Why?

Because USDA loans in California have no down payment requirement.

And no mortgage insurance.

Which means your monthly payment will be lower with a USDA loan than it will be with a FHA loan.

Here is a simple example of a comparison between an FHA loan and a USDA loan here in California:

A USDA loan in California would save you almost $5000 on what would be required for your down payment and approximately $30 a month in payments.

Purchase Price: $135,000.00

FHA

• Minimum Down Payment Required (3.5%) = $4725
• Estimated Monthly Payment = $941.30 **
• Interest Rate = 5.25%
• Annual Percentage Rate = 6.044%
• Term = 30 years

USDA

• Minimum Down Payment Required (0%) = $0.00
• Estimated Monthly Payment = $910.69 **
• Interest Rate = 5.25%
• Annual Percentage Rate = 5.730%
• Term = 30 years

** estimated monthly payment includes an estimated $150 for taxes and insurance

The USDA loan program here in California is designed to help homeowners who live in rural areas – or at least areas that are designated rural areas.  You might be surprised to learn just how many areas are eligible for USDA financing that are not actually in the middle of nowhere.  In fact, it is on the outskirts of many California towns that the most affordable homes are – and many of these homes are eligible for USDA financing.

USDA Property Eligibility and Income Information

California USDA Loan Program Highlights:

• No monthly mortgage insurance, 1-time guarantee fee of 2% that you finance into the loan.
• 102% Financing based on appraised value, if appraised value exceeds sales price, borrower can finance closing costs and repairs
• 30 Year fixed term
• No minimum cash contribution requirement
• No asset requirements.
• Borrowing of unsecured funds for closing allowed (with minimum credit score requirement).
• No First Time Homebuyer restrictions.
• No maximum on seller concessions and 100% gifting is allowed – You can purchase a home with no money of your own into the transaction.
• Previous housing payment is not required.
• Declining markets do not affect LTV.

If you are ready to save a lot of money, contact us (we are California USDA home loan experts) with questions and for more information today.

Finding the right home to purchase is the most exciting part of a real estate purchase, but most people do not realize that some of the most critical aspects of the entire process are the things you don’t do. If you want to conclude the deal successfully, it’s important to know what not to do before purchasing a home.

Avoid making any large purchases

For at least three to six months prior to your planned home purchase, avoid making any large purchases of any kind. This may sound extreme, but potential lenders are going to look at your spending habits and especially at the amount of debt you have already incurred; the more debt you owe, the less they will be willing to lend you for your home purchase.

A really good example is buying a car. You may find a great deal on exactly the model you want, and of course the dealer is going to be happy to help you finance it even if it means an extended loan term, a higher interest rate, or the like. The problem arises when you go to a potential mortgage lender looking for a home loan and they take a look at your income, your cash available, and your debt. Suddenly that car payment looms quite large because it increases your debt to income ratio and reduces the amount of mortgage loan you’re qualified to get.

The same advice holds true for all kinds of other major purchases, such as:

• Furniture
• Electronics
• Appliances
• Jewellery
• Vacations

Always put your home buying plans first, and avoid making large purchases that could derail those plans unexpectedly.

Keep your money safe and unmoved

Potential mortgage lenders will look at all aspects of your finances, and we do mean all aspects. This includes detailed examination of your entire financial situation, especially your source of funding for the down payment and the closing costs. Your checking accounts, savings accounts, certificates of deposit, mutual funds, retirement accounts, and the like are all of interest to your lender and you will be asked to provide at least two to three months worth of statements showing the amounts of money and where they are located.

If you have changed banks or moved money around between or among accounts during the previous two to three months, this can seriously complicate the process of getting the lender to approve your home loan. Why? It might seem tedious and even frustrating, but the lender has a responsibility to fully understand your finances and especially your sources of liquid assets. Anytime you move money around, such as between accounts, from one bank to another, or the like, the lender is going to want detailed receipts, cancelled checks, and everything else necessary to create an accurate paper trail of how, when, and where your money has moved around.

So if you want to make things easier on yourself (and on your loan officer), don’t move money around unnecessarily in the months prior to applying for a home loan.

