How can a widowed stay-at-home mom obtain a mortgage?

One Comment

1. W. E March 15, 2013

   HI – If her middle credit score is 580 + than yes she can obtain a homemortgage. There are some other companies that do underwrite if the credit score is 560 + But the norm is 580+. This is if she is needing 100 percent financing.

   A 100 percent loan – is not totally out of your reach – There are FHA programs, payment assistant programs to help you. Look at your middle credit score, if you do not know your credit scores – have your lender tell you, or pull your credit from the 3 credit reporting agencies – BUT the person you are working with should tell YOU.

   Lenders look at the middle score to qualify a person – With a 580 or higher you can get a 100 percent loan. If your credit is low, than you will be going SUB-Prime, and any amount over 80 percent does not have MI – There are alot of companies I underwrite for that does NOT charge MI – normally the rate is slightly higher. Say you got qualified and your rate was 8.50 at par (Par, means that is what rate the lender quotes you, with no addon’s to the rate for the lender to make pts on the back – some Lo”s add pts on the rate to make their money – instead of charging it up front). The 8.50 does not have MI included. This is a estimate only – ok –

   If you go with a FHA loan, FHA has MI included. (With a 580 + you will be going sub-prime the rates are higher by about a 1 percent, but you have no MI. (MI is mortgage insurance in case you default on the loan, it is a way for lenders to have added insurance. It is not the same as Home Owners insurance, ok)

   Go to these websites:
   http://www.nehemiahcorp.org/

   http://www.fanniemaefoundation.org/…

   http://www.fha-home-loans.com/

   http://www.freddiemac.com/

   When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now – (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 – This is just a estimate – ok –

   It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help – especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

   Talk with a broker, a broker underwrites for many company’s (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a “hard” pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

   Try to find someone (broker) that will pull your credit one time, and submit your loan application to company’s that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only – not the final – but it does help you figure things out.

   Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency’s and other useful information. This is not an advertisement – just helpful information for you…

   http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

   Welcome to the USDA Income and Property Eligibility Site
   2. This site is used to determine eligibility for certain USDA home loan programs. In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be located in an eligible rural area as defined by USDA.
   To learn more about a USDA home loan program, click on the Loan Program Basics link on the left side of this screen and select one of USDA’s home loan programs.
   To determine if a property is located in an eligible rural area, click on the Property Eligibility link on the left side of the screen and select a Rural Development program. When you select a Rural Development program, you will be directed to the appropriate property eligibility screen for the Rural Development loan program you selected.
   To determine income eligibility of an applicant/household, click on the Income Eligibility link on the left side of the screen and select a Rural Development program. When you select a Rural Development program, you will be directed to the appropriate income eligibility screen for the Rural Development loan program you selected.
   To find out how to apply for a Rural Development Loan, click on the Contact Us link on the left side of the screen and then select a Rural Development Loan program.

   Rural Housing Direct Loans are loans that are directly funded by the Government. These loans are available for low- and very low-income households to obtain homeownership. Applicants may obtain 100% financing to purchase an existing dwelling, purchase a site and construct a dwelling, or purchase newly constructed dwellings located in rural areas. Mortgage payments are based on the household’s adjusted income. These loans are commonly referred to as Section 502 Direct Loans.
   3. Purpose: Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.
   Eligibility: Applicants for direct loans from HCFP must have very low or low incomes. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to review area income limits for this program. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically within 22 to 26 percent of an applicant’s income. However, payment subsidy is available to applicants to enhance repayment ability. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories. Elderly and disabled persons applying for the program may have incomes up to 80 percent of area median income (AMI).
   Terms: Loans are for up to 33 years (38 for those with incomes below 60 percent of AMI and who cannot afford 33-year terms). The term is 30 years for manufactured homes. The promissory note interest rate is set by HCFP based on the Government’s cost of money. However, that interest rate is modified by payment assistance subsidy.
   Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Modest housing is property that is considered modest for the area, does not have market value in excess of the applicable area loan limit, and does not have certain prohibited features. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards.
   Approval: Rural Development officials should make a decision within 30 days of the Rural Development office’s receipt of the application.
   Basic Instruction: 7 CFR Part 3550 and HB-1-3550

   Section 502 Guaranteed Loan Program:
   1. Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.
   Eligibility:
   Applicants for loans may have an income of up to 115% of the median income for the area. Area income limits for this program are here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.
   Approved lenders under the Single Family Housing Guaranteed Loan program include:
   Any State housing agency;
   Lenders approved by:
   HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities;
   the U.S. Veterans Administration as a qualified mortgagee;
   Fannie Mae for participation in family mortgage loans;
   Freddie Mac for participation in family mortgage loans;
   Any FCS (Farm Credit System) institution with direct lending authority;
   Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.
   Terms: Loans are for 30 years. The promissory note interest rate is set by the lender.
   There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.
   Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.
   Approval: Rural Development officials have the authority to approve most Section 502 loan guarantee requests.
   Basic Instruction:7 CFR Part 1980.