A quick tip for those on Social Security-Disability

Just a quick tip to those with low incomes attempting to purchase homes. All is not lost, there is help you might not be aware of. Most banks will "gross up" social security and disability income due to it being untaxed.

Let's say you make $2000 in social security/ disability, to the bank, you make $2500. This can make the difference in buying the house you don't want verses the house you do.

Now I know what you are thinking, what kind of house can I afford at $2500 a month. Well, there are programs for people that have low income that need housing. Some even give you money! Some lower your interest rate! Take a look! http://www.rurdev.usda.gov/ or http://www.hud.gov/offices/pih/programs/hcv/homeownership/

Brought to you by "me!"

Police, Firefighters, and Teachers Need a Break! Oh! Here's one!

Let's face it, some people do a lot of work with virtually no return. You guys put your life on the line every day ( including teachers ) every day for meager wages. There is a little know Federal loan program that might put a little light in your life. It is called the " Good Neighbor Next Door " program. What is in it for you, you might ask.

• Less strict underwriting guidelines.
• Purchase price 50% less that the Government's asking price.
• $100 needed at closing.
• FHA rehab loans are available.
  

Sounds pretty good, eh? Well, here is the down side.

• Limited availability of housing.
• Cannot have owned a home for last 12 months prior to purchase.
• Homes listed are in high demand and sometimes are distributed via a lottery system.
• They like you to purchase where you work or service.
• It's a one time deal.
• If you stay there less than three years, you owe a pro rata portion of the other 50% of the home balance.
• The houses are usually trashed.

Things you as public servants need to do:

• Call HUD and see if you qualify.
• Interview Realtors that Specialize in HUD programs. You have to have one.
• Interview lenders. Trust me, some won't know what you are talking about. I say test them, see if they know at least what I have already told you, if not, RUN!
• Accept my thanks for your public service and invite me to your next Fire Hall supper ( well ok, you don't have to do that)

For more specific guidelines and instructions, go here!

FHA as compared to conventional loans

An FHA loan differs from a conventional loan in several ways. An FHA loan is partially guaranteed by the Government. It offers less of a down payment and usually a slightly higher interest rate than normal prime loans. It is normally used by first time buyers.

FHA loans have mortgage insurance in most cases that can also increase your payment.

Underwriting guidelines are sometimes less stringent on FHA loans and require a manual underwrite of credit instead of relying strictly on your credit score. Sometimes, non traditional credit is utilized, such as rental history, to stamp an approval on your loan.

Seller assistance is also a plus and usually available with FHA loans. They may contribute up to 6 % to the buyer and sometimes more with donations to non profit organizations.

Prime (traditional) loans normally require a down payment and rely on a more traditional credit score model. Mortgage insurance may not be a necessity and interest rates may be lower.

My best suggestion is to have your lender show you good faith estimates on several loan products so you may see the benefits of each.

If you are looking for a new home, don't...

• Insult the seller with a ridiculous offer thinking you can just steal a house. Be fair.
• Wait forever. These home prices will not last forever.
• Bother me with the " I want a 100% loan, I have a 375 score and no money" Those days are over, at least, for me.
• Forget to get a Realtor. Hey! You don't pay anything for them as a buyer and they are not the enemy!
• Listen to the news. Trust me, those knuckle heads have never closed a loan. And if they did, they weren't good at it or the wouldn't be reading a tele prompter.

The fact is, you won't find a better buyers market for a long time. Interview a few lenders and Realtors. Find people you like and gather your paperwork. Don't expect miracles but know, they might be out there. Happy hunting!

Do you need a down payment? maybe not!

It is a popular concept you need a 3% commitment in order to qualify for an FHA loan. Actually, it varies and can be closer to 2.25%.

That being said, it is important to know the required commitment can be in the form of a gift. It is also important to know it can be a gift from the seller.

Sellers can sometimes commit up to 10% to be applied to down payment, closing costs, and temporary interest rate buy downs. This is accomplished sometimes through a direct gift and sometimes gifts can be made from the seller to a non profit organization that then re gifts the funds to the buyer for a fee.

So you might wonder, why? The answer is simple. Some sellers truly need to get out of the house quickly and some homes have just been on the market too long. Typically, once a home is on the market 90 days, the seller drops the asking price around 10%.

It is more advantagous to pay 6% to the seller than to drop the price 10%.

Simple math!

So if you don't have a lot of cash in your pocket and think you can't buy, check again. You might be missing out on your dream home.

Get your docs

So, I know this girl. She's a good chicka. A little too trusting. She originally wanted to do a VA loan Good choice! However, she has very low scores. Too low, in fact, for my bank to touch her.

She gets to a broker. Broker says, of course, "No Problem!" I call her up the other day and asked her "How's your mortgage going?" She says, "It's in underwriting!"

This interests me. The broker she sent the loan too is a broker owned by my bank. ( And I'm tired, so , now you have to guess who is speaking when )

I ask her, " What did your good faith estimate look like?"

( The deafening pause ) "What paperwork?"

"You didn't sign any paperwork?"

"no"

"How long has your file been at underwriting?"

"Two weeks"

At this point I'm doing a Holy Crapper!

My last comment was " I hate to break this to you, but your loan is not anywhere near underwriting. No docs equal no loan."

Folks! Follow up on your loan. Don't assume the guy you talk to knows what he is doing! For the love of everything that's good, follow up!