About the Author:
I was born and raised in Central Toronto, spending my whole life in the neighborhoods that I now work, and in the Toronto Real Estate industry. I understand all the nuances of Toronto’s various communities & what Toronto real estate agents have to deal with.

I have dedicated my education to negotiating, marketing, business development and staying ahead of the curve with technology. I have attended international conferences, understand major agencies like Johnston and Daniel, all of which has helped me learn how I can provide more efficient, effective and thorough service.

From the San Diego Union Tribune:

Ed Smith Jr., president of the California Mortgage Brokers Association, considers himself an optimist. But even as he mingles with convention-goers in Las Vegas, he’s not jumping on any bandwagon predicting an imminent turn in the housing market.

Smith, a 26-year industry veteran who operates a mortgage referral business in Spring Valley, estimates that it could take at least until the dawn of 2012 for the market to settle. In the meantime, the mortgage industry continues to go through tough times.

Independent brokers, who once held an estimated 60 percent to 70 percent of the mortgage market in California, now represent only 15 percent of the market. The nation’s three top banks — Citigroup, Wells Fargo and Bank of America — dominate more than 50 percent of the market, Smith said.

“It’s not good for the consumers if there’s only three choices of lenders,” he said. “It doesn’t give them a lot of latitude to shop around for the best deal.”

In the meantime, Smith said, one of the big topics of discussion among brokers is whether to merge with mortgage banking operations so that they can build stronger competition to the big banks.

When asked for a timeframe on when he sees the housing market turning:

QUESTION: One of the major questions these days is whether the housing market may be approaching a bottom, now that the economy appears to be stabilizing. What do you think?

ANSWER: I usually try to be as optimistic as possible, but I think it could take another 18 to 24 months for the real estate market to settle. There’s a huge “shadow inventory” out there of homes that have not yet been foreclosed upon. Some people say the shadow inventory may total as many as 7 million homes. Those homes are being slowly dribbled back into the market, but if it comes onto the market much faster, it will destabilize the market much faster than it is right now.

In San Diego, I’m not sure how long it will take for property values to get back to the place they were. And that’s not bad, because at the peak of the market, property values were so out of whack that the average person couldn’t pay for a loan. At the top of the market, I wouldn’t have even bought my own house if it was on the market.

Officially, FHA doesn’t have a minimum credit score requirement.

But just because FHA doesn’t have a minimum credit score requirement, doesn’t mean that you can get an FHA loan with a bad credit score — because the key is that many (or all) lenders now require a minimum credit score before they will issue an FHA insured loan to you.

And in general – the lenders are generally moving to a 640 mid credit score (you have 3) before they will loan you money (assuming you meet the other criteria). True, some are still at 62o, but the trend has been for more and more lenders to move toward the 640 minimum threshold lately.

And for the last couple of years, as guidelines have been tightening – the minimum credit score requirement for most lenders has went from no credit score requirement to 580 to 620 and now 640.

Will it continue to rise?

I doubt it — but maybe. 3 years ago, anyone with a 680 or higher credit score was considered an “A paper borrower” and maybe it will go that high — but I just don’t see it happening.

But I have been wrong – which means if you have a 642 credit score right now and are considering refinancing or buying a house with an FHA insured loan – it might be wise to act now rather than wait.

Because it is possible that your 642 credit score won’t be good enough in the near future.

One in seven U.S. home loans was past due or in foreclosure as of Sept. 30, putting that quarterly delinquency measure at its highest level since 1972, when the Mortgage Bankers Assn. began reporting it. At the beginning of this year, 1 in 10 loans was past due or in foreclosure.

According to the MBA Chief Economist Jay Brinkman, this foreclosure cycle is different due to the dramatic downturn in real estate prices.

Overall, 14.41% of all U.S. home loans were in foreclosure or at least 30 days past due at the end of the third quarter — 1 in 7 — and up from 13.16% in the second quarter.

As it has for some time, the group’s report on delinquencies blamed job losses, not tricky adjustable-rate loans, for causing most of the recent pain.

