The Talon Group, a local escrow and title company, addresses which utilities are required to be paid at closing.
Income Limits and Property Qualifications for USDA Rural Loans
May 10, 2011 by Leave a Comment
NOTE: USDA INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.
USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not. To qualify, families must be without "adequate housing" (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines). I've written more details about USDA home loans on this earlier post.
Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines. This is separate from income considered for "debt-to-income" ratios. USDA loans allow incomes up to 115% of the median income for the area. Income limits vary on household size from 1-4 person or 5-8 person.
As of the publishing of this article, in Washington, the income limits by county are:
- King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
- Island County: 1-4 Person $89,550 | 5-8 Person $118,200
- Clark, Kitsap and Thurston Counties: 1-4 Person $82,650 | 5-8 Person $109,100
- Pierce County: 1-4 Person $80,050 | 5-8 Person $105,650
- All other Washington counties: 1-4 Person $74,050 | 5-8 Person $97,750
You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the "guaranteed" option. Income limits can and do change. You can also use USDA's income eligibility calculator which will factor in deductions to income. You're looking for the "guaranteed" results and not "direct".
Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they're on the mortgage. Incomes of children over 18 who working AND who are full time students are not factored.
Once you've determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don't have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage. Using the USDA site, under "Property Eligibility" click "Single Family Dwelling". From there you can either enter a specific address or click on the map to narrow down your search.
Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they'll consider for financing on their offers.
I'm pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I'm happy to help!
Happy Mothers Day
May 8, 2011 by Leave a Comment
I love this photo of Mom keeping us girls together on a visit to Disneyland many years ago.
Happy Mother's Day!
Pottery Sale Today at Moshier Art Center in Burien
May 7, 2011 by Leave a Comment
Many delightful and crafty creations of pottery are on sale today at Moshier Art Center in Burien.
I believe the sale ends at 3:00 and I'm sorry to say the photos I took inside the center came out blurry!
I'm hoping that my Mom (one of the artist aka "potters") has some photos that I can update this post with.
Here's more info on the B-Town Blog. Moshier Art Center is located on the east side of 1st Avenue at 430 South 156th, Burien (right by Moshier Field).
Their next sale is scheduled for December 3, 2011… just in time for the holidays!
USDA Zero Down Financing Available in King, Pierce, Kitsap and Snohomish Counties
May 6, 2011 by 4 Comments
12/10/11 EDITORS NOTE: Like many mortgage programs, some of the guidelines and features to USDA loans have changed since the original publishing of this post. This is a good thing to keep in mind whenever researching mortgages on-line.
USDA Guaranteed Rural Housing loans are administered through the USDA to provide financing in areas that are designated as “rural” for families under certain income limits. Qualified borrowers can purchase a home in a USDA approved area with 100% financing and if the appraised value is higher than the sales price, the home buyer can actually finance their closing costs too (USDA will consider the higher of the two). It’s a pretty sweet deal for the right home buyer.
Program highlights:
- 103.5% financing based on the appraised value
- 30 year fixed rates with government pricing
- No monthly mortgage insurance. There is a one-time guarantee fee (similar to a VA funding fee or FHA upfront MIP) of 3.5% which is financed into the new loan.
- No down payment or first time home buyer requirements
- 29/41 debt-to-income ratios (exceptions available with compensating factors)
- Closing costs may be financed into the new USDA mortgage (based on appraised value).
- Seller contributions allowed for all closing costs and prepaids
- Gifts from disinterested third parties allowed
- Primary residence (owner occupied) only
- Home buyer may not own other adequate housing
- Single family dwellings or HUD approved condos
- Subject to household income limits. Currently (5/6/11) in King County and Snohomish County, the income limits for a 1-4 person household is $92,600 and 5-8 person household is $122,250.
- No loan limits (income limits factored with debt-to-income ratios will create a loan limit for each specific scenario).
- Escrow hold backs for repairs allowed up to the lower of 10% of the loan amount or $10,000.
As I write this post, a majority of Washington State qualifies for this government backed program, including Bonney Lake/Lake Tapps, Enumclaw, parts of Maple Valley, North Bend, Duvall, Bainbridge Island, Vashon Island and Gig Harbor. Click here to see if a specific property is eligible.
EDITORS NOTE: Rates posted below have been EXPIRED for YEARS!!! Please click here for a current mortgage interest rate quote.
Let’s compare FHA and USDA financing to would look like for a qualified home in Fall City with a sales price of $350,000 utilizing a 30 year fixed rate with 720 mid-credit scores and with the seller paying closing costs and prepaids:
USDA
- Current rate: 4.375% (APR 4.820)
- Mortgage payment (excluding property taxes & home owners insurance): $1,808.66
- Down payment required: $0
FHA
- Current rate: 4.250% (APR 5.189)
- Mortgage payment (excluding property taxes & home owners insurance): $1,999.34
- Down payment required: 3.5% = $12,250 (may be gifted by family member)
The USDA mortgage payment payment is $190.68 less per month and cash needed for down payment is $12,250 less than the FHA scenario.
If you are considering buying a home located in a rural community that qualifies, USDA financing could be a prime choice!
If you would like more information about buying or refinancing your home located anywhere in Washington, please contact me. I’m happy to help!
NOTE: areas below that are not orange are currently eligible for USDA financing!
Student Loans: Subprime Financing of the Future?
May 4, 2011 by Leave a Comment
My son is getting ready to start college this fall and although I've done my best to plan and save to help out for his education, I'm not able to foot the entire cost. Like many parents, the 529 I've been religiously plunking away at was butchered when our markets crashed… I've continued plunking every month to this account but it's really a drop in the bucket. I'm very proud of him and he has earned a nice academic scholarship that will help go towards the expense. He's going to have to take out some student loans and it's something I'm not thrilled about.
I recently watched a show on CNBC about the student loan crisis and it has me very very concerned. It's appalling how much it smacks of the subprime crisis. Some of the stories on the show revealed how predatory some of the student loan companies and some colleges can be when they have a young student wanting "the American dream" and I'm not talking about home ownership, I'm referring to a college education. Many justify the huge expense because payments are deferred and they believe they'll graduate with employers knocking down their doors. Some students use their student loan money to buy pizza, beer…even go on a shoe shopping spree. I understand that students need money for food, but should this be financed? If they are receiving "student loan money" for essential food, should they only be allowed to use credits on campus? I'm rambling….
I plan on sharing some of my personal thoughts, experiences and opinions as I venture down this road with my son. I'll also address how student loans can impact borrowers when they on obtaining a mortgage: first time home buyers.
Any tips from parents of college grads?
25 Years Ago Today
May 1, 2011 by Leave a Comment
Hard to believe that 25 years ago, I began my career in real estate at Safeco Title Insurance in Seattle. It was a fluke that I wound up in the title insurance industry. Unsure of what I wanted to do for my career and needing an income, I went to the local Business Careers in Renton and they found my new job at Safeco Title (which was merged with Chicago Title Insurance Company). My first day was May 1, 1986. Don't worry, I'm not going to bore you with the 14 year history of my career in title insurance and escrow industry or my eleven years as a mortgage originator at Mortgage Master Service Corporation. This is just a little sentimental moment reflecting back on all of my years I feel fortunate to have been a part of such a fascinating industry.
I'm looking forward to my next 25 years in mortgage and real estate! And yes, that really is the former coach of the Seattle Seahawks, Chuck Knox, and those are real Seahawks uniforms.
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