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My husband and I are in the process of buying our first home in Fort Bend county TX.
It is a new construction home, and they have just started breaking ground on the homesite.
We have been approved for an FHA loan through Bank of America. 3.5% down, closing costs paid by builder, Good Faith Estimate shows Interest rate 5.125%, APR 5.680%. Middle score is around 615 as of September.
I believe we would qualify for a USDA loan as well, what are the differences between USDA and FHA? Were told that USDA are very strict on credit score and middle score has to be at least 620? Our lender told us that they do offer USDA loans, but that we should wait to see if our scores go up, I am a little worried about time frames and do not want to wait too long however.
We have been given a construction completion date of Jan. 26 2010 and closing date of Feb. 2, 2010. What do we need to do between now and then? We are not getting a whole lot of information from our lender or builder.
What effect, if any, will the extension of the $8000 tax credit have on our situation? Can it be used in any way toward the house, options, down payment, etc?
Any and all information is appreciated. Thanks in advance.
First of all, most lenders have already gone to a minimum 620 score of FHA loans and some have even raised it to 640. I would strongly suggest that you contact BOA and make sure they can still approve your loan with a 615 score using a FHA loan.
USDA has similiar rates to FHA but USDA will allow for 100% financing. Also, USDA does not have a monthly mortgage insurance fee like FHA. They both have an upfront fee, fha is 1.75% of loan and USDA is 2%. So, USDA is a little more expensive but you dont have a monthly mi fee.
USDA does require a 620 score. The home you are building has to be located in a more rural area to qualify for USDA. Here is a link that will give you more info on USDA, click here.
Since you are not getting much info from your lender, you might consider changing lenders. I do not know of any lenders that allow the use of the tax credit for down payment. Assuming it is extended, you will file a claim after you move in and the IRS will send you a check of up to $8000 or 10% of purchase price, which ever is less.
no it isnt. That fee is added to your loan amount. For example, if the loan amount is $100,000, on FHA they would add 1.75% or $1750 so the total loan would be $101750. On USDA they would add $2000 so total loan would be $102,000.
Okay, another question, I am starting the application process with Pulte Mortgage and so far they already seem more on top of it than Bank of America. However, the loan consultant stated they need an non-refundable, upfront fee of $200. That of course, does not guarantee us the loan will be approved. Bank of America did not require that. Is this a normal practice and if so, why is it necessary? At this point, we are trying to save as much as possible for the house, so I'd like to avoid things like this if possible.
When I was at Bank of America, we collected an application fee. An application fee must be refunded if your loan is declined, especially on loans that are federally insured or guaranteed (which FHA and USDA both are). I think even on conventional loans, it must be refunded. The only fees that are not refunded in the event of a decline, are 3rd party fees: appraisals, credit reports, home inspections.
It sounds like you are working w/ a Pulte loan officer that is sending the loan to Bank of America. Ask your consultant one more time, what is the application fee, how much is it and to please verify that it is not refundable, even if the loan is declined. Get this in writing and forward the correspondence to HUD at HUD's Local Office Directory - HUD and ask them if this is allowed - go ahead and mention someone didn't think they could do this and to check with the local (note: consumers have different offices to help them than what we, as lenders, have as support).
The loan consultant told me that it was to get the loan process started, for things like pulling our credit (although they've already emailed our reports to us), appraisal, disclosure package (which we also received online). I understand it's all stuff we would end up paying for anyway, I just don't feel comfortable paying it before we've even gotten, at the very least, a pre-approval. I will give her a call on Monday to double-check if it is indeed non-refundable and what exactly it includes. I appreciate your help!
.. okay, here is an update. I still would like to know more about this upfront fee, however, I spoke to my sales counselor and he told me that he spoke to the loan officer and they agreed to waive the fee because I was switching to Pulte Mortgage. So no fee for us for now..
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