About Hamilton County, TN

Mortgage rates continue to be historically low. This home for sale in Hixson, TN, is a great example of how affordable your new home payment can be. Terri Rule with Re/Max Properties North is the listing agent for this property.

The payments shown are for a conventional 5% down payment with standard mortgage insurance and with lender paid mortgage insurance. You can compare these payment options with an FHA loan that has a lower down payment requirement.

Many home buyers indicate that they do not like mortgage insurance, but mortgage insurance is what makes it possible to purchase a home with less than 20% down payment. Many home buyers though are not aware of the different options for mortgage insurance premiums.

By considering the different options home buyers can select the mortgage insurance option that best suits their budget and long term plans.

Terri Rule is having an open house for this home on Sunday, October 2, 2011. Call her at 423-994-3993 with any questions about this great home for sale in Hixson.

Call me, 423-280-0345, with any questions about your home purchase financing and your different mortgage insurance options. Visit my HomeBuyer YouTube channel to learn more about home buying programs.

Having attended the NAR mid year meetings in Washington DC this week, I thought it was important to share that Realtors do much more than assist in the buying and selling of real estate.

I belong to three orgainzations 1-Greater Chattanooga Association of Realtors,2- Tennessee Assocation of Realtors and 3- National Association of Realtors, all three of which are involved in lobbying our elected officials in relation to personal property rights and issues that afftect the housing market. For example, we visited Capital Hill this week to talk about preserving the Mortgage Interest Tax deduction for home owners as well as maintaining existing limits on loans so that there are more available mortgages and to protect the FHA program's current downpayment % at 3.5%.

Why is something like this important to you?? Well if some in congress had their way, it would be a minimum 20% downpayment to purchase a home. For the average American Family that takes 14 years to save up....can you imagine having to wait 14 years before you could buy your first home or what would your tax return look like if you suddenly lost the mortgage interest tax deduction you are currently claiming?

So the next time you hear about a realtor convention, changes are, we are not just taking a nice trip which we can write off, infact we are spending our dime to travel and stand you for YOU-the home owner, because home ownership matters in this country!

Rural Development Guaranteed home loans remain popular in the Chattanooga area, including eligible areas in Tennessee and Georgia. Home buyers and sellers are growing increasingly aware of the many benefits of this program. You can find many listings that specifically advertise the property is eligible for a Rural Development home loan. The program is also known as a USDA home loan.

The main benefit of a Rural Development home loan is that it allows for 100% financing of the home purchase.  No down payment. It also allows for closing costs and repairs to be included in the loan, up to the appraised value. I will write more repairs and closing costs in a later post.

The two key eligibity points with a Rural Development home purchase are the buyer's income and the property's location.

For the Chattanooga area, which includes surrounding counties in Tennessee and in Georgia, the basic income eligibility is for a family with 1 to 4 members is $74,050.

For families with 5 to 9 members the basic income limit is $97,750. These levels are much simpler that the previous income levels.

There are some income adjustments that are used to establish the income for determination of eligibility. You can check your income yourself on the Rural Development income eligibility page.

Rural Development income eligibility check.

The property's location is the other essential eligibity check. For the Hamilton County, the elibility boundaries are basically Thrasher Pike, Hunter Road, and Ooltewah-Ringgold Rd. The boundaries are a little more complicated in the Georgia counties that surround Chattanooga.

Several counties in Tennessee around Chattanooga are 100% eligible. These include Marion, Sequatchie, Bledsoe, Rhea, Meigs, McMinn, Polk, and Grundy.

For any area, you can check the property address to see if it is in an eligible area on the Rural Development property eligibility page.

Rural Development property eligibity calculator.

Rural Development Guaranteed Loan is an excellent home purchase loan for moderate income families. For more information about its many benefits, feel free to contace me at 423-280-0345 or to visit my website at www.RichardSmithHomeLoans.com. You can start your home purchase approval process on my website.

The biggest advantage of Rural Development home loans is of course the No Down Payment. A second great feature of Rural Development loans has been that they had no monthly mortgage insurance, an upfront funding fee was included with the loan, but no monthly charge.

Effective October 1, 2011, the benefit of no monthly fee will change.

Rural Development is adding an annual fee  charged to lenders of .3%. For a $130,000 Rural Development purchase loan, about the median for Chattanooga home purchases, the annual fee would be about $450. The actual fee will be based on a projected average.

Lenders will be billed annually for the fee. This is a new announcement, so no one has plans in place to collect from the fee from borrowers. I am certain though that the fee will be billed monthly with the regular payment escrows.

In effect this will become an equivalent to mortgage insurance. In the example above the charge would add approximately $37.50 to the monthly payment, for the first year.

The change is effective in October 1, 2011

The upfront guaranteed funding fee will drop to 2%. It is currently 3.5%

The annual fee will be paid at closing for the first year, and billed annually in subsequent years. The upfront fee will probably still be added to the loan amount. It looks like the initial annual fee though will be collected as a closing cost. I did not see any suggestion in the memo that it would be added to the loan amount.

The fee is actually not called mortgage insurance, but a fee. The fee is calculated annually based on the Average Loan Amount for the coming year. But the fee does not drop off at a certain loan to value amount. Mortgage insurance typically drops at 80% or so. This fee is lower with each year but it carries through to the full term.

The change is effective October 1, 2011.

The stated purpose of this change is "to make the Single Family Housing Guaranteed Loan Program (SFHGLP) subsidy neutral, thus eliminating the need for taxpayer support of the program." This seems to be consistent with the housing goals as put forth in the Administration's white paper on the future of housing, published on February 13.

It is consistent also with the recently announced increase in FHA mortgage insurance costs. 

New regulations allow for Rural Development to charge as high as 3.5% upfront and .5% annually, but the program will start with the 2% upfront and .3% annually.

If you have any questions about this or Rural Development home loans for the Chattanooga area, feel free to contact me via my website, www.RichardSmithHomeLoans.com, or call my cell phone, 423-280-0345.