Apr 15

24

Can a USDA Credit Waiver help you qualify with credit scores below 640?

How can you qualify for a USDA loan with credit scores under 640?

Welcome back everyone, Sean Stephens here again with Metroplex Mortgage Services and another USDA Loan Pro Video Quick Tip.

* Who can qualify for a USDA Credit Waiver?
* How can a Credit Waiver help you qualify for a USDA Loan?
* What compensating factors are considered with a USDA home loan credit waiver?

Today’s short video tip will cover these key questions and walk you through the steps about how a USDA credit waiver may be able to help when loans are not eligible for USDA automated underwriting approvals.

However, before we get started, don’t forget to download a copy of our USDA blueprint for success with the link below. This free guide will walk you through the USDA qualifying process step by step and is a great educational guide for anyone interested in a USDA home loan.

As a quick review, remember that many lenders only process USDA loans that received automated “Accept” eligibility findings received from the GUS underwriting system. As you will see, it is important to work with lenders that understand USDA manual underwriting guidelines and how to properly process a loan file and the documentation required. Because of this, understanding how a USDA credit waiver works is a critical part of approving a USDA Loan that may normally be denied.  USDA Credit Waiver eligibility for credit scores under 640

USDA Credit Waivers are applicable for manually underwritten loans with the following:

• Have received a GUS response of Refer or Refer with Caution, or
• Any loan that had to be manually downgraded for reasons such as:
o Lack of Established Traditional Credit History
o Authorized Users
o Disputed Accounts

USDA guidelines require applicants to have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due.

Credit waivers will be needed on files which have been approved by underwriting, and have indicators of negative (adverse) credit.

In situations where the borrower(s) have negative credit, USDA Loan approval can still be achieved provided the lender can document the borrower’s intent for overall good credit. USDA approved lenders may document this via a USDA Credit Waiver which would need to support that the adverse credit was:

1. Temporary in nature
2. Beyond the applicant’s control, and
3. Circumstances contributing to the adverse credit have been removed.

USDA Lenders may take into consideration mitigating circumstances which provide evidence to support the overall intent for good credit. However, lenders must conclude the applicant did not disregard their financial obligations. Possible examples of outside factors which may have contributed to the negative credit are, but not limited to:

• Dispute over defective goods
• Illness or medical conditionFlorida USDA Approved Lender
• Temporary loss of employment

As you can see, understanding how to process a successful USDA Credit Waiver can provide the opportunity of homeownership.

Remember, not all lenders have experience with processing and closing USDA loans. I see this each and every day on the 2nd opinions that come across my desk.

As an approved USDA lender, we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.

800-806-9836 Ext. 280
SeanS@MPLX.org

Just call or email if you have any USDA qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2nd opinion service which is great for those existing transactions

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Apr 15

17

Do you know about the Updated USDA Income Limits?

USDA Income Limits have been Updated!

On April 1st, 2015 USDA published updated income limits for the Single Family Guaranteed Loan Program.

Today’s video tip will cover the details and discuss how the recent changes could help more buyers qualify for a USDA loan.

We have received positive feedback on our USDA Blueprint for Success which can be downloaded with the link below. This free guide breaks down the USDA process step by step, and is a great educational resource for the home buying process!

What are the USDA income limits for your county?

A  key part of USDA Loan eligibility involves determining if your household income will meet  the USDA income limits which is also known as “Annual Income”. This will include all household members – NOT just those who are on the loan. Understanding your applicable county income limit is a critical step towards USDA qualifying.

As an example, we will use Florida and the Virgin Islands as an example to show how the recent USDA income limits have changed.  Effective 4/1/15 the following will apply:

Florida USDA Income Limits

Previously the majority of Florida counties had USDA income limits of $74,750 for a family of 1-4 people and $98,650 for a 5 to 8 person household. Those have been increased respectively to $75,650 and $99,850.

Now that may not seem like very much, but just remember that these income limits apply even if you are just $1 over the limit. Just think of how many potential buyers that were on the verge of qualifying, will now be able to proceed with a USDA loan.

It is important to remember that USDA guidelines also permit for deductions to household income which can include, but are not limited to:

• $480 for each dependent,
• Child care expenses when applicable
• Unreimbursed business expenses

When deductions are applied, this will reduce a household’s annual income, thus allowing for the potential to then qualify for a USDA loan.

Florida USDA Income Limits

Also, I have included the following link below to check for USDA income limits in all states.

