Why FHA Buyers Should Buy Now

FHA loans are on the cusp of some significant changes that will impact 2013’s FHA buyers.  If you are a FHA home buyer or if you are a Realtor working with FHA home buyers, this is information you need.

First – Some Background

Most of us know little about FHA, so let’s start with some basic history.  The FHA was formed by congressional decree in 1934 to help improve the housing market.  Back then, buying a home was tough.  Mortgage approvals typically required a down payment of 50 percent and loans would normally balloon within 5 years, requiring the buyer to pay them in full or try to refinance.

The creation of the Federal Housing Administration changed all that.  FHA set minimum loan approval standards and, if a bank would make a loan subject to those standards, FHA provided mortgage default insurance on that loan.  This allowed banks to shift the risk of default off of themselves which made them much more willing to extend mortgage loans.

Even though Congress created FHA, FHA wasn’t funded by tax dollars.  Instead, FHA created a mortgage insurance system in which they charged insurance premiums to the home buyer and used that money to self-fund their costs and losses.  This system was put in place almost 80 years ago and, even with the challenges our housing market has faced, FHA still operates entirely from the insurance premium income today.

Fast Forward to Today

While FHA has been able to continue covering its costs with insurance premiums, it’s not nearly as solvent as it should be.  The FHA is expected to keep $2 in reserves for every $100 insured. As of November 2011, though, it held just 24 cents per $100 insured.  To try and  strengthen the reserves level, the FHA has raised its mortgage insurance premiums 4 times in the last 4 years.  Still, the solvency of FHA is a high concern for our economy as a whole.

Just how much of a concern is it?  It worries our elected officials so much that a whopping 98% of the House of Representatives voted to pass the Federal Housing Administration Fiscal Solvency Act of 2012 this fall.  This act, along with some additional changes being implemented by HUD, will impact FHA buyers in 2013.

What to expect in 2013

One key thing included in the FHA Fiscal Solvency Act is the permission for HUD to raise the monthly mortgage insurance premiums (MIP) being charged to buyers.  Currently, monthly MIP is set at 1.25% of the original loan amount per year.  For example, let’s say a buyer has a $100,000 FHA loan.  That buyer will pay $1,250 per year in MIP ($100,000 x 0.0125) which works out to $104.17 per month. 

The Solvency Act grants HUD permission to raise the annual MIP up to 2.05% if needed.  This would increase the MIP for our example above to $170.83 per month, which is quite a chunk on  a loan amount of only $100,000. 

While this is disturbing, even more disturbing is HUDs plans to no longer allow buyers to remove the annual MIP once their balance hits a certain level.  Currently, monthly MIP goes away once the balance hits 78% of the original price or 5 years has passed, whichever comes last.  HUD will be canceling this provision, meaning that mortgage insurance will stay on the loan as long as it exists, regardless of the balance.  MIP levels stay the same each month, even as the balance declines, so our $100,000 home buyer could still be paying $170.83/month in MIP even when the balance is down to $10,000 or less if they don’t pay the loan off or refinance it into a new loan.

What You Need to Do

While we don’t know exactly when these changes will take place, the expectation is early 2013.  Given this, a FHA buyer should do one of two things:

·        Become Conventional Eligible – FHA buyers typically use FHA financing because they need the flexibility it offers with credit history, income or down payment.  If you need it for one of these reasons, work with your lender to see if you can strengthen that weak area and make yourself eligible for conventional financing.  Conventional mortgage insurance is significantly lower and can typically be removed once you have 20% equity in your home.

·        Buy Now – if your situation is such that a conventional mortgage will not work for you, start home shopping in earnest.  If at all possible, you will want to close on your FHA loan before these changes are put in place.

If You Want to Know More

These changes look severe and, frankly, they are, but they won’t stop buyers from buying homes with FHA financing.  They will hopefully encourage buyers to explore their options more deeply, though, and not go with FHA just because it’s the first thing their lender suggests.

If you want to know more about the FHA vs. Conventional option for your unique situation, I can help you.  Feel free to give me a call at 574-234-5201, email me at lori.hiscock@ruoff.com or visit my website at www.SouthBendHomeLoan.com. 

You Have To Feed The Puppy

About two years ago, my daughter Jessica got puppy fever.  I blame it on our next door neighbor who got an adorable little black cockapoo.  It yipped a lot, but man was that dog cute.