The mortgage group’s chief economist, Jay Brinkmann, said he expected the delinquencies to keep rising until the unemployment rate tops out in the first or second quarter of next year.

Normally, foreclosures would continue rising for two quarters past the peak in delinquencies, he said. However, given the extreme decline in home prices, Brinkmann predicted the foreclosure rate would continue to rise longer than usual past the peak in delinquencies.

Lastly, not all states are impacted the same – many of the nation’s foreclosures can be found in just 4 states:

Four Sun Belt states where the housing bubble inflated the most and exotic lending was most prevalent — California, Florida, Nevada and Arizona — accounted for 43% of the foreclosures started in the third quarter.

A few highlights from the video:

NOD’s were down 7.5% from September – BUT – they are pretty much within a range.

NOD’s up 103% year over year.

Bank owned inventories are up 5.6%.

Properties that are being bought by 3rd parties are up 16% since September – and is up 381% year over year.

With better information available to investors such as Foreclosure Radar, it is becoming less risky to buy on the courthouse steps.

Two highlights from clip:

“We need a two year moratorium at least for homes that are under $200,000…”

“You bailed out Wall Street, how about helping out Main Street…”

$8,000 First-time Home Buyer Tax Credit Details

• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit Details

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

What all this means is that if you are thinking of buying a new home, now is the time – you still have a few months to pick out a house and close on it and still get the tax credit.

So hurry up and start shopping now before it is too late!

Some people have cut down on the number of times that they take the family out to dinner. Some are choosing to have a “staycation” rather than a vacation. Some are taking a second job.

But one of the best ways to save money is often overlooked because it is just something that people don’t think about – finding the cheapest insurance quotes that they can on both their home and car insurance policies.

Insurance is one of the biggest monthly expenses that many people don’t think about – yet it isn’t uncommon for a family to spend around the same amount as their monthly car payment on insurance costs – without health insurance costs considered.

So when you are thinking about saving money, and you are thinking about what things  you may be able to save money on – think “insurance”. You might be surprised at how much a little savings with insurance costs can help you make your monthly obligations without you even realizing that you have had to make a sacrifice. The way that the insurance companies are competing for your business in today’s world, you almost can’t afford not to shop for the best deals in insurance.

Giving interesting names to the generations of the 20th century is a funny habit of social scientists.  The members of a certain generation have been influenced by all the different political and cultural aspects of their time period which gives us the dating.  The baby boom generation, that are people born from mid 40’s till late 50’s, was the most important buying force, or at least until just a few years ago. But now most of these people have retired or are preparing for it. 

At the same time, the children of baby boomers known as Generation X, now in their 30’s or 40’s, have finally acquired the financial ability to purchase recreational property at almost any price.
You will see this change mainly when we compare the results of the first half of this year with the ones from last year.  74 percent of markets surveyed this year reported a trend towards thirty-something buyers buying a wide selection of recreational property products ranging from waterfront cottages to resort condos.  This compares with just 40 percent in 2008.  From January till April 2009, the number of sold recreational properties decreased – at least two thirds of all surveyed markets showed such trend.  However, a lot of major centers are now reporting an increase in buyer activity since the cottage season began.

Highlights of the report:

While the overall supply seems to be reasonable in most markets, the most tight inventory levels are what concerns entry-level products (18 percent of markets report this), as most of the buyer activity was taking place in the lower-end.  Older cottage owners, a lot of whom own their properties outright, are selling to younger purchasers with families.  As the Canadian dollar is now stronger, some American cottage owners in Canada are trying to take advantage of this situation to cash out of the market.  American purchasers have mostly fallen off the radar, with some exceptions. One of the known factors in the marketplace is pent-up demand. For example some buyers who had intended to buy recreational properties in the second half of 2008 decided to defer the transaction till the next year. Older Canadians continue to seek secondary houses in warmer parts of the U.S. such as Florida, Arizona, California, and Nevada. Purchasers from the X Generation are now usually prepared to spend their hard-earned dollars on recreational properties. But at the end of the whole transaction, they want to be sure they’ve gotten the best possible result out of it.