March 2009

USDA Rural Housing Loans – Understanding the Basics

Today you’ll find that one great option that many people in rural areas have are the USDA rural housing loans. They provide great rates and a whole lot of flexibility as well. These are loans that have been designed specifically for people who are living in rural areas around the United States, such as rural Minnesota, and they are also for those who have very little money that they are able to put down on the home that they want. There are many great options that these loans have to offer people today and if you are interested in purchasing a home in a rural area, you should definitely find out if you are in an area where the property you purchase will be eligible for one of these loans. Of course there is quite a bit to look at, so let’s take a look at the highlights that this program has to offer and the eligibility guidelines as well.

The Highlights of the Program

First of all, it’s important that you are aware of all the highlights of these USDA home loans that are available when it comes to getting a MN rural mortgage. Here are a few of the top highlights that you’ll need to understand.

• 102% of the Sales Price or Home Value – First of all, when it comes to getting a USDA loan for your home that you are purchasing, you’ll find that you can get 102% on the appraised home value or the sale price. However, you have to go with whichever one is going to be lower. A guarantee fee of 2% may also be provided with the loan as well, which allows the loan to go up to 1-2%, allowing help for buyers who don’t have the money to pay this expense out of their own pocket at the time.

• 30 Year Secure Mortgages – When it comes to these mortgages that are funded by the USDA, you’ll find that they last for 20 years. They are secure mortgages and fixed rate mortgages and the term on them is for 30 years.

• Little Cash Reserves Needed – If you are able to get rural mortgages through the USDA, you’ll need little cash reserves to help you get the home that you want. If you are a qualified buyer, you shouldn’t need to touch your own cash, which is extremely helpful to you.

• Sellers Can Help with Buyer Closing Costs – Sellers are also able to help out with the closing cost of the buyers as well with this plan. This can be very helpful to the buyer if they don’t have a lot of money to afford the closing costs on their home.

• The Eligibility Guidelines

• Now that you understand some of the highlights of the USDA rural loan program, it’s also important that you understand the eligibility guidelines as well. If you want to see if you are eligible for this type of a loan, here are a few of the guidelines that you’ll have to measure up to in order to get this type of a mortgage.

• U.S. Citizens and More – First of all, this is a loan that is designed for people who are U.S. citizens and it is also acceptable  for people who are legally admitted to the U.S. and allowed to permanently reside, as well as some qualified aliens. If you don’t meet these qualifications, then you will not be able to qualify for these programs for rural housing.

• Household Income Guidelines – There are also household income guidelines that are important to understand as well when you are considering whether one of these USDA rural housing mortgages will work for you. There are moderate income limits in the area that cannon be exceeded. However, the size of the family and any child care costs can enhance the chances of becoming qualified in some cases.

• Rural Area – Of course the home that is being purchase has to be located in a rural area as well. This can be in open country in the U.S. or it can be in areas that have less than 25,000 people in the town or area. Of course this can vary, so it is important to find out more from a loan advisor that offers these types of loans.

• Type of Residence – Last of all, the type of residence does matter when you are trying to qualify for one of these loans. You’ll find that the only types of homes that are eligible for the USDA rural loan program is going to be a home that is a primary residence. This means that vacation homes and second homes will not be eligible under this program.

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New Homebuyer Tax Credit

Back in 2008, there was a $7500 tax credit that was enacted by Congress and it was to be a great incentive for those buying homes for the very first time. It was to help out the over supply of homes out there that are for sale. For the year of 2009, there have been some changes made to this tax credit. Wondering how the new Homebuyer Tax Credit actually works? Here’s a look at the changes that have been made, who will be eligible, and a lot more important information that you need.

How this Has Changed for 2009

Wondering how everything has changed for the year of 2009 when it comes to the Homebuyer Tax Credit? Well, while the credit used to be $7500, it has now been increased by Congress to $8000. For those that purchase in 2009, there is no repayment feature on this credit, like there was back in 2008. Homes that are purchased for more than $80,000 will get then entire $8000 tax credit. Those that are lower than that will get 10% of the cost of the home. So, someone purchasing a home for $70,000 would get a tax credit of $7000. The purchase must be between January 1, 2009 and must occur before December 1st of 2009.