But I digress…So Jessica had a case of puppy fever, and it was bad.  She knew the family rule though – if you want it, you save for it and buy it with your own money – so she did just that.  Week by week, she set aside her allowance until she finally had just enough money to cover the adoption fee for a rescue dog.  With her hard earned savings in a little Ziploc bag, she came to us with overflowing happiness believing that now now NOW she could finally have the doggie she wanted so much.

It’s moments like that that make my heart swell and break all at once.  I was so proud of her for working so hard for her goal and saving every penny she had to get that puppy, but I still had to ask her an important question “And how are you going to feed the puppy?”

Jessica’s face crashed in a second and tears started to bubble.  She’d worked for weeks and weeks to save up the money to get the puppy, but she hadn’t given any thought to taking care of it once she had it.  Seeing that realization hit her, I was hit with a realization of my own - My 10 year old daughter was very similar to my first time buyers.

I’ve worked with hundreds of first-time homebuyers through the years.  Much like my Jessica, they get incredibly motivated and excited about obtaining their goal. They want a home of their own and they work feverishly to save the money needed to make that dream come true.  Most of the time, though, they don’t think about the cost of actually owning the home beyond the basic mortgage payment.  They forget that they will need to ‘feed the puppy’. 

Being a good mom means asking the question, and so does being a good mortgage lender.  When I see my clients having to stretch so far just to get into the home, I have to raise the question of whether they will be able to take care of the home once they own it.  Just like puppies need food, homes need maintenance – shingles instead of shots, filters instead of flea collars - but additional ongoing costs, none-the-less.

Knowing this, I raise the question.  Being a good mom or mortgage lender doesn’t stop at asking the question though.  I also need to help build the answer.  Jessica and I sat down and figured out additional chores she could do to contribute to the cost of the puppy's maintenance.  Likewise, my homebuyers and I talk about the importance of a home maintenance fund and a home improvement fund.  We talk about budgeting and buying below their ceiling so that there is room in the family finances to take care of their home after they own it.

After we worked out a plan, Jessica got her puppy.  Cotton has brought a great deal of joy to our household in the two years since and, for the most part, Jessica has continued doing what she committed to do to contribute to the care of her dog. 

As for my first time buyers?  I can only pray that they also stick to the budgetary commitments they made to themselves so that they can care for their home and enjoy the pleasures of it for years to come.  Feed the puppy, take care of the home, and one can reap the joys for a lifetime. 

The Blessing of a Cut Appraisal

When the appraisal on a home purchase comes in lower than the agreed on price, it’s a very stressful situation for a home buyer.   That was definitely the case for Charlotte, whose appraisal came in $4,000 below the $117,000 price on the condo she was buying this fall. 

I personally wasn’t concerned in Charlotte’s case though.  The $113,000 appraised value that we received actually looked really good to me.  There had been several condominium sales in that development this year and the vast majority had sold for $105,000-$107,000.  The units were all very similar so Charlotte’s Realtor and I both expected the seller to see that it could have been a lot worse and to renegotiate with her on the price.

You can never predict what people might do, though, and this seller did the opposite of what we’d all expected.  He dug in his heels and refused to negotiate so, with a heavy heart, Charlotte walked away from the purchase of her new home. 

There’s no doubt that Charlotte was disappointed. She really liked that condo.  Even worse, she had already sold her previous home and was temporarily staying with some family.  This temporary situation was only supposed to last for a week or two, but now that the purchase had fallen apart, it looked like it could go on indefinitely.  After years of having her own space, living as a guest was taking a toll on Charlotte.

Luckily for her, Charlotte had partnered with Bethany Rowe, an amazing Realtor with At Home Realty Group.  Bethany wasn’t about to give up because the going got tough, and she immediately hit the streets to find Charlotte another home.  In a matter of weeks she found and negotiated a purchase on another wonderful condominium for Charlotte in the same development as the previous one but this one cost $14,000 less than the first one.

So the moral of the story?  Sometimes a home buying disappointment is a blessing in disguise.  Charlotte was definitely discouraged when the initial purchase fell apart, but five weeks later she was able to close on the purchase of the RIGHT home for her, at the right price.  Thanks to the hard work of her excellent Realtor (and me, for getting the second purchase closed super-fast), Charlotte is now happily living in her new home that she purchased at a great great price.  Congratulations Charlotte!

