Ron's Blog

Great No Money Down Program still Available, here are some details.

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Sat, 13 Dec 2008 16:27:04 -0600

In today's financial climate first time homebuyer's are really stuck having to come up with a down payment to purchase a home or get a sizable gift from a relative that is loosing money in their own portfolio.

I have had many requests for more information from the Kansas City Area Realtors that need this type of program to get starving potential homeowners into a mortgage. This will help boost sales and provide a home loan that will benefit a person over the long term. No adjustable rate, No PMI.

This post is for consumers/homebuyers, Real Estate Professionals and Mortgage Professionals that may not have a good working knowledge of the features and benefits of the US Department of Agriculture's Guaranteed Rural Housing program. In the last 13 years I have one of a very few lenders closing these Guaranteed USDA home loans in Johnson County, Kansas. I have always known that it is one of the most under-utilized mortgage loan programs in the United States.

For purposes of this Posting Most the information below pertains to the Kansas City Market, and most importantly to the Gardner, KS area. There are links to help you find more information directly from the USDA.

Many Advantages of this home loan are:

•1.      No down payment required.
•2.      No Mortgage Insurance.
•3.      No cash reserves required.
•4.      No seller contribution limit.
•5.      No Prepayment Penalty
•6.      Loan up to 102%* of appraised value allowed...not the lesser of Sale Price or Appraisal
•7.      Loan amount can include closing costs and prepaids up to appraised value.
•8.      No stated maximum loan amount; maximum loan based on repayment ability
•9.      No First Time Homebuyer Requirement
•10. New and existing homes OK
•11. Fully amortized 30-year fixed rate loan
•12. No minimum credit score required...common sense underwriting allowed.
•13. No minimum cash contribution required from borrower.
•14. No limit on CLTV when soft second financing.
•15. No limitation on source of funds for closing costs. No seasoning requirement.
•16. 100% gifted closing cost or down payment assistance is permitted.
•17. Non-traditional credit may substitute for lack of traditional credit history.
•18. No derogatory credit explanations required when credit score is 660 or above.
•19. Rent is not verified with FICO of 660 or more.
•20. Qualifying ratios of 29%/41%...29% PITI to Income and 41% Total Debt to Income, however standard ratios may be exceeded with documented compensating factors.
•21. Conventional type loan packaging with only 1 extra form required.
•22. Competitive rates (set by underwriting lenders) As of 12/12/2008 rates for loans above 85,000 are 5.50%

*Appraisal may be exceeded by amount of Guarantee Fee

Determining if property is in a Rural Development designated rural area:

http://eligibility.sc.egov.usda.gov/

Determining if applicant(s) have an acceptable credit history:

•1.      Credit history must indicate a reasonable willingness to meet obligations when due.
•2.      Streamlined credit approval when primary applicant has a middle credit score at 660 or above.
•3.      No minimum credit scores.
•4.      Lack of credit is not derogatory. Alternative credit verifications are allowed, typically 3 lines.
•5.      Lenders make the credit decision.

Income eligibility:

Project the cumulative gross income of all adults in the household.

THE GROSS INCOME LIMITS CAN BE MUCH HIGHER THAN THE ADJUSTED INCOME LIMITS SHOWN IN THIS TABLE

If the projected dependable income exceeds the limits, certain adjustments can be made, such as childcare expenses for children age 12 or younger and paid to someone outside the family. You also can deduct one $480 annual deduction for anyone under 18 or a student who is not one of the applicants. Other deductions may be available (see FL/VI Handbook or RD Instruction 1980-D, www.rurdev.usda.gov/regs

Example: Johnson County 4-person family (2 adults, 2 children) has a gross income of $89610. Child care for the two children age 12 or less is $10,000 annually. Is the threshold income at or below the limit? YES. $89,610 less $10,000 child care less $480 for each child = $79,650.

County	1-person	2-person	3-person	4-person	5-person	6-person	7-person	8-person
All Counties within the Kansas City MSA	55050	62900	70800	78650	84950	91250	97550	103800

See the easy to use calculator at: http://eligibility.sc.egov.usda.gov/eligibility Click on "Single Family Housing" under "Income Eligibility"

Applicant(s) repayment ability:

Ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI). Rural Development generally allows expanded repayment ratios if recommended by the lender's underwriter. 31%/43% automatic for dwelling built after 1/1/2000.

Other eligibility criteria:

•1.      Do not own a suitable dwelling.
•2.      Insufficient resources to secure conventional 80% loan without the guarantee.
•3.      U.S. citizen or permanent resident or qualified alien.
•4.      Financed dwelling will be primary residence.

Loan-To-Value (LTV) and Loan Limit:

•1.      102% LTV for the guaranteed first mortgage loan when including the guarantee fee, 100% LTV without the fee included.
•2.      Loan amount can exceed appraised value by the amount of the guarantee fee.
•3.      There is no loan limit

http://www.RonYarbrough.com

Reverse Mortgages. Are they really taking away money from seniors?