Previously the majority of Florida counties were capped at $74,750 for a family of 1-4 people and $98,650 for a 5 to 8 person household. Those have been increased respectively to $75,650 and $99,850.

Now that may not seem like very much, but just remember that these income limits apply even if you are just $1 over the limit. Just think of how many potential buyers that were on the verge of qualifying, will now be able to proceed with a USDA loan.

It is important to remember that USDA guidelines also permit for deductions to household income which can include, but are not limited to:

• $480 for each dependent,
• Child care expenses when applicable
• Unreimbursed business expenses

When deductions are applied, this will reduce a household’s annual income, thus allowing for the potential to then qualify for a USDA loan.

Also, I have included the following link below to check for USDA income limits in all states.

USDA Income Limits – All States

In Summary:

  1. Never assume that your income is either eligible or ineligible for a USDA loan
  2. Additional factors may apply, and as your USDA mortgage professional we are here to help with the calculations
  3. If you are a Realtor or a Home Buyer who had a previous situation where a loan was denied due to the income limitations in place, contact us today so we can put the pen to the paper and start reviewing

Remember, not all lenders have experience with processing and closing USDA loans. I see this each and every day on the 2nd opinions that come across my desk.

As an approved USDA lender, we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.

800-806-9836 Ext. 280
SeanS@MPLX.org

Just call or email if you have any USDA qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2nd opinion service which is great for those existing transactions

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Apr 15

10

Fannie Mae vs. Freddie Mac 3% Down

Thanks to recent changes, both Fannie Mae and Freddie Mac mortgage lending programs now offer a 3% down conventional loan option. In today’s video, we will discuss key differences in the Fannie Mae vs. Freddie Mac 3% Down payment program options.

If you are thinking about utilizing the Fannie Mae or Freddie Mac 3% down payment programs, and you live in Florida, Texas, Tennessee, or Alabama, this short video will cover the details on how you may be able to save money on your next conventional loan.

Recent program changes that resulted in down payment reductions by both Fannie Mae and Freddie Mac, have made conventional loan programs more affordable.

Fannie Mae:
As a quick review from a previous post, effective December, 2014 Fannie Mae now allows 3% for a down payment.

One of the more notable stipulations of this program is that at least one borrower on the application must be considered a first-time homebuyer.

Fannie Mae defines First-Time Home Buyer as someone that:

  1. Will reside in the property as a principle residence, and
  2. Has had no ownership interest (solely or jointly) in a residential property during the three-year period preceding the date of the purchase.
  3. There are also additional criteria that may apply. See here for more information Fannie Mae First Time Home Buyer definition.

Improved interest rates and mortgage insurance (PMI) are available under the MyCommunityMortgage® feature. While this does fall under the Fannie Mae umprella, there are additional requirement involved. If you have questions regarding this, please call or email.

Freddie Mac Fannie Mae 3 Down Florida

Freddie Mac:

As of 3/23/15, Freddie Mac allows for 3% down payment through their Home Possible Advantage® mortgages.

  • While there is no first-time homebuyer requirement, applicants may not have any ownership interest in other residential properties at the time of closing.
  • If applicants are considered a first-time homebuyer, homebuyer education and counseling will be required which includes the Freddie Mac’s Credit Smart online training.
  • Gift funds are allowed – this is a new Freddie Mac improvement, specific to Home Possible Advantage mortgages.
  • Income Limits will apply – read more about these here.

As always, remember that minimum credit conditions will apply and sufficient equity will be required on all programs.

While we usually cover USDA home loan topics, I did want to keep you in the know about additional financing options, in case a USDA loan may not apply.

Whether it be USDA, FHA, VA, or Conventional loan programs we appreciate you trusting us for all of your financing needs.

We thank you for reading and encourage you to leave a comment below or send us a question via email.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Apr 15

3

Most Viewed USDA Loan Video Quick Tips

The team at Metroplex would like to wish all of you a very Happy Easter weekend, and share with you our 2015 (Year-So-Far) top three Most Viewed USDA Loan Video Quick Tips Countdown.

USDA Loan Mortgage Florida Happy Easter

3. Can You Qualify for a USDA Loan After Bankruptcy and Prior Mortgage Debt?

Chapter 7 bankruptcies generate a lot of questions when it comes to USDA loan applications. In one of our most watched Video Quick Tips, Sean Stephens breaks down exactly how your USDA loan application will be affected by prior mortgage debt absolved by a Chapter 7 bankruptcy. USDA qualifying guidelines differ from FHA loans when it comes to Chapter 7 bankruptcies and recent deed transfers, so it’s important for you to know how this potentially affects you.