The People Eligible for the Credit

Many people are wondering who is going to be eligible for this new Homebuyer Tax Credit. Well, only people who are purchasing a home for the very first time are going to be eligible. People qualify as a first time home buyer if they have not owned a home for the past three years. Of course the purchase of the home has to fall in the time frame as well, in order to get this credit.

How it All Works

So, how does this tax credit work? Well, the tax credit reduces the amount of income taxes that are paid. When you fill out your income tax return, you claim these credits on there. You figure out your income items, and then your exemptions, then you figure out the amount of your total tax. Once you figure this out, then the tax credits are going to be applied to what you owe. If you owe $10,000 to the government in taxes and you have the tax credit of $8000, then you’ll only end up owing the government $2000.

A Refundable Credit

There are times when you can get a refundable credit as well. This occurs if you are able to get this tax credit for your home, but you owe less than the $8000 on your taxes. In this case you can actually get money back in a refund from the government. If you only owe $3000 to the government and you have the tax credit of $8000, then you’ll end up getting a refund check from the government for $5000.

Income Restrictions

You will find that the new Homebuyer Tax Credit does come with some income restrictions that you need to know about. The restrictions are based on the amount of money that is claimed and the filing status on the income tax returns. Those who are single can only have an income of $75,000. However, married couples who are filing jointly can have up to $150,000 to quality for this tax credit.

Determination of Income

So, how is the income determined to figure out if you meet the restrictions or not? Usually this is figured out just like the Adjusted Gross Income on the 1040 tax return. This can include salaries, interest, pension, rental income, and many other things. It is this Adjusted Gross Income that you’ll want to look out to make sure that you meet the income restrictions on the tax credit.

The Principal Residence

The tax credit is only available for those who are purchasing a principal residence. So, what exactly is a principal residence? Basically this is the home where a person ends up spending 50% or more of their time. It also may be called housing that is “owner occupied” as well. This includes condos, single family housing that is detached, townhouses, and co-ops. In some cases manufactured homes and even a few houseboats may quality under this definition as well.

Financing Restrictions

For the most part you’ll find that various types of financing are going to be acceptable when you are trying to claim this credit. There were some restrictions in 2008, but the one that was applicable then was removed in Congress. So, you don’t have to worry about financing restrictions keeping you from being able to claim this tax credit.

Do These Credits Have to Be Repaid?

While last year the tax credit eventually had to be repaid, in 2009 there is no repayment on the tax credits that are being given. This is excellent for new homeowners, since they won’t have to worry about paying back the government in the future.

How to Get the Credit

So, how do you get the new Homeowner Tax Credit? Well, there is nothing really special you need to do. Simply claim this on your 1040 tax return this year. The credit will be on a 5405 form that you will attach and you can easily get this form at the IRS website so that you can make the claim and get that tax credit.

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MN Rural Loan for Homes in Rural Minnesota – Benefits of These USDA Rural Loans

If you are considering purchasing a home in rural Minnesota, you’ll find that there are many financing options that will be available to you. However, one of the best options that you may have is a USDA rural loan. When you’re considering one of the many homes that are located in rural Minnesota, you may be wondering if there is a great way to finance your home. Well, you’ll definitely find that you can get a MN rural loan from the USDA, but of course you’ll have to meet certain qualifications to qualify. There are many benefits to choosing this type of a loan when you are trying to finance a singe family home in an area of rural Minnesota. So, here’s a look at some of these great benefits that you’ll be able to enjoy if you are able to get a USDA rural loan.

Benefit #1 – Promotes Rural Housing – First of all, one of the main benefits of the USDA rural loan program is that it helps to promote rural housing. Many people think that they may want to live in a rural area, but so many times it can be hard to find great financing. Well, this program is helping more and more people in rural areas to be able to get the type of a loan that they need so they can get in a nice home in these areas.

