Ams Rural Housing

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USDA $0 Down Home Loan

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Ams Rural Housing

  1. 1. AMS Rural Housing We are financing 102% of the American dream!
  2. 2. AMS Rural Housing <ul><li>Justin Vaught </li></ul><ul><li>Sr. Mortgage Banker </li></ul><ul><li>[email_address] </li></ul><ul><li>(480)299-8565 </li></ul><ul><li>www.JustinVaught.net </li></ul>
  3. 3. AMS Rural Housing <ul><li>The AMS Rural Housing program is dedicated to the preservation of rural communities. We partner with Rural Development, a division of the US Department of Agriculture, to help thousands of mortgage originators throughout the country put their customers into a Guaranteed Rural Housing (GRH) loan. </li></ul><ul><li>This program, administered through the US Department of Agriculture, features 102% financing for qualified moderate-income families looking to purchase single-family homes. For borrowers with little or no cash, it’s ideal since they need no down payment and no funds for closing. </li></ul>
  4. 4. AMS Rural Housing <ul><li>Guaranteed Rural Housing (GRH) </li></ul><ul><li>Guaranteed Rural Housing – </li></ul><ul><li>New Construction Pilot </li></ul>
  5. 5. GRH Program Benefits <ul><li>No Money, No Problem </li></ul><ul><li>Borrow more and pay less </li></ul><ul><li>15 Basic Rules </li></ul><ul><li>Rurally Nice Home </li></ul>
  6. 6. Borrowers Cash to Close <ul><li>Average Cash to Close $158.75 </li></ul><ul><li>Loans with $0 Cash to Close 60% </li></ul>
  7. 7. How do we do that? <ul><li>No Down payment </li></ul><ul><li>Finance Closing Costs and Prepaids </li></ul><ul><li>Unlimited Seller Contributions </li></ul><ul><li>Unrestricted Gift Funds </li></ul>
  8. 8. What closing costs Can be financed? <ul><li>Lender fees </li></ul><ul><li>Escrows and first year insurance </li></ul><ul><li>Third party fees </li></ul>
  9. 9. How much can be financed? <ul><li>100% LTV of Appraised Value </li></ul><ul><li>Appraisal $150,000 </li></ul><ul><li>Purchase Price $ 145,000 </li></ul><ul><li>Closing costs/pre-paids $5,000 </li></ul>
  10. 10. Borrow More Pay Less Guaranteed! <ul><li>Guarantee Fee = </li></ul><ul><li>Loan amount x 2.0% </li></ul>
  11. 11. Guaranteed to Pay Less! <ul><li>One time, up-front at closing </li></ul><ul><li>May be financed into loan amount </li></ul><ul><li>** Above the Appraised Value ** </li></ul><ul><li>No monthly MI premium </li></ul>
  12. 12. FHA vs. GRH Payment Comparison <ul><li> </li></ul><ul><li>FHA GRH </li></ul><ul><li>Purchase 98,000 98,000 </li></ul><ul><li>Loan Amount 97,132 100,000 </li></ul><ul><li>P&I 679.16 699.21 </li></ul><ul><li>MIP 39.87 0.00 </li></ul><ul><li>Total 719.03 699.21 </li></ul>
  13. 13. GRH Program Benefits <ul><li>15 Basic Rules </li></ul>
  14. 14. Rules 1-4 Borrower Eligibility <ul><li>Make enough, but not too much </li></ul><ul><li>http://eligibility.sc.egov.usda.gov </li></ul><ul><li>2) House is in the right place </li></ul><ul><li>http://eligibility.sc.egov.usda.gov </li></ul><ul><li>3) No other real estate owned </li></ul><ul><li>4) Pay their own way </li></ul>
  15. 15. Rules 5-7 Income <ul><li>5) Full documentation, or ALT Doc </li></ul><ul><li>6) 24-month employment history </li></ul><ul><li>7) 12 months ancillary income </li></ul><ul><ul><ul><ul><li>-Bonus/Overtime/Part-time </li></ul></ul></ul></ul><ul><ul><ul><ul><li>-SSI </li></ul></ul></ul></ul><ul><ul><ul><ul><li>-Disability </li></ul></ul></ul></ul>