2. How Many Acres Can You Finance with a USDA Rural Home Loan?

Another popular topic in 2015 has been the recent changes to the USDA guidelines and how these have impacted acreage limits on rural loans. In this Video Quick Tip, Sean walked us through how you could potentially increase the amount of acres you can finance with a USDA mortgage loan.

 1. What Credit Score Qualifies For A USDA Loan?

In this year’s most popular Video Quick Tip, Sean Stephens shared his expert advice on the credit scores needed to qualify for a USDA home loan in order to receive automatic approval and some options regarding manual underwriting.

The USDA home loan program does have minimum credit score requirements.


That’s our countdown; we thank you for continuing to watch our Weekly Video Quick Tips. We love getting your questions each week – you can continue to send those to us via email or leave a comment below!

Again, we hope that you and your families have a safe and Happy Easter, and we will see you right here next week’s for another Video Quick Tip!


Remember, not all lenders have experience with processing and closing USDA loans.  As an approved USDA lender, we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.

Get connected with USDA Real Estate Network on LinkedIn and feel free to join our discussions and/or post your listings to the group.


Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Mar 15

27

How Long Does It Take to Save for a House?

Do you know how long it will take to save for a home?  What about how much money will you need to buy a house?  As you can imagine, these questions are surrounded by both myth and fact.

If you are trying to save for a down payment on a house right now, and you live in Florida, Texas, Tennessee, Alabama, today’s topic will help explain and compare current available home loan programs.

Over a decade to save for a down payment?

A recent article by Marketwatch.com indicates that it would take on average 12.5 years in order to save up for a 20% down payment.  Yes, that is over a decade!

Thankfully, affordable mortgage programs do exist, but as I talk to more and more potential homebuyers, many are just not aware of the available options.

USDA loan steps to closing florida

Affordable Mortgage Program Comparison

If you are buying a primary residence, the following programs are available:

  • USDA Rural Home Loans:

USDA Loans offer 100% financing (No Down Payment) and the ability to finance closing costs into the loan when the appraised value is higher than the sales price.  This is only eligible for designated rural areas and household income limits will apply.

  • VA Loans:

VA Loans allow for 100% financing (No Down Payment) and are restricted to eligible service members.  VA Loans can provide for qualifying flexibility with previous short sales, foreclosure, and/or bankruptcy.

  • FHA Loans:

FHA Loans have a minimum down payment requirement of only 3.5% and allow for credit qualifying flexibility.

Florida USDA mortgage save

Common traits for all of these programs are:

  • Full Income and Asset verification
  • Sufficient equity and minimum credit qualifying conditions are required
  • Primary residences only
  • Credit qualifying flexibility
  • Gift Funds are allowed

So while it could take over a decade to save for a house, thankfully there are some great flexible loans that could mean that you, or your client’s, dream of owning your own home is closer than you think!

It doesn’t have to take over 12 years to save for a home. The Metroplex Mortgage team are experts in the USDA, VA and FHA programs. Call or email us to discuss your situation today, or take advantage of our free second opinion service! 


Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Mar 15

20

Are Your Debt Ratios Too High for a USDA Loan?

It is true that USDA loans offer a high amount of qualifying flexibility, and it is also possible to qualify even when debt ratios exceed USDA published guidelines. With proper documentation, USDA home loans will allow for debt ratios waivers to be approved.

How do you qualify for a USDA Debt Ratio Waiver?

If you are thinking about a USDA loan in  Florida, Alabama, Tennessee or Texas but you have been told that your debt ratios are too high,  don’t lose hope, because as an approved USDA lender – Metroplex Mortgage Services may be able to help!

USDA loans with high debt ratio in Texas

USDA Guidelines on High Debt Ratios

USDA published guidelines for debt ratios are 29% for housing and 41% for total overall expenses. 

For housing and debt ratios higher than 29/41, debt ratio waivers may be approved pending the following USDA eligibility criteria:

First off, a minimum qualifying credit score of 680 or higher will be required; and at least one of the following compensating factors:

1. Proposed PITI (housing expense) is equal to or less than the applicant’s current verified housing expense for past 12 mos. (Documentation will be required)

2. Accumulated savings of liquid assets available post loan closing of at least 3 mos. or greater (PITI payments after closing)

3. All employed applicants have been continuously employed with their current primary employer for a minimum of 2 years.
  Not Applicable for Self Employed Applicants

Remember, USDA debt ratio waivers do not apply to GUS files that receive an “Accept” underwriting recommendation.  The Guaranteed Underwriting System or “GUS” is the specific USDA automated underwriting system used to assist lenders in processing USDA Rural Home Loans.