Benefit #2 – Excellent for First Time Buyers – Another benefit is that these loans are wonderful for first time buyers. People who are purchasing a home for the first time will find that they can easily find some great deals in more rural areas and the great USDA rural loans that are available make it even easier to be able to purchase one of these homes.

Benefit #3 – 100% + Financing - Of course the 100% financing that is offered on these mortgages by the USDA is definitely a great benefit as well. Sometimes it can be difficult to come up with the money needed for a large down payment, since so many loans out there only cover about 80% of the loan that you’ll need. However, with these loans in the rural loan program, you’ll find that you can get up to 100% financing if you need it, which can definitely be a huge help.

Benefit #4 – Refinances Apply – Although this program is great for people who are making purchases in a rural area, you’ll find that there are some refinances that apply as well. Not all refinances are going to qualify for this loan, but if you are getting a refinance in order to get a term improvement or a rate improvement on your home loan, then you may qualify to get involved in this program for those interested in Minnesota rural housing.

Benefit #5 – 30 Year Terms – The terms on these loans are 30 year terms, which is also a benefit. Many people just can’t afford the payment on a 15 year mortgage, but a 30 year mortgage is manageable for most people. Also, the 30 year mortgage comes with a fixed rate as well, which is definitely a benefit, since it means you won’t have to worry about your rate going up later and costing you a lot more money.

Benefit #6 – Buyer’s Don’t Have to Contribute – Probably one of the main benefits of going with one of these loans for rural housing is that buyer’s don’t have to make contributions. You’ll find that some FHA loans actually require that you contribute at least 3% on your home, but there is not even a minimum contribution that you have to make on the home purchase when you go with a USDA rural home loan. This is a huge benefit because it can keep you from having to dig into your savings or having to borrow more money to make up the difference in order to get the home loan that you need for your Minnesota home.

Benefit #7 – Large Loan Amount Available – There are fairly large loan amounts that are available as well. On the high side, the most that you can get in a loan from the USDA rural loan program is $417,000, which is a fairly large loan for a home. So, you have quite a bit of flexibility when you are trying to purchase a home in a Minnesota rural area.

Benefit #8 – You Won’t Need Private Mortgage Insurance - Last of all, you’ll find that another great benefit of going with one of these home loans for rural housing is that you don’t have to have Private Mortgage Insurance. Although you’ll find that you have a guarantee fee of 2% of the loan, this can be financed into the rest of the loan. If you are going with a refinance, then the guarantee cost is only going to be 0.5% instead of the 2%.

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Minnesota Reverse Mortgages – Understanding the Common Myths

Today you’ll find that reverse mortgages are quire popular and many seniors today find that this is one of the best senior housing options that are available. Although many people seem to think that they understand the way Minnesota reverse mortgages work, there are still many people who don’t totally understand how these mortgages work. There are a variety of myths out there when it comes to reverse home mortgages and it is important that people are able to get beyond the misinformation about these loans so that they understand how they work and can decide if these mortgages are a viable option for their needs. So, let’s take a look at some of the most common myths out there and the real truth about them that you need to know.

Common Myth #1 – You Don’t Have Enough Credit

Many people believe the common myth that they don’t have enough credit to get a reverse mortgage. However, the truth of the matter is that there are few qualifications that you have to go through when it comes to credit for a reverse home mortgage. When it comes to the HECM, there are only few requirements, which include not being delinquent on any federal obligations that you may have, such as a Federally Insured Student Loan , a Federally Insured SBA Loan, or a FHA loan. Even if you have had to declare a bankruptcy in the past, you will still be able to get a HECM reverse mortgage and you can qualify even if you are on a payment plan for bankruptcy if you have gone for a year of making your payment. People who are going through a foreclosure can even get the reverse mortgage that they want as well.

Common Myth #2 – The Lender Will Receive Your Home

Another very common myth that you may encounter while you are checking into reverse mortgages is the myth that the lender is going to get your home. You are the one that still owns your home, but the lender does have lien on it when you go with a Minnesota reverse mortgage. It is almost like a traditional mortgage, but instead of you paying payments on your home, you’ll find that the money that is there in the equity of your home is yours, which you can get in monthly payments, up front, or even as a line of credit. You won’t be making any monthly payments and then when you decide to sell your home, you don’t live in it any more, or you pass away, the loan will be due on the home. However, throughout the time that you have a home mortgage, you will still have the title to your home.

