Keith Wimberly

The Super Bowl is one of the most cherished days in American sports, and with it being less than a week away, people are beginning to plan and finalize their Super Bowl party plans. Even though we are Who Dat fans here in Lake Charles, and sad to see the Saints miss their chance at playing in the Super Bowl, we will certainly be watching on Sunday!

For homeowners who have their house on the market or will be selling soon, it is a great time to take advantage of this opportunity. When prospective home buyers are looking for a home, they always imagine what their life would be like if they lived there. Furnished homes are an excellent way to do this, but having actual people interacting within the home is even more helpful!

So put out some tasty table food, have a TV in plain sight for everyone to see and invite your friends over for a good time. Even though none of your friends might be interested in purchasing, some of their friends could be and you should tell them to tag along—this is a great opportunity for you to essentially market your own home. You should even invite your realtor to stop by, because the next time he or she shows your home, they can actually speak from experience about how accommodating your home is.

Also, with historically low rates right now, it is the best time for a potential buyer to receive a low mortgage rate. Please, just remember to clean up after the party!

What is a Rural Development loan?

A rural development loan is a 30 year fixed mortgage guaranteed by the US Department of Agriculture (USDA) which allows homeowners to purchase a home with no down payment, and in some cases, it even allows the closing costs to be financed into the loan. The loans are intended to target low to moderate income borrowers that want to live in USDA targeted areas. The Federal Government guarantees the lender up to 90 percent of the loan against losses if there is a default on the loan, thus enticing lenders to do the loans.

Is there an acreage limitation on Rural Development loans?

USDA likes to keep the acreage to 30% of the total value of the home and land. If the value exceeds the 30%, it is still possible, but difficult.

Are Rural Development loans only available in rural areas?

While the rural development loans may target rural areas, their definition of a rural area is probably larger than what most people consider rural. For instance, all of Moss Bluff, Westlake, & Iowa qualify. In addition, south of Gauthier Road in Lake Charles and areas south of I-10 in Sulphur also qualify.

Are there eligibility limitations for whom can get a Rural Development loan?

In order to qualify for a USDA loan, the lender typically wants a 620 or higher score. There are income limitations and requirements for the loans, so you have to make enough to qualify for the financing, but can't make too much to be eligible for their guarantee. For Calcasieu Parish in 2011, a family of 4 needs to have an AGI under $74,050, and if the family has 5 or more, they can make up to $97,750. Typically, USDA prefers that you have a total debt ratio below 41% and a housing ratio of 29%, but we have had many loans approved with ratios above that with good compensating factors such as credit, time on the job, and lack of payment shock. USDA does not allow you to own multiple residences and the purchase must be for a primary residence only.

How would home financing be affected if the purchase were lower than the appraised value?

If a home does not appraise for the purchase price, the customer must either pay the extra amount down to the appraised value or negotiate with the sellers a lower purchase price.

What is PMI and why is it not required for Rural Development loans?

In the past, the USDA did not require monthly mortgage insurance (MI) since they charged an upfront funding fee. However, as of October 1, 2011, the USDA now charges a small monthly fee in addition to their upfront fee. This change is due to all the foreclosures nationally and subject to change. The USDA is still considered by most to be a better option than the government's FHA loan since the monthly fee is still considerably less than the government's FHA loan, and the customer can get the mortgage with little or no money out of pocket.

A great way to end the year is to throw a Holiday office party and invite your clients, real estate agents, attorneys, appraisers and insurance companies that you have worked with over the previous years. We always have our annual Christmas Party, here at Louisiana Mortgage in Lake Charles, around this time and this year it went off without a glitch!

It’s a wonderful way for everyone to get together, unwind, relax and have a good time. We had tons of food, ranging from smoked turkeys and hams, to jambalaya and all the sides to go with it. Several hundred people came and all of our Loan Officers and Production Assistants were able to talk to previous clients, as well as, generate new business.

Everyone left full and happy needless to say! Many people came up to me, thanking me for a great party, but Louisiana Mortgage had it because I wanted to show my appreciation to everyone for all they do for our company. We all work together as a team year round, and I believe it’s important to let people know that without them, Louisiana Mortgage wouldn’t be here. So if you didn’t have one this year, consider having one next year. And for those of you who did, always try and improve it for the next time. We always continue to think of new ideas for next year’s party and it has proven to make it bigger and better every time.

Leading online real estate and marketing firm, Trulia, conducted a study of the advantages of renting versus buying a home in the 50 largest cities across the country, and the results proved that owning a home is actually less expensive than renting. Here are a few interesting facts from their examination.

Trulia compared renting a two bedroom apartment, condo or townhome to owning it, and in over 72% of the major cities, it was better to buy. A few cities that are exceptions to this rule are major metropolitan areas such as New York, San Francisco and Los Angeles, but that can be expected in those areas. Only 12% of America’s largest cities are markets where renting is actually more affordable than buying a home.

However, the results prove that in other major cities, such as Detroit and Miami, it is still better to buy and Las Vegas is considered the best city to buy a home in the United States. As a Mortgage broker, I have also compared prices of renting versus buying in Lake Charles, Sulphur and the surrounding areas in Southwest Louisiana and my numbers have been consistent with the findings of Trulia. Another factor to take into consideration is the real estate market isn’t considered at its best right now; therefore, it is much more affordable to become a home owner in 74% of major U.S. cities.

Frank Garay and Brian Stevens from Think Big Work Small furthered the study by conducting one in Seattle, and they found that a 3 bedroom, 2 bathroom house built after the year 2000 was two-hundred dollars cheaper to own than to rent. Having said that, the facts are in, and for most of you home ownership seems like the better deal. I would encourage you to do some research on your own to see if home ownership is the best financial decision for you!