informed about the credit requirements for a home purchase and take action to meet those credit requirement.

It is equally important to ensure that you assets documentation will meet the loan requirements. Call and discuss what funds and asset documentation you will need before you begin to look for your new home.

And certainly know what funds will be needed before you begin to negotiate the contract for the new home you want to be yours.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Foreclosure Home Purchases Chattanooga and North Georgia

Richard Smith FHA VA Rural Development in TN GA — Tue, 31 May 2011 17:35:29 -0700

Many prospective home buyers mention that they are interested in purchase a foreclosure. Many of these prospective foreclosure home buyers though are not aware that the financing choices depend on who the seller is.

In the Chattanooga and North Georgia areas home buyers will find many properties available.

There are many considerations that should be made when looking at a potentional foreclosure purchase, but financing options should be one of the earlier considerations, unless the home buyer has significant down payment funds.

In many cases foreclosure financing options depend on the seller. Typical bank foreclosure properties often do not have any special financing options. And as always, property condition should be a concern. Always include a provision for a home inspection when purchasing a foreclosure.

FNMA owned properties are generally eligible for HomePath financing. This is a 97% purchase program for primary residence purchasers. There is no mortgage insurance with the program, which for many buyers is a plus. The rate for this program is higher than regular financing programs.

This program is only available for FNMA owned properties. More information is available on the HomePath.com website.

HUD owned properties can be f for this HUD $100 down purchase program. The terms with a HUD $100 down are the same as with regular FHA financing. Tis is a great advantage to the $100 down program, regular FHA loan terms but with only a $100 down payment.

More information on HUD owned properties can be found at hudhomestore.com.

Call me or email me with any questions about financing your foreclosure home purchase.

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Rural Development USDA property and income eligibility for Chattanooga

Richard Smith FHA VA Rural Development in TN GA — Tue, 08 Mar 2011 19:53:04 -0800

Rural Development Guaranteed home loans remain popular in the Chattanooga area, including eligible areas in Tennessee and Georgia. Home buyers and sellers are growing increasingly aware of the many benefits of this program. You can find many listings that specifically advertise the property is eligible for a Rural Development home loan. The program is also known as a USDA home loan.

The main benefit of a Rural Development home loan is that it allows for 100% financing of the home purchase. No down payment. It also allows for closing costs and repairs to be included in the loan, up to the appraised value. I will write more repairs and closing costs in a later post.

The two key eligibity points with a Rural Development home purchase are the buyer's income and the property's location.

For the Chattanooga area, which includes surrounding counties in Tennessee and in Georgia, the basic income eligibility is for a family with 1 to 4 members is $74,050.

For families with 5 to 9 members the basic income limit is $97,750. These levels are much simpler that the previous income levels.

There are some income adjustments that are used to establish the income for determination of eligibility. You can check your income yourself on the Rural Development income eligibility page.

Rural Development income eligibility check.

The property's location is the other essential eligibity check. For the Hamilton County, the elibility boundaries are basically Thrasher Pike, Hunter Road, and Ooltewah-Ringgold Rd. The boundaries are a little more complicated in the Georgia counties that surround Chattanooga.

Several counties in Tennessee around Chattanooga are 100% eligible. These include Marion, Sequatchie, Bledsoe, Rhea, Meigs, McMinn, Polk, and Grundy.

For any area, you can check the property address to see if it is in an eligible area on the Rural Development property eligibility page.

Rural Development property eligibity calculator.

Rural Development Guaranteed Loan is an excellent home purchase loan for moderate income families. For more information about its many benefits, feel free to contace me at 423-280-0345 or to visit my website at www.RichardSmithHomeLoans.com. You can start your home purchase approval process on my website.

Thank you for visiting. This is the professional blog for

Richard Smith

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC).
Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

Visit my website: www.RichardSmithHomeLoans.com To start your approval Begin Here

Read my most recent articles in Scotsman Guide.
Search for properties: www.HomeLoansChattanooga.com

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Rural Development adds monthly fee effective October 2011

Richard Smith FHA VA Rural Development in TN GA — Thu, 03 Mar 2011 07:48:04 -0800

The biggest advantage of Rural Development home loans is of course the No Down Payment. A second great feature of Rural Development loans has been that they had no monthly mortgage insurance, an upfront funding fee was included with the loan, but no monthly charge.

Effective October 1, 2011, the benefit of no monthly fee will change.

Rural Development is adding an annual fee charged to lenders of .3%. For a $130,000 Rural Development purchase loan, about the median for Chattanooga home purchases, the annual fee would be about $450. The actual fee will be based on a projected average.

Lenders will be billed annually for the fee. This is a new announcement, so no one has plans in place to collect from the fee from borrowers. I am certain though that the fee will be billed monthly with the regular payment escrows.

In effect this will become an equivalent to mortgage insurance. In the example above the charge would add approximately $37.50 to the monthly payment, for the first year.

The change is effective in October 1, 2011

The upfront guaranteed funding fee will drop to 2%. It is currently 3.5%

The annual fee will be paid at closing for the first year, and billed annually in subsequent years. The upfront fee will probably still be added to the loan amount. It looks like the initial annual fee though will be collected as a closing cost. I did not see any suggestion in the memo that it would be added to the loan amount.

The fee is actually not called mortgage insurance, but a fee. The fee is calculated annually based on the Average Loan Amount for the coming year. But the fee does not drop off at a certain loan to value amount. Mortgage insurance typically drops at 80% or so. This fee is lower with each year but it carries through to the full term.

The change is effective October 1, 2011.

The stated purpose of this change is "to make the Single Family Housing Guaranteed Loan Program (SFHGLP) subsidy neutral, thus eliminating the need for taxpayer support of the program." This seems to be consistent with the housing goals as put forth in the Administration's white paper on the future of housing, published on February 13.

