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Paying off Home Equity Loan for Deceased

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Paying off Home Equity Loan for Deceased Powered By Docstoc
					    NEW YEAR
NEW OPPORTUNTIES!
Robert McDonald, Housing Program Director
       robert.mcdonald@vt.usda.gov
              802-828-6015
VT/NH USDA RURAL DEVELOPMENT
  GUARANTEED LOAN PROGRAM
We DON’T inspect meat!
(or peanut butter)




                     We DON’T finance farms!
This is NOT Rural Development!
 THIS IS MORE LIKE IT!
NO MAXIMUM PURCHASE PRICE
       More lenders choose 100%
      Guaranteed financing FIRST!

• True 100% program
• No maximum purchase price
• No monthly mortgage insurance
• Expanded qualifying ratios 29/41 and above
• No asset limit / No reserve minimum
• Generous income limits: ADJUSTMENTS
• Not FICO driven: NOT A SUB-PRIME SOLUTION! Emerging
  Markets/Non Traditional histories, etc.
• NOT just for first time homebuyers
• Creative financing options to maximize buying power
                Eligible areas:
http://eligibility.sc.egov.usda.gov/eligibility/wecomeAction.do
Click here
for
property
eligibility




Click here
for
income
limits
If you have a
complete
address
including
the zip code
enter it here


Just
browsing in
a county?
Click on
“VERMONT”
and then
click on the
county you
are
interested
If you are
interested in
Washington
County…
click on it!
Washington
county is
100%
eligible!
If you had
selected
Chittenden
county you
can see a
few cities
are
ineligible.
        More Benefits:

• Downpayments accepted up to 19%
• Gift/Grant funds accepted
• Generous income limits

   Deductions allowed for children,
         daycare, and more!
       GENEROUS ―ADJUSTED‖
          INCOME LIMITS



           MOD. INC-GUAR. LOAN
 Washington County ―Adjusted‖ Income Limits
1 person: $52,750      5 person: $81,400
2 person: $60,300      6 person: $87,400
3 person: $67,800      7 person: $93,450
4 person: $75,350      8 person: $99,450
Search out DEDUCTIONS!
Dependents: $480 each
•   Children 18 yrs. or younger
•   Disabled household members 18 yrs. or older
•   Full time students 18 yrs. or older
•   Care expenses of minor children 12 yrs. or younger
    that enable the employment of a household member
Elderly family: $400
• 62 yrs. of age or older, disabled, or surviving spouse
  of deceased elderly client
• Medical expenses not to exceed 3% of gross income
     Deductions In Action!
• Family of 3          $73,000 Gross
  $74,000 gross
  salary               - $480 1 child
• Moving to            - $5200 daycare
  Washington county,
  VT                    $67,320
Waashington county
  adjusted income               THEY
limit for 3: $67,800           QUALIFY!
      REALITY CHECK

       KIDS ARE EXPENSIVE!
• Daycare: $100 - $300 per week
• After school care: $75 - $150 per
  week
• Summer months: full time care for
  all children

 No tax returns necessary! Please provide receipts or
           letters from providers stating prices.
   FIND THE DEDUCTIONS!
     Qualify more clients!
Family of 4 moving to Washington Co.:
• 3 yr old: daycare $200 wk x 52= $10,400
• 9 yr old: after school $50 wk x 9 mo. = $1,800
• 2 kids x $480 = $960


                 $80,960
             possible gross salary
    Guaranteed to compete!
$175,000 loan
$4,000 annual real estate taxes
$600 annual home insurance
    premium

YOU BE THE JUDGE!
NO PMI LOANS 8% INTEREST RATE 30 YR. TERM                                     $1572
FREDDIE MAC 100                                                          $1547
FREDDIE MAC HOME POSSIBLE/FANNIE MAE MY COMMUNITY                     $1518
FLEX 100                                                         $1505
5% CONVENTIONAL ($8,750 + MI)                                 $1493
FHA ($5,250 + UFMIP + MI)                                 $1488
40 YEAR LOAN + MI                                       $1486
FLEX 97 ($5,250 (3%) DOWN + MI                         $1471
80/20   80%: 6% 30 YEAR LOAN 20%: 7.5% 30 YEAR LOAN   $1467
VA 2.15% FEE NO MI                                $1455
100% RURAL DEVELOPMENT +                     $1453
2% GUARANTEE FEE NO MI
    2% GUARANTEE FEE IS A DEAL!

• Roll fee in above
  appraised value: No
  out of pocket needed

• Cheaper than PMI

• Best insurance
  coverage for the lender
  (90%)

• Least cost to client
Guarantee Fee vs. PMI
           $3,500 guarantee fee
                    vs
           Freddie 100:    2.08 years
           HP/My C:        3.39 years
           95% LTV:        3.5 years
           Flex 100:       4.0 years
           FHA:            1.02 years
                 (time to break even)


               Average stay of
             homebuyer: 5-7 years
    UPDATES!
INTERPRETATIONS!
 CLARIFICATIONS!
WHO APPROVES THE LOAN?