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Sun, 23 Nov 2008 08:19:58 -0600

Reverse mortages have been around for a long time. Many people think very negative about the use of a reverse mortgage and the negative effects on a senior's estate. I think the only negative is the huge costs some approved brokers charge but the concept is great. In today's market seniors are getting hurt the most. It is a great way to tap into the equity of their home or even save their home from a foreclosure. The mortgage is just a mortgage with deferred interest. The estate retains all the equity over and above the mortgage.

Take a simple scenario:

A senior would like to take a couple hundred thousand out of their house instead of their declining retirement fund. Give some money to thier kids now before they pass away and still retain thier current lifestyle. What a great way to enjoy their estate while they are able to.

Or maybe they want to purchase a home and not liquidate their funds from an annuity or retirement account. They can put 30-40% down instead of liquidating 100% for a down payment. Then never have a house payment as long as they live.

http://www.RonYarbrough.com

Rural Development Home Loans

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Tue, 18 Nov 2008 15:13:15 -0600

I cannot tell you how many Realtors I have spoken to in the Kansas City Area that just cannot seem to get a buyer or potential buyer interesting in purchasing a home. The main reason seems to be the money down and the uncertainty of money. I spoke to one Realtor today that said she was sure that you could not get a mortgage without at least 20% down.

Nothing could be further from the truth. I have 1 conventional loan program for 100% but 2 government programs for no money down and flexible credit guidelines. My favorite is the USDA Guaranteed program. This program has ZERO money out of pocket at a great rate ~6.5% with No PMI.

Sure you have to be in an eligible area but First Time Homeowners don't really care if you are less than 10 minutes out of town.

For more information reply to this blog.

http://www.RonYarbrough.com

Lease Purchase Options

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Sun, 16 Nov 2008 11:47:21 -0600

With the credit crisis continuing and no real end in sight we are seeing those people who are still stuck with homes running out of reserves. As a mortgage banker we always have put a big emphasis on reserves, especially with Investment property purchases and purchasing another home without selling the previous home. Renting the properties is a decent way to make ends meet but putting the pressure on the homeowner to be the bank is turning out to curt the homeowner except their is no government bailout for the people who pay their bills.

Lease purchase is a great way to get a buyer in the home and have the buyer hedge their bet the market will stabilize soon and possibly increase within the next couple years.

Conforming and Government loans will allow a portion of the rent to go to down payment when the option is exercised. There are specific requirements to make this happen but are relatively minor when preparing the lease purchase option.

Many of my clients including myself have entered into lease purchase agreements on a 2 or 3 year term. I believe it setting up a win win situation and minimize risk. The formula I use is to take a 3% down payment 3 years from now so I know they can execute the option and remain in the home. On a 150,000 house that is 4500.00. The guidelines agree that you have to apply excess rent over the market rent to apply to down payment. So on a 150,000.00 the market rent could be 1100.00 in our market. I would collect 2500.00 down payment for the option and 2000.00 a month extra rent for 3 years. So the rent would be 1155.00 a month with 55 a month going toward purchase. On a 2 year option it would be 1184.00 a month.

Just an idea. If you were to get a Real Estate Professional involved you can work out a commission structure up front and on the back side. Many agents would like to get a small income now for bringing a Lessee and when the option is exercised you can pay then again.

Ron Yarbrough CMPS

Can you really purchase an Investment property with Zero Down and Positive Cash Flow?

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Thu, 13 Nov 2008 00:32:51 -0600

I have a Real Estate Broker contacting me about end loan financing for her clients. The clients have purchased a home with a hard money loan less than 60 days ago with zero money down. She wants me to rate term the short term money into a long term loan. Does anyone have any thoughts. Seems like if you purchase a property for 50K it is worth 50K not 75K unless you can document some improvements.

These properties come complete with Section 8 tenants with a minimum 400.00 a month positive cash flow. The Rehabber says he has a list of 30 buyers. Who wouldn't??? Get a free 400.00 a month check...

http://www.RonYarbrough.com

100% Purchase Money Options Still Exist

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Wed, 12 Nov 2008 08:34:12 -0600

Beyond popular believe there are still programs that allow no money down purchases. I have three programs available. The first 2 our government programs. The RECD USDA loan and the Veterans Loan ( VA ). I also have a conventional program with a down payment assistance second mortgage. The qualifications for the loan require 100% of the area median income and 680 credit score.

For buyers that have done what they were told and took care of their credit they still have a great opportunity to purchase a home in the best buyers market I have seen in my 13 years in the mortgage business. You can buy low and get a great low interest rate. The best of both worlds.

Apply on line or email for more information

ron@ronyarbrough.com

http://www.ronyarbrough.com

Is America heading for disaster? What do you think?