Common Myth #3 – Reverse Mortgages Affect Benefits From Social Security

There are some people that believe the myth that reverse mortgages affect benefits from social security, but this is another myth that is totally false. You will find that your social security cannot be affected by a reverse mortgage; however, it is important to understand that some need based programs may be affected if your reverse mortgage is handled the way that it should be. However, if you need the help from a reverse mortgage to stay in your home, you don’t have to worry about your benefits from social security or even your retirement benefits from other places being affected.

Common Myth #4 – I Have to Have My House Entirely Paid Off

The idea that you have to have your home entirely paid off is yet another myth out there that needs to be dispersed. Basically a reverse mortgage is designed to take the equity that is in your home and convert it into cash that you can have. As long as you have enough equity in your home, you may be able to get the reverse home mortgage that you want. This does not mean that your home has to be totally paid off for you to receive this benefit. In fact, there are actually many people who take out a reverse mortgage in order to pay off their mortgage so that they don’t have to worry about a payment on a monthly basis anymore.

Common Myth #5 – Use of the Money is Restricted

There are many people today that think that the money that they get from one of these reverse mortgages is going to be restricted as to the way that they can use it. This is totally false. You will find that there are no restrictions at all as to how you can use your money that you get from this mortgage, so you can use it in any way. However, it is definitely a wonderful idea to talk to a financial advisor that can help you to make the best possible financial decisions. Some people use the money that they get through this play to pay off their debt, help out their family, travel around the world, live a bit easier without having to worry about money, and even to pay medical expenses.

Common Myth #6 – Reverse Mortgages are Only for Needy Seniors

Last of all, another very common myth is that a Minnesota reverse mortgage is only for seniors that are needy. Although this is definitely a great idea for seniors that are in need, it is a great tool for anyone who owns a home when they are in their retirement years. It can help to enhance their life and today there are many people who are going with jumbo reverse mortgages that allow even people that have million dollar homes to get a reverse mortgage as well. Although FHA lending limits are below $400,000, there are other options available those who have more expensive homes as well. So, this is a wonderful option for people from all income brackets.

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MN Housing Values are Declining – Lenders Protect Themselves with Home Appraisals in Minnesota

There was a time when home values were going up; however, today this is not the case any more. You’ll find that even the value of twin cities real estate is going down, and this is causing things to change in the process of buying, selling, and refinancing a home. Today more and more lenders are beginning to work to protect themselves with home appraisals in the state of Minnesota and elsewhere around the country. This is a hard time for lenders and home owners alike, and it is no wonder that they are working to make sure that they are covered when they are lending money in any way. With MN housing values going very low, it is a great time to buy, but be aware that things may be a bit different for you when you try to get the loan for the property.

The Real Estate Market is Declining

Not only will you find that the real estate market is declining in the state of Minnesota, but this is a problem that is occurring around the entire country today. So many people are suddenly finding that their home value has gone down drastically and they are finding that selling their home at this time is hardly an option, since they will probably end up actually losing money on the sale. Because of this market that is declining, lenders are operating in ways that are different than ever before to make sure that they are not lending on properties that are worth less than the appraisal.

Appraisals Must Reflect Today’s Market

Today it is important that the appraisals that are done on homes are going to reflect today’s market. Home appraisals in Minnesota cannot be expected to reflect the home values of five years ago, although that may seem great. Lenders have to make sure that these appraisals actually reflect the current market. If they don’t, then there can be a problem later with the loan on the home. Lenders don’t want to end up actually lending out more money than the home is worth in today’s market, so any appraisal that is done should be sure to reflect the actual home value of the home today.

Lenders Start Going with In-House Appraisals to Protect Themselves

Because of all the changes in the market and the many foreclosures that have been occurring where lenders are losing huge amounts of money, many lenders are starting to go with in-house appraisals to help protect themselves. Too much money has been lost because they end up foreclosing on a home that is no longer even worth the amount of money that is owed on the home, which really is bad for lenders. So, they are now making sure that quality appraisals are done before they lend. While they may have taken the word of the appraisal done by a real estate company, now they often are going with their own home appraisals in Minnesota to make sure that they don’t lose on their properties.