         THE LENDER!
Rural Development does not:
• Underwrite loans
• Issue credit waivers
• Inspect properties
        Credit standards
• What are your credit standards?
  – Explanations acceptable to your standards
    are given special consideration
• You decide if open collections must be
  paid
  – Will repayment be impaired?
• Credit scores over 620 require no
  explanations
AN 4237: Utilizing Credit Scores
• 620 and above qualifies for
  streamlined documentation
 (NO VOR’s, No adverse credit explanations)
• 619 and below: be careful of too many
  risk layers
 (ratios waivers, and adverse credit waivers, and no
 previous housing history, and etc.)
AN 4216: Collection Accounts
• UW will determine what is to be paid
• Tax liens, judgments, federal debts must
  be cleared
• Adverse credit waiver must be issued
  on 1008 by UW if collections remain
  open
• UW must document decision
THE UNDERWRITER WILL
SIGN HERE
By signing here you are
acknowledging that you
did underwrite the file.




The borrower(s) will each
sign here.


FAX OR PHOTOCOPIES
OF SIGNATURES ARE
NOW ACCEPTED!
             RD 101: File Flow
• Lender interviews applicant
• Lender submits to their
  underwriter
• Lender submits approved
  underwritten file to RD
• RD issues conditional
  commitment in 24-48 hours
• Loan closes
• Lender submits closing
  package to RD
• RD issues Loan Note
  Guarantee
Building your business
   with Guaranteed
      Financing!
Be a trusted advisor

          • $230,000 purchase
          • 10% downpayment saved
          • Debts:
          Car 1: $350/mo.9 months left
          Car 2: $400/mo. 2 years left
          Visa: $6,000
          Mastercard: $3,000
          Old Navy: $500
          Fingerhut: $650
          Furniture: $2,500

          $12,650 credit card debt alone!
 Which would you choose?
      100% Guaranteed           10% Down Conventional

 $230,000 + Guarantee fee,        $230,000 – 10% ($23,000),
      taxes & insurance                taxes & insurance
          $1,932                           $1,893

• Clients retain $23,000 to     • Clients are out $23,000 and
  pay off debt, save, invest,     they have over $25,000 in
  etc.                            debt
• By paying off Car 1 and all   • Home Equity Loan?
  credit cards they would         Now they get to PAY to
  still have $7,350 plus $350     borrow their own money!
  additional monthly income       (If they even have a credit
  ($4,200 per year)
• ALL FOR $39 MORE PER            score high enough to
  MONTH!                          qualify for the loan)
             5% down with RD
Put down 5% with RD                         80/20

  $230,000 – 5% ($11,500) +     80%: $184,000 6.5%
      Guar.fee, tax, & ins.     20%: $46,000 8.0%
           $1,852               Plus taxes and insurance
                                            $1,967
• Client retains $11,500 for
  debt reduction, savings, ER   • Need a great credit score
  fund, etc.
• 2% FEE IS THE MOST COST       • 2nd mtg is tied to HELOC and
  EFFECTIVE OPTION!               prime rate it will go up—may
                                  not be a fixed rate
                                • Client has to make two
                                  payments
    Purchase and repair
         options
• Escrow for repairs & get Note
  Guarantee with no delay
• Not just weather related repairs
• Homebuyers get to close and move in
  before repairs are completed
• Up to 180 days to submit completion
  certificate
    Myth #1:              Inspections are too picky; house
                          will never pass……
• HUD Handbook
  4150.2 standards
     (drastically revised 12/2005)


• Home Inspection
•    In a survey of real estate
     professionals conducted by the
     American Society of Home
     Inspectors, 99% of respondents
     said they always or often make the
     recommendation that buyers get a
     home inspection.

•    RD will alert you IF any repairs are
     necessary to meet minimum standards.
    Which repairs are required?
•   Missing handrails
•   Cracked window
•   Dripping faucet
•   Peeling paint on doorframe/windows
•   Flat roof on garage: could not inspect
•   No smoke detectors
•   No GFI’s in kitchen/bathrooms
NONE OF THOSE
   REQUIRE
   REPAIR!
Myth #2:   RD loans have recapture, I don’t
           recommend them!


                     • Guaranteed loans
                       have
                       NO RECAPTURE!!

                     Clients make full payments
                        to their lender.
    Myth #3:        RD loans take too long to close



•    THIS IS YOUR LOAN!
     How fast can you complete:
     * appraisal
     * underwriting

•    RD turns around
     complete underwritten
     files in 24-48 hours
Myth #4:          Real estate in my area is too high
                  priced for RD loans

 NO MAXIMUM
  PURCHASE
    PRICE!

  Expanded Qualifying Ratios
+ Creative Financing Options
BUYERS QUALIFY FOR A
  HOME THEY LOVE!
Myth #5:   RD loans are for low income
           applicants and ―fixer-upper‖
           homes

                     • Generous
                       “adjusted” income
                       limits apply

                     • RD encourages
                       newer homes and
                       new construction
    100% Guaranteed Rural
   Development Financing is:
• Flexible
• Affordable
• Profitable
• Easy
          It’s the BEST!
WE BUILD COMMUNITIES!
  One home at a time!
                             Interested? Contact:
                              NH: Colleen Ladew
                                 603-223-6035
                         Colleen.ladew@nh.usda.gov
                            VT: Cheryl Ducharme
                              802-748-8746 x 107
                        Cheryl.ducharme@vt.usda.gov


                                                                                         www.rurdev.usda.gov

USDA is an equal opportunity provider, em ployer, and lender. To file a com plaint of discrim ination w rite USDA, Director, Off ice of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C., 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD).

				
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