The Pay It Now Plan



Yesterday I gave some advice to a buyer that I thought might be beneficial to more than just that one client.  It's the "Pay It Now" approach to preparing for a home purchase.  To learn more about how this could help you (or your buyers) to better prepare for home ownership, enjoy this video blog:

 



The Realtor Who Cared Enough to Say No

Let me just start by saying that I really like Realtors.  In general, they are a caring, funny, hard -working bunch of entrepreneurs, so – yea - my kind of people. 

Every now and then, though, a Realtor and I butt heads on what a buyer’s price range should be.  I’ve been known to encourage buyers to lower the price range for the home they buy even when they are technically eligible to buy at a higher price.  Not all home buyers really understand their budgets, so when I review their financial situation with them, I talk to them about how wise and realistic it is for them to buy at the very top of their ability.  Realtors don’t always think I should be offering this advice, and I’ve been scolded a few times for it.

Which brings me to my story – Last week I was talking to some first time buyers.  They were eager to buy a home at the top of their price range.  They are financially able to get a loan approved at that level but, as I reviewed their information, I didn’t feel that they should.  They were relying on her part time income and his overtime to make it work, but he’s about to be changing to a new shift that may not have as much overtime and she’s due to have their second child so her part time work may slow down.  While they could make the payments now, I felt that they may not be able to as easily in the future so I told them that.  I asked them to consider buying a lower priced home that gave them more breathing room, and they said they’d give it thought.

A few hours later, my phone rang.  Caller ID said it was their Realtor, who is a gentleman I haven’t worked with a lot.  I’ll admit it – I was nervous as I picked the phone up.  I started bracing myself for him to yell at me about talking his buyers into a cheaper home and wasting his time seeing he’d already been showing them some at the higher price range. 

This Realtor didn’t yell at me though.  He didn’t complain about wasted time or reprimand me about overstepping my role.  Instead, he thanked me.  He said he had been worried that they might be putting themselves into a tight spot and he never wanted that for his clients.  He appreciated me suggesting limits and would support my suggestions when showing them homes.  If they asked to see a home above what I felt was wise, he said “I’ll just tell them no”.

After we hung up the phone, I just stared at it for a minute in shock and delight.  We’ve all heard bad stories about Realtors (and mortgage lenders) who aren’t looking out for the buyer’s best interest.  Here’s proof that some -  likely most – really do.  Thank you, Mr. Realtor, for caring enough to say no.

The Best of Both Worlds – Using a Gift with Conventional Financing

If you were to ask a random sampling of mortgage lenders if you could buy a home using conventional financing and a down payment that was a gift from a family member, they’d probably all tell you “No”. 

Guess what?  THEY’RE WRONG.

When structured right, a qualified home buyer can purchase a home with the more advantageous conventional financing terms and gifted down payment money.

Why Would You Want Conventional Financing?

FHA financing is typically the route lenders use when a buyer is using gift funds for a down payment.  Conventional financing is often a better financial option, though, for the following reasons:

• Lower fees – FHA has a 1.75% upfront mortgage insurance premium that is typically added into the loan balance. This is a fee that you don’t have to pay with conventional financing.
• Lower monthly Mortgage Insurance (MI) – mortgage insurance is currently at 1.25% annually for FHA loans.  Conventional loan MI rates vary depending on credit score, down payment, etc.  The conventional MI is very likely going to be less than the FHA MI, often significantly less.
• Lighter home standards – FHA has tighter requirements on the condition of the home.  In our area, interior or exterior peeling paint often becomes a problem with FHA financing.  Conventional financing doesn’t have the same requirements, so some homes will be eligible with conventional financing that couldn’t be purchased with FHA financing.
• Faster removal of Mortgage Insurance – FHA requires MI to stay on a loan for a minimum of 5 years.  Conventional financing can normally remove it faster (typically 2 year minimum).

Interest rates between conventional loans and FHA loans vary, so sometimes FHA is still a good option just because the interest rate is better.  Given the lower closing costs, mortgage insurance and property requirements, though, conventional financing is often a better option.

So….Why would the other Mortgage Lenders Say “No”?

That’s a great question.  They would likely say no because they just can’t do this.  Many lenders are locked in with one MI company and the MI company is the one that says you can’t have the down payment gifted.  Ruoff Home Mortgage shops your MI to several different companies, though, to get you the best rate and the best terms.  One of the many MI companies out there will allow gifted down payments.  If you need this option, that’s the company we’d use.  Our competitors either won’t, can’t, or don’t even realize this option exists.  In any of those cases, they’re not the lender for you.  Ruoff Home Mortgage is.