USDA-debt-ratio-USDA-loan-florida

In addition to a USDA debt ratio waiver,  USDA eligibility guidelines will also permit for installment accounts with 10 months (or less) remaining to be taken out of the qualifying ratio calculation. This does not include revolving accounts (credit cards). 

So, if you have found the perfect home and have had issues with high debt ratios, a USDA home loan may be able to help. Call us for a free USDA Home Loan second opinion! 


Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Mar 15

13

Can a USDA Property have an In-Ground Swimming Pool?

The December 2014 changes to the USDA guidelines removed the prior value restrictions on in-ground swimming pools on USDA eligible properties. These changes have brought the program into line with FHA, VA and Conventional appraisals.

Today’s video tip will keep buyers, sellers, and realtors in the know when USDA financing is involved with a property with an in-ground swimming pool.

If you are thinking about a USDA loan and the property you have found in  Florida, Alabama, Tennessee or Texas with an in-ground swimming pool, there is good news!

USDA loan Florida

Review of Previous USDA Requirements

Prior to 12/1/14 properties that had in-ground swimming pools were not considered in USDA’s modest housing definition. One myth that existed, was that USDA loans would not finance homes with inground pools, but that was not true.  However, financing was possible, but no value could be credited to the pool. For example, if your property appraised for $120,000 and the appraiser noted that the value attributed to the pool was $15,000 – then the most we could finance would have been $105,000.

This previous requirement created confusion among Appraisers, Realtors, and Homebuyers along with creating possible cash to close issues due to financing limitations.USDA loan Texas

Updated Guidelines

Now, we can see another positive change under the updated USDA 3555 regulations which modernize their in-ground swimming pool guidelines and simply state that:

“The agency may approve dwellings with in-ground swimming pools.”

It’s business as usual for eligible properties with in-ground swimming pools!


Make sure to share the good news with any listing agents or sellers when your next offer involves USDA financing with a home that has an in-ground swimming pool.   As always, please feel free to reach out to my team with any USDA property eligibility questions.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Mar 15

6

USDA Loan with a Property Located in a Flood Zone?

Wondering how a flood zone affects USDA loan eligibility?  For anybody who has had this situation come up before, USDA guidelines have implemented a key change that will make a significant impact when moving forward on existing properties located in flood zones.

Today’s video tip will keep buyers, sellers, and realtors in the know when USDA financing is involved with a property in a flood zone.

If you are thinking about a USDA loan and the property you have found in  Florida, Alabama, Tennessee or Texas is in a flood zone, there is good news!

USDA loan flood zone florida

Review of Previous USDA Requirements

Prior to12/1/14, USDA guidelines  required the following when a property was located in a Special Flood Hazard Area (SFHA):

“A flood elevation certification is also required to ensure the first floor of habitable space (including basements and mechanicals located in crawl spaces) is above the 100 year flood zone elevation.”

At best this could be a tedious process and at worst even if flood insurance was available, being able to move forward was contingent on receiving an acceptable flood elevation certificate as mentioned.

Updated USDA Requirements

USDA loan flood zone Texas

Now, we can see another positive change under the updated USDA 3555 regulations which modernize the flood insurance guidelines.  Now, they simply require that existing dwellings are eligible if flood insurance is available for the community through:

  • FEMA’s National Flood Insurance Program (NFIP) , or
  • A policy under the “Write your Own Program”, or
  • Private flood insurance as approved by the lender, is purchased by the borrower

Assuming the homebuyer is able to purchase acceptable flood insurance, the need for the additional step required for calculating the base flood elevation is no longer needed for existing properties.

However, obtaining an acceptable flood elevation certificate is still the requirement for new construction properties.  If you have questions on how to qualify for a USDA loan on a new construction property, we have a high level of experience on these transactions so please call me team to discuss your questions today.


It is important to not get bogged down into the details on today’s video tip, but instead take away the positive change which now simply requires the need to for the homebuyer to obtain acceptable flood insurance on the property like other programs require.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Feb 15

27

How Can You Qualify for a USDA Loan after a Short Sale?