Comparative Market Analysis

Many companies are also turning to comparative market analysis as well, which is very important when they are deciding on the home value of a specific home in a specific area. Basically a comparative market analysis actually helps to establish a price of value of the home by taking a look at various properties that are also in the same area. While lenders are still having appraisals done on homes as well, they are also using the comparative market analysis to help make the decisions on what the homes are really worth as well.

How This Affects You

So, wondering how all of this affects you. Well, you’ll find that just getting your own appraisal if you are going to purchase a home is not going to cut it anymore. You can expect lender to go ahead and do one of their own as well. Also, if you are trying to sell a home, this can affect you as well. If you are trying to get what the home was worth a few years ago out of the home, then you’ll have a problem. There is no way that these lenders are going to finance that amount of money. They will only finance the amount of money that the appraisal is today. So, this can definitely cause some interesting problems and challenges for those who are trying to work on selling a home in this market that is having a hard time lately.

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The Homeowner Affordability and Stability Plan

In the past few months, we have definitely seen the economy go down hill. The housing market has almost crashed and many people are looking for relief. With so many people having difficulty making home payments, the list of foreclosures is large and going up by the thousands every single day. Well, in order to try to help people dealing with this problem the Homeowner Affordability and Stability Plan has been created and will soon be started up. Of course many people are not even aware of all that this plan has to offer. So, here is a closer look at the plan, why it has been created, the components of the plan, how to know if you are eligible, and when it all is going to get started.

Why This Plan Has Been Created

So, you may be wondering why the Homeowner Affordability and Stability Plan has been created by the Obama Administration. Well, the plan has been developed to help the millions of families that will probably be facing foreclosure in the near future as well as people who are working hard to keep current on their mortgage. We are dealing with a real estate crisis as well as an economic crisis. In order to keep problems from going even lower as the foreclosures mount up, the administration hopes that this plan will help to stabilize the market and eventually start things back on an upward trend. The plan is supposed to help millions of people keep current on mortgage payments and to help prevent foreclosures from happening as well. It will work to help the housing market recover while helping workers pay on their mortgages to prevent a further crisis.

This plan comes with several different components. Here is a look at the three main components that make up this plan, how they work, and the goals of each component as well.

Component #1 – Offering Refinancing for Homeowners that are Responsible

The first component of the Homeowner Affordability and Stability Plan is to offer refinancing to homeowners that have proven to be responsible. This way they don’t continue to suffer because of falling home prices. Some people are having great difficulties dealing with their mortgage payments, since now their homes are worth far less than what they owe on their mortgage. This component of this plan will work to help those people refinance for lower rates and payments so they can continue to afford paying on their home without having to face foreclosure in the future.

Component #2 – Homeowner Stability Initiative ($75 Billion)

The second component of the Homeowner Affordability and Stability Plan is a homeowner stability initiative to the tune of $75 billion dollars. This will include a loan modification plan that will reach out to lenders to help them reduce payments and will also provide incentives to borrowers as well. This is expected to be helpful to 3-4 million people who own homes. Clear guidelines are laid out within the plan for the loan modifications that will take place as well. During bankruptcy people may be able to modify their home mortgages as well. It should also help out FHA loan programs and should provide more hope to those that own their own homes today.

Component #3 – Strengthening Freddie Mac and Fannie Mae

The third component of this plan is going to help strengthen the confidence in Freddie Mac and Fannie Mae, which should help to keep mortgage rates low. This component has several different steps to it. It will provide for responsible homeowners low cost refinancing if they are dealing with problems due to home prices that are falling. This will help them to reduce the payments that they are paying each month so they are more affordable. There is also money to help prevent foreclosures as well.