4 Things a First-Time Buyer Should Know

If you’re considering a home purchase, here are four things you should know upfront to help you get started on the process:

1.      Focus on your Credit Score – Your credit score is a critical part of your mortgage approval, so you’ll want to have it reviewed early on in the process.  A person who isn’t credit readily initially can often change that with time.  Having a knowledgeable, qualified mortgage lender review your credit report is absolutely mandatory early on for any hopefully home buyer.

2.      It’s not WHAT you do, it’s THAT you do – buyers often worry that they can’t get a mortgage because they recently started a new job or finished school.  The old myth that you need to be on a job for 2 years to get a mortgage isn’t true.  Banks don’t care WHAT you’ve been doing for the last 2 years.  They care THAT you’ve been doing for the last 2 years.  Have you been employed in some form?  Have you been in school?  The mortgage lender will typically rely on your current income from your current job – even if you’ve only recently started it – as long as you can show them that you’ve been actively working or learning in some form for the last 2 years.

 3.      Try to have a Down Payment – Do you need to have a down payment to buy a home?  Probably not.  Most first time home buyers can qualify for a ‘no down payment’ option.  Even though these options are there, you should still try to save up a 5% down payment if you can.  Your closing costs will be cheaper, your interest rate will likely be lower and your monthly PMI will typically be less.

       4.      If you truly need down payment help, explore USDA – If saving up a down payment just isn’t going to work for you, explore USDA financing.   It offers 100% financing to eligible buyers, has good interest rates and very low PMI.  There is a financing fee that is rolled into your loan, so you’ll owe more when you pay the home off, but – on all other fronts – it’s a low cost 100% financing option.  The biggest drawback is that you can only use this loan type when buying a home in an area considered rural, but that area is larger than many think, so it’s worth exploring as you home shop.

Credit score, income and down payment are the three main things that a lender will focus on when approving your mortgage.  To learn more about these and other important aspects of home buying, visit www.SouthBendHomeLoan.com and www.youtube.com/SouthBendHomeLoan.

 

When Home Buying Seemed Hopeless

Ethel stood in front of me, a pile of papers in her hand and a disheartened look on her face.  “Do you think there’s anything you can do for us?  I’ve just about lost hope of buying our home”. 

This was a rare feeling for Ethel who was a strong woman of faith.  Peace and hope were second nature to her, but her bank had just called and told her that her mortgage was being declined.  She and her husband had planned on moving into their new home that weekend – everything she owned was already boxed up – and now the whole plan was crumbling around her without warning.  This disappointment had her wondering if a home purchase was God’s will for her after all. 

Ethel’s Realtor had also been surprised by the news, but he wasn’t one to admit defeat easily.  Instead, he sent Ethel to me, hoping that we could make a miracle happen.  Not only did we need to find out what went wrong with the previous bank and fix it, we also needed to help Ethel find down payment assistance.  The home buying process had been more expensive than expected causing her down payment money to be absorbed with unexpected costs.

A miracle was what was needed, and a miracle was what was given.  We found the flaw in the other bank’s thinking and re-arranged her financing plan to work around it.  We enrolled Ethel in IHCDA’s down payment assistance program and got her the funds needed to cover the unexpected shortage.  It wasn’t easy and all parties had to work together, but a month later, Ethel and I met up for a much happier occasion – the moment when her Realtor handed her the keys to her very own home.   

We Should Be So Lucky – Understanding the 3.8% Real Estate Tax

Have you gotten the scary emails talking about a 3.8% real estate tax taking effect January 1^st?  I have.  It’s easy to be freaked out by these emails because they make it sound like this 3.8% tax will work like a sales tax, meaning the seller of a $100,000 home would pay a $3,800 tax on the sale.  That’s not how it works, though.  Let me share some key points about it to clarify:

1. If your total income is less than $200,000 ($250,000 on a joint tax return), you will not be impacted by this tax.
2. Even if you make more than the $200,000/$250,000 amount, you still will be excluded from this tax if your gain on the sale of your house is less than $250,000 for a single filing or $500,000 for a married filing jointly filing.
3. If you have to pay this tax, it’s only paid on the gain above that $250,000/$500,000 amount and it’s paid when you file your tax returns, not when you actually sell the home.