It is consistent also with the recently announced increase in FHA mortgage insurance costs.

New regulations allow for Rural Development to charge as high as 3.5% upfront and .5% annually, but the program will start with the 2% upfront and .3% annually.

If you have any questions about this or Rural Development home loans for the Chattanooga area, feel free to contact me via my website, www.RichardSmithHomeLoans.com, or call my cell phone, 423-280-0345.

Thank you for visiting. This is the professional blog for

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

Visit my website: www.RichardSmithHomeLoans.com To start your approval Begin Here

Read my most recent articles in Scotsman Guide.
Search for properties: www.HomeLoansChattanooga.com

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Tri State Home Show at Chattanooga Convention Center

Richard Smith FHA VA Rural Development in TN GA — Fri, 25 Feb 2011 10:42:34 -0800

The 2011 Tri State Home Show opens today. It is the 45th Home Show, and the exhibitors worked hard Thursday to finish, the last day for set up. Most of the larger exhibits were already completed by Thursday morning.

It is going to be a great show.

Come by this weekend and get some ideas for those home improvements that you want and have been waiting on.

The vendors have worked hard planning the displays. When you see all the exhibits you will be able to tell the effort put every one. These exhibits really show off the craftsmanship that we have in Chattanooga.

You can keep up with the Home Show and post comments on their Facebook page. Click on the picture to the right.

Below are some more images from the set up this week. Compare with my previous blog post.

Home Show times:

Friday 10am to 8pm
Saturday 10am to 5pm
Sunday 11am to 5pm

Location at the Trade and Convention Center.

Thank you for visiting. This is the professional blog for

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

Visit my website: www.RichardSmithHomeLoans.com To start your approval Begin Here

Read my most recent articles in Scotsman Guide.
Search for properties: www.HomeLoansChattanooga.com

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Foreclosure Purchase Programs for Chattanooga – FHA $100 Down and Fannie Mae HomePath®

Richard Smith FHA VA Rural Development in TN GA — Thu, 24 Feb 2011 21:41:27 -0800

RealtyTrac this week announced that foreclosure sales were 26% of the home sales market nationally in 2010. That is a very big number. Many buyers are looking for that "great deal" and believe that a foreclosed property is just the thing.

FHA and Fannie Mae have established special financing programs to help home buyers to purchase homes that are owned by FHA or Fannie Mae.

HUD owned homes can be purchased with an FHA $100 down loan. Normal buyer qualifications apply, but the minimum down payment is only $100. In many cases the contract can be negotiated for the seller to pay most of closing costs.

Some of these homes have repairs that are already approved to be financed in with the new loan.

I have helped numerous buyers purchase a great home with this program, only paying $100.

HomePath® by Fannie Mae is another great financing program. This is for families that are purchasing a home owned by Fannie Mae. Using a HomePath® Mortgage owner occupant buyers can purchase a single family home with 3% down. The loan has no mortgage insurance.

With both of these programs the appraisal is already done, another savings of upfront cost to the buyer.

You can search for HUD owned properties at www.HUDHomeStore.com.

You can search for Fannie Mae owned properties at www.HomePath.com.

You can also visit my site at www.RichardSmithHomeLoans.com to search foreclosure listings in the area. Have your real estate agent help with the home search and with contract negotiations.

Thank you for visiting. This is the professional blog for

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

Visit my website: www.RichardSmithHomeLoans.com To start your approval Begin Here

Read my most recent articles in Scotsman Guide.
Search for properties: www.HomeLoansChattanooga.com

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.

Tri State Home Show 2011 at Chattanooga Convention Center

Richard Smith FHA VA Rural Development in TN GA — Tue, 22 Feb 2011 15:09:17 -0800

The excitement is building for the 45^th Annual Tri-State Home Show in Chattanooga this weekend February 25 - 27. The exhibitors started setting up Tuesday morning. And I love helping with the Home Show set up. It is so much fun to watch the convention center floor transform into the amazing displays that our Home Show is known for.

Mike Moon, this year's President of the Home Builder's Association of Southeast TennesseePresident, Tim McClure, a former president, and Chris Mabee with Cornerstone Construction Group were at the Convention Center early helping with the set up. They talked about how excited everyone seems to be, and how quickly all the booths sold this year.

Remodeling has been on an upswing nationally according to a recent BuildFax Residential Remodeling Index, which tracks remodeling building permits.

Teresa Groves is the Executive Director of the Home Builder's Association. She told me that there were 230 exhibitors for this sold out show. Most of the vendors are local, but because of the great reputation that our home show has, she said that there are always exhibitors who come great distances to take part.

The Show opens up Friday, February 25 from 10am to 8pm.

Saturday hours are also 10am to 8pm. Sunday is the final day, from 11am to 5pm.

Be sure to take time this weekend to come to the Home Show. Parking is again offered at the stadium with shuttle to the Convention Center.

Here are some of pictures from this morning. I love helping with this. I hope to be back Thursday morning and cannot wait to see the great exhibits.

Update 02/25/11 - Here is a link to some more pictures from Thursday's set up. There is a link there to the Home Show Facebook page.

Convention Trade Center Floor

Wood Hollow Cabinets

Fischer Irrigation & Lighting

Hitson Cabinet

Destinctive Designs 4 You

Northgate Door

By Friday the Convention Center floor will be full of exhibits of the best in home construction and remodeling.

Thank you for visiting. This is the professional blog for

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

Visit my website: www.RichardSmithHomeLoans.com To start your approval Begin Here

Read my most recent articles in Scotsman Guide.
Search for properties: www.HomeLoansChattanooga.com

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.