  16. 16. Rule 8 - Ratios <ul><li>29 and 41% </li></ul><ul><li> - Limited compensating factors </li></ul><ul><li> - All debts > 6 months counted </li></ul>
  17. 17. 2/1 Buy Down <ul><li>Qualify at the start rate </li></ul><ul><li>Must have compensating factors </li></ul><ul><ul><li>Similar housing payment </li></ul></ul><ul><ul><li>History of savings </li></ul></ul><ul><ul><li>Post high school education or technical training </li></ul></ul><ul><ul><li>Verifiable history of salary increases </li></ul></ul><ul><ul><li>Debt to be paid off between 7 and 12 months </li></ul></ul><ul><ul><li>Lender or Seller paid </li></ul></ul>
  18. 18. Rule 9 Credit Scores <ul><li>Tri-merged or Full RMCR </li></ul><ul><li>620 is the magic score! </li></ul><ul><li>Middle of 3, or lower or 2 </li></ul>
  19. 19. Unacceptable Credit History Indicators <ul><li>More than 1/30 in last 12 months </li></ul><ul><li>Bankruptcies/Foreclosures in last 36 months </li></ul><ul><li>Outstanding tax liens or government debts </li></ul><ul><li>Outstanding judgments in last 12 months </li></ul>
  20. 20. Unacceptable Credit History Indicators <ul><li>Collections opened in last 12 months </li></ul><ul><li>Unpaid collections w/o repayment plan </li></ul><ul><li>Debts written off in last 36 months </li></ul><ul><li>Clouded CAIVR’s number </li></ul>
  21. 21. Mitigating Circumstances <ul><li>Circumstances were of temporary nature </li></ul><ul><li>Beyond the applicants’ control </li></ul><ul><li>Circumstances have been removed </li></ul>
  22. 22. Mitigating Circumstances- Examples <ul><li>Loss of job </li></ul><ul><li>Delay or reduction in government benefits </li></ul><ul><li>Increased expenses, illness or death </li></ul><ul><li>Dispute over defective goods or services </li></ul>
  23. 23. Things that make the underwriters really mad! <ul><li>Late pays after bankruptcy </li></ul><ul><li>Bad credit with a bad letter (or, no letter) </li></ul><ul><li>Never had a housing payment, already have credit problems </li></ul>
  24. 24. Rules 10-12 - Credit <ul><li>Explain and support adverse credit </li></ul><ul><li>Housing – get 24, verify 12 </li></ul><ul><li>12) First time homebuyers, students </li></ul>
  25. 25. Rules 13-15 Cash to Close <ul><li>Verify any cash to close > 2% or </li></ul><ul><li>$1,000 whichever is lower </li></ul><ul><li>14) Submit gift documentation </li></ul><ul><li>15) Provide terms of unsecured loan </li></ul>
  26. 26. Rurally “not so” nice home
  27. 27. Rurally “not so” nice home
  28. 28. Rurally “not so” nice home
  29. 29. Rurally “not so” nice home
  30. 30. Rurally Nice House
  31. 31. Rurally Nice House
  32. 32. Rurally Nice House
  33. 33. Escrow Holdback for Repairs <ul><li>Determine as-improved appraised value </li></ul><ul><li>Obtain itemized bid from a licensed contractor </li></ul><ul><li>Itemize repairs on 1003 and 1980-21 </li></ul><ul><li>RD approvals </li></ul><ul><li>Set up escrow at closing </li></ul><ul><li>Complete repairs and inspect </li></ul><ul><li>(Minimum Repair Amount = $250, Max = lower of 10% or 10K, and must be completed within 30 days. All lender premiums are held in escrow until the work is completed. Chase Administration Fee of $150.00) </li></ul>

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