So how does this play out in real life?  Let’s look at an example.  If you are a married couple selling a home and you make $250,000 or less per year combined, this won’t impact you.  If you make more than $250,000 but you selling the home for no more than $500,000 more than you paid for it, this won’t impact you. 

But….if you and your spouse make over $250,000 per year and you are making more than a half million on the sale of your home, then you might pay some more taxes because of this new law.

Yea - We should all be so lucky.  Overall, this isn’t going to impact many people in Michiana, so I wouldn’t invest much time in worrying about it. If you are one of the people that it actually impacts, you’re probably better of just being grateful that the real estate market has treated you so very very well. J

Why I Love Ruoff Home Mortgage

Alisa is buying her first home through Ruoff Home Mortgage and was scheduled to close tomorrow.  Earlier this week, Alisa made a boo-boo.  Not an intentional boo-boo.  Not even a really big boo-boo.  Never-the-less, it was a boo-boo and it broke some of the rules that need followed for mortgage lending these days.

Now, I’ve been a mortgage lender for over a decade.  I’ve worked at a few places.  I’ve talked to a ton of other mortgage lenders.  I know this boo-boo and I know what it typically does to the mortgage process.  It typically stops everything dead it its tracks and – best case – gets the mortgage closing delayed by a week or more.

So, Alisa made a boo-boo and told me about it yesterday afternoon.  Did I mention she was scheduled to close tomorrow?  Yep, she was scheduled to close tomorrow until the brakes got hit with the ‘oh crap’ aforementioned mortgage rule breaking boo-boo.

So, why do I love Ruoff Home Mortgage, you ask?  This is why.  When the boo-boo hit our radar, Ruoff Home Mortgage fixed it.  Fast.  We told Alisa what we needed from her and she got it to us this morning at 9:30.  It was to the mortgage underwriter by 10:00.  The underwriter reviewed it immediately and approved the file by 12:00.  The auditor reviewed it by 1:00 and it was in closing by 2:00. 

Alisa not only WAS closing on her mortgage tomorrow, Alisa IS closing on her mortgage tomorrow.  All because Ruoff Home Mortgage gets that these are people’s lives we’re dealing with and is willing to do whatever they possibly can to make things work for our customers.

So, I love Ruoff Home Mortgage.  If you work with us, I bet you’ll love us too.

Beware the Soft Credit Check

Most home buyers know that a mortgage lender pulls there credit report at the beginning of the home buying process, but did you know that the mortgage lender pulls it again right before closing?  They do – it’s called a ‘soft credit check’ - and the results of it can cause you to lose your mortgage approval just days before buying your home.

The Soft Credit Check

A soft credit check is a credit pull that your mortgage lender will typically do in the last couple of days before the closing on your home purchase.  This type of credit pull does not impact your credit score, but it does show the mortgage lender if anything has changed on your credit report since you initially applied.

Mortgage lenders are looking for things that might make them change their mind about financing you.  These things could be items that make the credit score lower or items that make the debt higher.  Either situation could cause the mortgage to be declined at the very last minute, causing a great deal of stress and heartache for the home buyer, seller and Realtors.

Top Soft Credit Check Problems

So what kind of things could cause you to lose your mortgage approval at the last minute?  Here are the most common ones:

·       Higher monthly bills – some time people make multiple purchases around the time that they get their mortgage.  They buy new furniture, a new vehicle or some other financed item.  This could make your debt compared to income too high and you could become ineligible for the mortgage because of it.  Even co-signing for someone else’s loan during this period can cause you to be declined.

·       Higher credit card balances – Even if you don’t take out new debt during the mortgage process, racking up the balances on your existing credit cards can cause your credit score to drop to a point where you lose your mortgage approval.

·       Late payments – a lot is going on when buying a home and it’s easy to let something slip.  Even one small late payment can cause your score to drop significantly, though, causing your mortgage to be declined.  If you have loans on your credit report that are technically someone else’s but that you co-signed for, their late payment can have the same effect on your credit score.

·       Hard Inquiries – soft inquiries like this one done by your mortgage lender don’t impact your credit score but hard inquiries do.  Hard inquiries are credit pulls done by companies when you apply for new debt.  These inquiries indicate that you might be stretching yourself financially, and your credit score could drop because of this, causing your mortgage to be declined.