Who This Program Will Reach Out To

There are many people that this plan is attempting to reach out to. It is focusing on those who own homes and who are at risk of ending up in foreclosure. It provides loan modification to these people. It also reaches out to those who have not been missing their payments. For families that have a lot of debt, there are special provisions in this plan for them as long as they going into debt counseling that is HUD certified. It should provide protection to tax payers, will provide counseling as well as outreach, and will limit foreclosures in the future as well.

How to Know if You are Eligible

So, now that you know a bit more about the Homeowner Affordability and Stability plan, you may be wondering how you can know whether or not you are eligible for this plan. Usually you’ll need to have enough income to make a new payment and you’ll need to have a fairly good payment history as well. Of course not all of the eligibility details are out yet, and they will be announced when the program gets started.

When the Program Starts (March 4th)

Wondering when this program will get started so you can start benefiting? Well, you’ll find that the program is going to get started on March 4th, when you’ll be able to find out a whole lot more about it.

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Minnesota First Time Buyers Financing Options

Minnesota First time buyers financing options include- FHA, VA, conventional, special down payment assistance and bond funding

First time homebuyers in Minnesota may feel a little scared about whether or not they will be able to obtain the loan they need in order to secure the home of their dreams. Often times first time homebuyers are young couples who do not yet have a lot of work or credit history to look back upon. This makes them a risk according to many lenders, which can make it somewhat difficult for people to find the loans that they need to get the home they have been eyeing up for some time now. Since there are so many roadblocks up against first time homebuyers, one may think that they just do not stand a chance.

Luckily though there are a lot of program out there designed specifically with the first time homebuyers in mind. Such programs would include that of FHA, VA, special down payment assistance, bond funding, and conventional loans. These finance options are out there for the taking but you will want to take a special look at each one of them in order to make sure that you are going with the one that is right for you. Minnesota housing finance is something that scares a lot of people who have gone through the process before. As long as you are working with skilled professionals there should be no reason to be worried.

Those you are working with will know that you are a Minnesota first time homebuyer. You are looking at a vast majority of Twin cities homes and it is important to make sure that you are getting the best for your money. That is why some of the programs require the Minnesota home to pass their own criteria of home inspection qualifications. This is to protect the best interest of not just the lender but the customer as well. Since first time home buyers are new to the whole thing, they may need that little bit of extra guidance to make sure that everything goes smooth and that they are not ripped off.

The Minnesota housing finance that is the least popular for those who are first time homebuyers is that of the conventional loan. There are a lot of hoops to jump through and a lot of qualifications a buyer must meet in order to make the cut. Although conventional loans can offer great rates, that is not the only type of loan out there that can give you incredible rates. Since FHA and VA loans are designed to give people a break, they will generally offer incredible interest rates as this will help to make sure that the new buyers will have very little problems making their mortgage payments. In some cases, the interest rates given through an FHA or VA loan is better then what could be offered through a conventional loan.

If you are ready to buy a home but feel as though you do not have a lot of money for a down payment you could find help with that. Some people may not have any money at all for a down payment but that does not mean that there is not assistance for that out there. The government wants people to be homeowners and that is probably a big part of the reason as to why there are so many programs out there is help give down payment money. Generally, the down payment money is given from the program or the sellers of the property. It raises the principal balance by that amount of money. All it means is that you are paying the down payment money throughout the course of the loan instead of upfront, as this is the easiest way to look at it.

Bond money can also be an option if you qualify. There is a lot of money set aside out there for people who need help with down payment money. The key though is to make sure that you are really looking over all of your options in order to make sure that you are making the right decision for you and your family. There is nothing wrong with wanting to come up with the down payment money on your own, but if there is assistance out there for a Minnesota first time homebuyer then you should look into it. You could always use the money you have set aside for moving expenses or to do some minor repairs to the home once it is yours.

Make sure that you contact a realtor as soon as possible in order to review all of your options. As long as you are going with an experienced realtor, he or she should have no problem walking you through the process and providing you with all of the money you would need to check into a FHA or VA loan. Even if you qualify for the first one you look into, make sure that you are exploring all of your options. By not doing so, you could very well find yourself wasting hundreds, or even thousands, of dollars that you could have otherwise saved and put towards something else.

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