Maven Musings

The Low-Down on the $0 Downpayment USDA Home Loan

3/16/2019


If you’re like me, when someone mentions the United States Department of Agriculture (USDA), I immediately think about farming, food inspections and national nutritional guidelines.

It wasn’t until I became immersed in real estate that I learned about the USDA Loan program - a mortgage program that many Duval, Clay and St. Johns County residents are eligible for.  Managed by the Department’s Office of Rural Administration, eligible suburban and rural home buyers can qualify for a 100 percent, no-money-down mortgage backed by the USDA.

How so, you ask? Well, the USDA loan program was made possible by the 1990 U.S. Farm Bill, which established the Rural Development Administration (RDA) to administer programs related to rural and small community development. Currently, the RDA has a $216 billion portfolio of loans and is on track to administer $38 billion in loans, loan guarantees and grants through the fiscal year to support essential services such as housing, economic development, health care, first responder services and equipment, and water, electric and communications infrastructure.

USDA loans are similar to the more-widely know FHA loans in that they are issued by lending institutions and “guaranteed” by a government agency. Additionally, USDA loans are:

  • Fixed-interest loans
  • Have no prepayment penalties
  • Discounted mortgage rates as compared to other low-downpayment loans; the discounted rate is what allows the agency to provide the 100 percent financing option
  • First-time home buyers and repeat home buyers are both eligible

As long as the property address is located in an approved USDA zone and loan applicants meet certain income requirements, they are eligible for the loan program. Income guidelines vary depending on the state and county, but for the greater-Jacksonville and surrounding areas, household income of 4 people cannot exceed $82,400 and for households of 5 people, the income limit is $109,150.

Here’s a link to the official site: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do, where you can learn more about the program. And certainly, give me a call and I’m happy to answer your questions.

- Mabel Perez, Real Estate Maven


Image may contain: cloud, sky, grass, outdoor and nature

(Photo credit: Freestocks.org @ Pexels)





The Hidden Costs of New Construction

3/9/2019


Florida’s real estate market is pretty unique.  Unlike other states where home resales dominate the market, locals know that new construction homes seem to pop up on a regular basis.

In Jacksonville and St. Johns County, Builders are offering a plethora of incentives, including closing cost assistance, a bundle of upgrades at “no-charge”, and enticing Buyers with the “latest and greatest” upgrades and floor plan options.  Currently, it’s the white kitchen cabinets, quartz countertops and wood-look tile that’s trending.

Hey, I get it it!  I visit new homes regularly and there’s something about the shininess of a new home and the thrill of going to a design center, sorting through swatches, and choosing your flooring, paint colors, and more.  And that’s what this blog topic is really about.  This heavy new-construction environment tends to put existing homes, also know as “resales” at a disadvantage.  That is, until you actually think about the hidden costs of new construction.

As you view new construction homes, keep in mind that the model homes you tour will typically have $50,000-$100,000 worth of upgrades from the “base price” of that particular floor plan.  Those wood-look tiles or real wood floors aren’t included, and cabinets with crown moulding and beautiful lighting fixtures aren’t standard.

Additionally, after you purchase a new construction home, keep in mind that windows treatments and/or blind costs will add up quickly, and you will most likely have to install a rain gutter system, and a fence for your yard.  Just last year, we priced a fence for our own yard - and it was $6,500 and that was after a neighbor fenced their own yard! And gutters for our new construction home were $2,000!  In contrast, most home resales would have all these items already affixed to the home and included in the sales price.

So I leave you with this: When shopping for a new home, I encourage you to explore all your options and keep an open mind.  When you’re comparing new construction to a home resale - always remember to keep a tally of those hidden costs you’ll have to incur with new construction.  And I’m not saying that to knock new construction.  There are certainly pros and cons to each scenario.  I’m offering this advice so you have a full picture of what a new construction home will cost you.

- Mabel Perez, Real Estate Maven

No photo description available.

(Photo credit: Pixabay @ Pexels)




The Elusive and Often Misunderstood Down Payment

3/2/2019


“No, you do not need a 20 percent down payment in order to purchase a home.”

Every time I share those words with prospective homebuyers, their reactions are a mixture of disbelief and curiosity.  Let’s face it: Saving a $40,000 down payment for a $200,000 home purchase is pretty hard, and for first-time homebuyers, especially Millennials, that entered the workforce during the recession, it really sounds like a pipe dream.  Hey, I know how it feels firsthand.  More on that later…

According to the 2018 Borrower Insight Survey from Ellie Mae, a whopping 48.6 percent of renters think they need to put 20 percent or more down on a home purchase. Another 40.4 percent said they need 4-19 percent down. (For background, Ellie Mae is a leading software company that serves the mortgage finance industry. Their proprietary software processes more than 35 percent of home loan applications nationwide.)

Sadly, those stats don’t surprise me.  If the study would have been conducted in 2007, when I moved to Jacksonville, I would’ve been one of those folks that believed I needed significant cash to purchase a home.

I was not a Realtor at the time but now that I am, I can certainly appreciate my then-predicament: My rent was equivalent to the mortgage of a $120,000 home. But for three years, I rented and gave my hard-earned money to someone else… because I thought that A.) I couldn’t afford a home. B.) Who’s going to lend a 20-something-year-old money? And C.) I for-sure didn’t have $20,000 sitting at the bank.

And it wasn’t until I began reading and researching that I discovered that there were a variety of home loan products that would allow me to purchase my own home for less than 20 percent down. And that I did. At 26 years old, I was handed the keys to a cute home in the Mandarin area of Jacksonville. The purchase price was $159,000 and because of the FHA (Federal Housing Administration) program the down payment was 3.5 percent - or $5,565 - a much easier amount to obtain for someone in my situation.

So I leave you with this: home ownership is possible.  Don’t rule out the idea or label it a fantasy until you have a chance to speak to your trusted real estate advisor and explain your situation.  There are options and solutions for almost every situation.

- Mabel Perez, Real Estate Maven

Image may contain: 1 person, sitting and laptop

(Photo credit: Bruce Mars @ Pexels)

 

Page:  of 000  |