So what should you do to avoid losing your mortgage approval at the last minute?  The best course of action is to do NOTHING related to your credit during the mortgage approval process.  Don’t apply for any new debt.  Don’t increase the balances on your credit cards.  Don’t co-sign for anyone.  Don’t fall behind on any payments.  Basically, just keep your credit as it was when you applied for your mortgage originally.  Doing this will help you avoid the risk of losing your mortgage approval right before the closing on your new home.

Your Credit Score - and Introduction to FICO and Credit Scoring

I love to read.  Fiction, non-fiction, magazines, cereal boxes, it doesn't matter.  If it's in writing, I want to read it. 

My FAVORITE type of books, though, are business books.  I have a passion for my work, and anything that can help me improve and give a better experience to my clients thrills me.

So...while on vacation last week I read a captivating book entitled "Your Credit Score - How to Improve the 3-Digit Number that Shapes your Financial Future".  I've had a working knowledge of credit scores, the FICO Score in particular, for years, but this book took my credit score knowledge to a whole new level. 

What we need to realize is that our credit score impacts many areas of your life, from interest rates to insurance premiums, from housing to employment options.  Because of this, understanding how FICO and credit scoring works can make a huge difference in the quality of our lives.

Plan on seeing future blogs here about credit scores in general and and how your credit score can be improved.  For today, though, let me share some credit score and FICO basics.  Attached is a link to a video I made about FICO earlier this year.  It provides a nice background to understand what credit scoring is and how it can impact your mortgage options.  Enjoy!

Mortgage Credit Certificate Program for Indiana First Time Homebuyers

Are you a first time homebuyer in the state of Indiana?  Are you looking for special first time homebuyer mortgage programs in Indiana that might offer you savings over the typical unimaginative mortgage options offered by most mortgage lenders?   If so, then you should learn about Indiana's Mortgage Credit Certificate program offered by Indiana Housing and Community Development Authority (IHCDA).  The Mortgage Credit Certificate offers an annual income tax credit for the eligible first time homebuyer in Indiana.  To learn more about the IHCDA requirements and benefits, please watch this video.  To have me review your information and see if you qualify for this mortgage program, please apply for a free mortgage pre approval at www.SouthBendHomeLoan.com.

Buying a Home with No Down Payment

Let’s face it – it can be hard to save money.  We’d like to think that all home buyers can set money aside for the down payment on a home purchase, but some people just can’t make that happen.  Does that mean they shouldn’t be allowed to buy a home, though? 

VA, USDA and IHCDA all say “Of Course Not!”.  Each of these entities has an option in place to let a person buy a home now, even if they don’t have savings set aside for a down payment.  Here are the highlights of what they offer:

·        VA – VA is a term used to reference loans guaranteed by the Department of Veterans Affairs.  If you or your spouse is a Veteran, this can be an excellent option.  It offers a great interest rate, no monthly private mortgage insurance (PMI), and no down payment.

·        USDA – USDA stands for the United States Department of Agriculture.  Among other things, the USDA guarantees mortgage loans made in rural areas.  That guarantee allows for 100% financing on these homes.  The interest rates are great too, and the PMI is cheap.  To see if a property is USDA eligible, just enter the address on USDA’s website:  http://tinyurl.com/69aafc.

·        IHCDA – my favorite option is the Next Home program by IHCDA.  IHCDA stands for the Indiana Housing and Community Development Authority, which is a government branch that focuses on promoting home ownership in Indiana.  Their premier program, the Next Home loan, provides 3.5% in down payment assistance to the qualified buyer using FHA financing and 3% to the buyer using Conventional financing.  That contribution covers the entire down payment needed with both loans. 

So what is all this telling us?  It’s telling us that HOMEBUYERS HAVE OPTIONS.  Just because a buyer doesn’t have money in the bank right now, it doesn’t mean they can’t buy a home.  They just need to be working with a lender who can explore all the options out there and find one that will work for them.

To learn more about any of these options, feel free to drop me an email or give me a call (lori.hiscock@ruoff.com, 574-707-0196.  I'd be happy to help you take the exciting step into home ownership. 

Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here. NMLS#404320.

Ruoff Mortgage Company, Inc. is an Indiana corporation licensed by the Indiana Department of Financial Institutions (DFI) and operates with the following licenses:

Indiana-DFI First Lien Mortgage Lending License #10994;
IL Residential Mortgage Licensee #MB.6760734;
Michigan 1st Mortgage Broker/Lender License #FL0017496.

