Jerimiah Taylor

USDA Financing is a little known option for buying homes in Tucson with zero down. Buying a home with no money down allows you to finance 100% of the home. No down payment homes are very attractive for many Tucson home buyers who are looking to buy a home with no upfront money.The USDA eligibility tool is a helpful resource for Tucson home buyers looking for homes in Tucson with no money down.

What is a USDA Mortgage?

USDA stands for United States Department of Agriculture.

How does that have anything to do with a mortgage? A USDA Mortgage provides low-cost, low rate, insured home mortgages for people who want to become home owners in designated rural areas.

A USDA home loan might be right for you if you want to live in a rural area and purchase a home with no down payment. The other great thing about a no money down USDA mortgage is that it’s very similar to an FHA mortgage when it comes to your credit. A USDA home loan can give you piece of mind with low closing costs, no down payment and great 30 year fixed interest rates.

What Types of Loans does USDA offer?
Currently, there are two kinds of USDA home loans available for single family households:

USDA Guaranteed Rural Housing Loans:

USDA Guaranteed Loans are the most common type of USDA home loan and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may

have an income of up to 115% of the median household income for the area.

Contact Us to see if you qualify under your area’s income limits for this program.

All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.

USDA Direct Rural Housing Loans:

USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain home ownership, as defined by the USDA. 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. Contact Us to find out what the area income limits are for this program in your area.

What are the advantages of USDA home loans versus Conventional Loans?

USDA home loans offer many benefits and protections that you won’t find in other loans including:

USDA loan requirements are not totally credit score driven, although it is typically required to have at least a 620 FICO score to obtain an approval with most lenders. USDA loan guidelines are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable manner, they’re generally going to be credit-eligible for an USDA rural loan mortgage.

USDA Rural Loans Require No Monthly Mortgage Insurance:

A distinct advantage of a USDA loan, as compared to a conforming loan, is great interest rates and no mortgage insurance (MI). The daily USDA Mortgage rates are usually comparable to, if not lower than a conforming 30-Year Fixed loan.

USDA loans Require No Down Payment:

USDA Mortgages have no down payment requirement. Other loan programs don’t allow this. A conventional loan will require at least 5% down and up to 10% if you are buying in a declining market

What factors determine if I am eligible for an USDA Loan?

To be eligible for an USDA home Loan, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is required to obtain an USDA approval. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. To find out what the Maximum USDA Guaranteed Loan income limits are for your area, Contact Us. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

I have two mortgages on my house. Does that mean I am limited to foreclosure or can I short sale my home?

You can always pursue a short sale. It becomes a bit more cumbersome at this point though.

The key here is to understand a short sale is simply a negotiated settlement. It is an attempt to workout an amicable and mutually beneficial solution with your lender, when you are upside down in your property, and must sell it.

The fact that there are two loans means that there are 3 negotiations that will run simultaneously.

1. The negotiation of what the second lien holder will require to release their lien.

2. The negotiation of what the first lien holder will require to release their lien.

3. The negotiation of how much the first lien holder will agree to give to the second position lien holder.

The 3rd piece here is the most important and there are some guidelines that we use. Most first position lien holders are reluctant to give the second position more than 10% of their payoff balance. Most second position lien holders will settle for 3,000 or 8% of their payoff balance whichever is greater. Note this is most, not all, and in no way guaranteed.

If you are in a position where you are upside down and have more than one loan against your property, make sure you work with an experienced short sale agent that can counsel you through the process! We handle a lot of short sales in Tucson, and can guide you through the process of short selling your home in Tucson. Contact us today for more info!

Jerimiah Taylor Tucson Homes and Real estate

We are often asked "How do you determine how much to list my home for if it’s a short sale?"

Proper pricing of a short sale is paramount to success, and it is not substantially different than pricing any other type of home for sale.

We begin by looking at sold homes that are similar or comparable within the closest market area we can find, preferably that occurred in the last 90 days. We then rule out what I call the “deal breakers”

1. We don’t look at single story homes as a comparable to a multi story home, and vice versa.

2. We begin by staying within 20% + or – of the square footage of the subject property.

3. We don’t compare 2011 construction to 1955 construction and vice versa.

4. We look at the overall market data for distressed versus equity sales. If an area is more than 50% distressed sales there is no weight given to non-distressed property. I.E 7 of the 10 homes sold in your neighborhood in the last year were foreclosures or short sales, you need to be prepared to compete with them on a dollar for dollar basis as an equity seller.

Once we have determined a basis for the comparable properties, preferably 3 active, 3 pending, and 3 sold properties, we then adjust for size and features of the subject property versus the comparable ones.

1. We begin by looking at average $/sq. ft. and making an adjustment up or down from each comp based on this.

2. We look for major features such as pools, extra beds/baths, or garages etc. And then give value or take away based on each comparable.

3. Finally we look at average days on market at the average price and adjust our list price based on the seller’s motivation to sell.

i.e. average $/sq ft is 105 with an average days on market of 96. My seller is being relocated and needs an offer in 30 days or less, we would adjust the price by around 10% downward to have this affect.

So to circle back around and answer the initial question of pricing short sales, we must begin with the end in mind. Typically we are working with a seller who is in financial hardship, and we are looking for a buyer who can hold tight for 30-60 days while we negotiate with lenders to get approvals of the sale. Both of these factors impact our pricing dramatically.

1. The seller is in distress, the last thing they want to do is sit on the market for 6 months with no offers while the home goes to foreclosure.

2. The buyer must have a reason to stay in the game through the process.

That being said, we typically price our short sales 10-15% under market depending on property condition and the seller’s financial state. This DOES NOT mean that the bank will accept that price. We typically see our short sales sell for 15-18% over our list price once the bank counters and everything is said and done.

There really is no exact science to pricing, we do our best to get it right up front, but the “right” price for a house is the one that the buyer is willing to pay and the seller is willing to sell for, and nothing more.

See more info at my blog on Tucson Real Estate

The luxury home market in Tucson is finally showing some signs of improvement!  Homes selling in Tucson between 750,000 and 1,000,000 have shown the largest improvement from 2010 to 2011.  In 2010 there were 33.8 months of inventory at this price point, and now in 2011 we are down to only 10.8.  This is great news for anyone looking to sell a luxury home in Tucson between 750K and 1 Million.  The market is still soft above 1,000,000 as we are holding steady at 30 months of inventory, which is an improvement over 2010 where we had 36.7 months, until the market makes a clear shift this price point will continue to be challenged. Homes in the 500 to 750 range are improving as well, we are down from 13 months of inventory to 11.  Financing is a large driving factor at this point, as the conventional loan limits still sit at 417,000, and jumbo loans remain difficult to obtain. Across the board we are showing signs of life, mainly in the sub 300 sales range, and our luxury market is picking up as well.  As we watch inventory continue to decrease we will see more sellers entering the market at aggressive prices, which is what will lead us into price recovery.  Even with the improvements we have made in inventory we remain saturated with distressed property representing 46% of our sales volume.  Until we start to trend back to non distressed sales, the price gains will be marginal at best.  The "experts" are still predicting incremental price recovery by this time next year, and it looks like that may just be in the cards, based on our current data trends.  All in all, we're slowly improving and it is becoming easier to sell a luxury home in Tucson, but the market continues to drive great deals for buyers in this market!