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Mon, 22 Oct 2007 09:03:23 -0500

What is going on? All we hear on the news is the financial markets are crashing. The housing market is in dissarray. Home Inventory is up to nine months. Liquidity crisis is forcing banks out of business.

Well individuals need to make sound decisions concerning their finances and so do businesses. We need to save 15% of our income for our future why don't banks? The last 10-15 years have been a windfall for banks and Fannie Mae, Freddie Mac. Profits have soured. What happened to that money? Why don't banks save for the rainy day.

I try to coach all my first time home buyers to save for the rainy day. It still rains, despite global warming.

Ron Yarbrough - Kansas City Mortgage Expert
http://www.RonYarbrough.com

Should you Float, Lock, or just Give Up?

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Thu, 04 Oct 2007 10:00:32 -0500

As a Certified Mortgage Planner I always try to help my clients understand how their home works as an investment. In today's market Home Owners and First Time Home Buyers need to look at their home as a long term investment. You can buy at reasonable prices and get locked into a reasonable rate. Working a plan for the future with a Mortgage Planner you will be able to get your investment to perform over the long term. During the last 10 years we have seen the consumers spend their equity and have sacrificed their financial future.

I feel we will see interest rates dip for a little while but if First Time Home Buyers are gambling on hitting the low for both rate and home prices they are going to loose. Even the experts cannot hit the low.

If you have any clients out there that are wasting your time shopping without knowing their financial options, you need to get them with a certified Mortgage Professional.

Ron Yarbrough - Kansas City Mortgage Expert
http://www.RonYarbrough.com

Kansas City Real Estate Values dropping?

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Wed, 03 Oct 2007 11:00:12 -0500

From the mortgage perspective the values of homes are not really dropping but instead they are adjusting. If you look at a mortgage as an investment in Real Estate, you can compare the market. Just as anything. Stocks, futures, and Real Estate, the price is driven by demand.

Demand is down right now. I believe the media is playing a big roll in that but the values for existing homes are holding steady at 2004/2005 value. The new home market is really getting pressure to lower prices.

This is just the opinion of Ron Yarbrough - Kansas City Mortgage Expert
http://www.RonYarbrough.com

Follow-up is the single most important aspect of Sales

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Wed, 03 Oct 2007 10:04:23 -0500

I have been in the mortgage business for over 12 years in Olathe, KS. I have always worked with first time homebuyers and have helped these clients grow into a 2nd and 3rd home. My struggle has always been consistancy in non-sales follow-up.

I have tried many systems with email follow-up, mail merges, multi hundred dollar in the box systems and the list goes on and on.

Someone real smart started a company that has helped me stay in touch. http://www.sendactualcards.com

Sending a paper card shows you care. Sending an electronic card usually just goes to spam or get's deleted. Newsletters and going to the card store take time, energy and substatially more money.

Check out this company. Send a couple cards to test the system. I have already set up a guest account. I will pay for the first few cards.

Ron Yarbrough - Kansas City Mortgage Expert
http://www.RonYarbrough.com

Forclosure Saver Programs

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Wed, 26 Sep 2007 11:54:41 -0500

As many of you know Fha has stepped up to the plate. If you have any clients that you know should not have taken the 2/28 or 3/27 program when they purchased the home you might help them remain clients for the future if you help them out.

The Fha Secure program is designed to help people who currently have mortgage lates upto and including Notice of Default. Fha will allow the mortgage to be refinanced into a Current low rate Note.

For specific details give me a call. Your client will thank you forever. There next home in a couple years will be your reward.

Ron Yarbrough - Kansas City Mortgage Expert
http://www.RonYarbrough.com

Fha is coming to the rescue

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Wed, 26 Sep 2007 11:36:43 -0500

Fha Secure is a great program to help homeowners that thought they would benefit from a ARM loan and now have found their payment ballooning.

You can qualify for a refinance at a low fixed rate if you are currently behind in your mortgage payments due to the increased rate.

Fha is very clear that to qualify you must prove that your current mortgage you cannot afford and a new mortgage will help you save your home from forclosure.

Ron Yarbrough Kansas City Mortgage Expert
http://www.RonYarbrough.com

913-747-3234

CMPS Mortgage Planning

Ron Yarbrough (FirsTrust Mortgage, Inc.) — Tue, 01 May 2007 14:30:39 -0500

Harvesting the equity in your home is a concept many homeowners are not familiar with. Consuming the equity in your home is the philosophy of internet lending.

Mortgage Bankers have always built their business by helping clients obtain a good home loan. With the mortgage certification (CMPS) being offered, consumers can know they are working with a professional.

I am located in Olathe, KS and have been mortgage planning for over 8 years. I not only know the proper way to help someone purchase for now but structure best for tax savings as well as wealth in equity.