Ohio Mortgage Broker Act License #MBMB.850220.000

The Florida Office of Financial Regulation License #MLD1182

Down Payment Assistance is BACK!!

Great News! The Indiana Housing and Community Development Authority (IHCDA) has rolled out a GREAT new program that offers down payment assistance to qualified homebuyers in the state of Indiana. Many, many Hoosier homebuyers will benefit significantly from this program.  To see if it might help you, check out the program overview below.

Next Home Program Overview

·        Owner-Occupied – you have to be buying a home you will be living in.  You do NOT need to be a first time home buyer to qualify.

·        Single Family Homes Only – this program can’t be used to buy a duplex, 4 unit home, etc.

·        FHA Financing Required – you have to use FHA financing with a 30 year fixed rate with this program.

·        IHCDA Selected Interest Rate – the interest rate will be set by IHCDA and may be slightly higher or lower than the general market rate at the time you buy. 

·        Minimum Credit Score – The homebuyer’s credit score must be 650 or higher to be eligible.

·        Minor Enrollment Fee – IHCDA charges a one-time 0.125% enrollment fee to participate in the program.  This works out to $125 per every $100,000 borrowed. 

·        Full Down Payment Provided – this program offers up to 4% of the price in down payment assistance.  Seeing FHA currently only requires a 3.5% down payment, this will cover the whole down payment needed (NICE!).

·        Technically, It’s A Second Mortgage – technically, this 4% is a second mortgage on the house, but if you live in the home 2 years, it is forgiven and released and you do not need to pay it back.  If you live there less than 2 years, though, you will have to repay the money.

·        Income Limits Apply – if you make too much money, you won’t qualify.  How much is ‘too much’ depends on the county you live in and the size of your household.  Current limits can be found here:  Next Home Income Limits.  Please know, this is a HOUSEHOLD income limit, so the income of anyone who lives in the household will count, even if they are not on the loan.

·        Maximum Loan Amount – if you are buying a home with a price above $271,050, it is ineligible for Next Home.

As you can see, the guidelines for this program are quite flexible and will work for many homebuyers who need or want a little help with the down payment for their home purchase.  To learn more about whether this option will work for you, give me a call or drop me an email (574-234-5201/ lori.hiscock@ruoff.com). 

Learning The Hard Way

My two sons rented an X-Box game from a local store today.  For some reason beyond comprehension, they decided to pull the X-Box gaming console out from the cubby where we keep it stored, even though they could load the game perfectly well from where it was.  I saw this and advised that they should tuck it back in, to which I got the standard teenager ‘yeah yeah yeah’ with no following action on their part.

Fast forward 30 minutes - The start goofing around, my oldest trips over the X-Box, the rented game gets hopelessly scratched, my boys are out $40 to replace it.

Morale Of The Story

Listen to your momma

when she tells you how to prevent scratching video games.

Now onto another story from today.  A wonderful gentleman is buying a home and I have been helping him explore mortgage options for the last week.  The last time he bought  a home was 10 years ago and the process was very different then than it is now (interpret that as ‘waaaaaaaaay easier’).  When I asked him for the paperwork that I needed for his loan approval today, he got offended by the invasiveness of it and decided to go find a lender who would “give some credit to the fact that he’s paid his bills on time for the last 40 years”.  

Now, I’m not psychic, but I can fast forward 30 days and see the ending of this story.  He will find a lender who is uncomfortable with insisting on the paperwork upfront, so he’ll start working with them while thinking that I was making this harder than it needed to be.  

Three weeks from now, when closing is within days for him, he’ll find out that the other bank needed everything I’d asked for upfront, only now - because the loan originator wasn’t firm enough to get it when he should have - this good gentleman will be scrambling and sweating, trying to get what is needed at the 11th hour and very likely not closing on the intended date.  Even if he can get it all pulled together in that final hour, the whole experience will be chaotic and stressful, ruining what should have really been a very exciting and enjoyable experience.

Morale Of The Story

Listen to your Ruoff home mortgage lender 

when she tells you how to navigate the home financing process.  

I don’t know everything in life, but 

I know mortgage lending very, very well.  

(And I know how not to scratch rented video games.  Just sayin’, sons.)