If you, or one of your clients, made the difficult decision to opt for a short sale on a previous mortgage, it has been a challenging process but hopefully the time has come to start rebuilding.  With the many short sales that were finalized in recent years, we have had many inquiries about qualifying for a USDA loan after a short sale.

The USDA has recently clarified the eligibility requirements in regards to short sales, so this week we are breaking down exactly how you might be able to qualify for a USDA loan after a short sale and the exemptions that apply if the waiting period has not yet elapsed.

If you are thinking about a USDA loan with a previous short sale in Florida, Alabama, Tennessee and Texas, understanding the USDA’s short sale guidelines is essential for achieving your dream of owning your own home again.

USDA-loan-short-sale

What You Need to Know About USDA Loans after a Short Sale 

As a point of clarification, prior to 12/1/14 USDA guidelines did not specifically mention qualifying criteria when previous short sales were involved.  Instead they were considered under their general adverse credit guidelines.

However, the newly updated guidelines with the 3555 Handbook state the following when evaluating credit qualifying which involve short sales:

  • A short sale is considered a pre-foreclosure activity or event
  • An applicant is ineligible for a mortgage loan if they pursued a short sale agreement on their principal residence to take advantage of declining market conditions and purchases at a reduced price a similar or superior property within a reasonable commuting distance.
  • An applicant in default on their mortgage at the time of the short sale (or pre-foreclosure sale) is not eligible for a new mortgage loan for three years from the date of pre-foreclosure sale.

USDA-short-sale

Exceptions to the USDA guideline when trying to qualify after a short sale are possible:

If an applicant was current at the time of short sale, they may be eligible for a new mortgage loan. The prior mortgage payment history must reflect all mortgage payments due were made on time for the 12 month period preceding the short sale and all instalment debt payments for the same period were also made within the month due.

As many of us know, having a mortgage current at time of a short sale being finalized may be a very difficult task.

This new guidance is very specific and leaves little room for exception when trying to qualify for a USDA loan after a short sale.  However, if your situation dictates further review and may possibly meet the exception criteria provided, please contact my office so we can discuss in detail.


Remember, not all lenders have experience with processing and closing USDA loans.  As an approved USDA lender, we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.


Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Feb 15

20

Can you qualify for a USDA Loan after foreclosure?

Do you have questions about qualifying for a USDA loan after foreclosure? Bouncing back after a foreclosure takes time, but the flexibility of the USDA loan program means that you could be back in your own home again… and sooner than you might think.

The waiting period to qualify for a USDA Rural Development loan after a foreclosure is generally three years from the recorded date of the foreclosure. Depending on the factors involved, a USDA Loan may be able to help you qualify after a foreclosure before the waiting period has elapsed.

If you are thinking about a USDA loan with a previous foreclosure in Florida, Alabama, Tennessee and Texas, understanding the USDA loan foreclosure guidelines is essential for achieving your dream of owning your own home again.

USDA loan foreclosures

USDA Loan After Foreclosure Guidelines

USDA qualifying guidelines state the following regarding previous mortgage foreclosure:

“An applicant is generally not eligible for a new guarantee, if during the prior three years the applicant’s previous real property was foreclosed on or they have given a deed-in-lieu of foreclosure.”

In cases when a foreclosure has been less than 3 years, exceptions are possible but should be made only in the following situations:

  • Was the situation which cased the credit problems temporary in nature?
  • Was the situation beyond the applicant’s control?
  • Have the circumstances been removed and resolved for the 12 months prior to application

Examples could include, but are not limited to the following:

  • Temporary loss of employment
  • Delay or Reduction in Benefits
  • Illness
  • Dispute over payment for defective goods or services

Documentation will need to be provided by the potential applicant in order to support their request for a possible exception.

USDA loan foreclosures application


It is also important to note that the following limitations will apply when seeking a possible exception to the USDA 3 year waiting period after foreclosure:

  • The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.
  • Divorce is not considered an extenuating circumstance. However, an applicant whose loan was current at the time of a divorce in which the ex-spouse received the property and the loan was later foreclosed may qualify as an exception.

Remember, not all lenders have experience with processing and closing USDA loans.  As an approved USDA lender, we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.


Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs, USDA Loan After Bankruptcy


Sean Stephens

Metroplex Mortgage Services

Contact Me Here
Toll Free: (800) 806-9836 Ext. 280
NMLS ID# 185288

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