What’s the Difference Between an FHA and a USDA Mortgage?

31 Jul

What’s the Difference Between an FHA and a USDA  Mortgage?

The vast majority of first time home buyers purchase their first home with using either an FHA or a USDA home loan for their financing.  These two options offer some great advantages as well as some negatives.  Let’s take a look at the differences.

 

Hopefully after watching that video you have a bit better understanding of the difference between an FHA and a USDA home loan.

FHA LoanFHA Loans

FHA loans are by far the most popular of all loan options for first time home owners.  The unique combination of low down payment, lenient credit qualifying, artificially low interest rates along with no income limits or property geographic limitations make this the loan of choice.

These loans are sponsored by the Federal Housing Administration (FHA) in order to increase availability of mortgage financing to those who have only a small down payment but still would like to purchase a home.

USDA Loans

A USDA loan, where available, offers true 100% financing.  Obviously, this makes it a very popular program.  All that glitters is not gold, however, as I explained in the video.  I’m not opposed to using the USDA loan but I do believe strongly that a home buyer should clearly understand what they’re getting themselves into here.

USDA LoanThe obvious advantages is the fact there is no down payment and there is no monthly mortgage insurance.  But nothing is free.  The USDA loan is no exception.  The not-so-obvious disadvantage is that you are adding over 3.5% of the purchase price onto your loan in the form of a reservation fee.  Therefore you are actually borrowing not 100%, but 103.5% of the purchase price.  Additionally the loan is only available on certain addresses.  Basically the program is designed to encourage “rural” housing.  In other words, to increase sales of homes outside of major cities like Fort Wayne.

Why is that a big deal?  Well, when you go to sell a home here in Indiana you need roughly 10% equity in the property just to break even (after paying pro-rated taxes, Realtor fees, closing costs, etc).  With a typical 30 year loan this borrower will not have 10% equity in their home (starting with 103.5% and assuming flat housing prices) for roughly 7 years!  So, you’ve made your mortgage payments from August 2011 all the way through August 2018, you go to sell your house and walk away with… Nothing?  Ouch!

USDA vs FHANow pointing this out won’t be popular with many Realtors and even more builders.  Builders can charge a premium for homes in areas that offer USDA 0% down financing because it EASY to get into the house.  If you plan to purchase one of these home because you can get in with very, very little “skin” in the game, just remember, it’s “pay me now or pay me later.”  Facts are the facts and you deserve to understand your options.

Personally, I encourage buyers who are using the USDA loan to set up AUTOMATIC extra principal payments along with their mortgage payments.  On a $100,000 mortgage you can dramatically reduce your principal balance quickly by just adding an additional principal payment of 10% of your payment each month.  Many people I’ve seen have the best of intentions, but unless it is set to AUTOMATICALLY get paid, alas, the extra payment loses out to an iPad, or braces, or a cruise, or even Starbucks.  Don’t let that be you!

For a detailed post on USDA loans click here.

Your next loan in Indiana

When you’re ready to get your next loan in Indiana, I would love to help you.  My pledge, as always, is to treat your money as if it were my own.  I will treat you as a friend, not just a file.

Sincerely,

Chris Sanderson Tech Savvy LenderChris Sanderson
Tech Savvy Lender
260-414-3511

What’s the Difference Between a Home Appraisal and a Home Inspection?

29 Jul

What’s the Difference Between a Home Appraisal and a Home Inspection?

 

I get it!  Everyone is looking to save money when possible on the purchase of a home.  But friends, the argument that since the lender will be appraising the house you can go ahead and skip the home inspection.  NOT a good idea!  Here are the major differences, as I see them, between a home appraisal and a home inspection.

The Home Appraisal

First, let’s take a look at the home appraisal.  The purpose of the home appraisal is to get an independent opinion of value.  It will confirm to the lender that the house they are considering loaning money against is worth at least as much as the buyer has offered to pay for it.  Sometimes a misguided buyer just has to have that cute little bungalow because of that maple leaf shaped swimming pool and the granite island in the kitchen.  Here’s the problem:  They’ve been looking for a maple leaf shaped swimming pool and this is the only one they’ve found.  So, yes, $150,000 seems a little high, but who’s counting when you find that perfect pool!  The buyer can agree to buy.  And the seller can agree to sell.  But when the lender finds out that similar houses are actually only selling for $125,000 the lender will not make the loan based on the $150,000 purchase price.  The lender will lend based on the real market value of $125,000.  So, either the deal falls through or the buyer makes up the $25,000 difference with their own cash.

AppraisalThe licensed home appraiser will pull “comps.”  Comps are homes that have sold in the past 12 months that are similar to the house being appraised (called the “subject property”).  Generally the appraiser will find 3 comps that are similar in age, size, location, bedrooms and baths.  They will make “adjustments” to the value if they cannot find identical homes that have sold.  Based on the sales price of the comps the appraiser will determine their opinion of the subject property’s fair market value.

So, as you can see the appraisal is to protect the lender, NOT to inspect for the condition of the house.  Yes, if something is grossly and obviously wrong with the house the appraiser will catch it.  But the appraiser does not go to the home with the idea of checking the furnace, roof, wiring, plumbing, termites, etc.

The Home Inspection

The home inspections is wildly different from the home appraisal.  First off, it has nothing to do with your mortgage.  You can get a mortgage without a home inspection, but probably not without a home appraisal (unless you’re putting down a VERY large percentage of the purchase price).

The home inspection is contracted and paid for by the buyer of the home.  A licensed home inspector will inspect for major defects all the major components of the home:  i.e. foundation, roof, plumbing, electrical, heating, air conditioning, appliances, outlets, windows, insulation, etc.

knob and tube wiringAt the completion of the home inspections, which take from 2-5 hours, and cost from $225 – $600, the buyer will receive a copy of a very detailed home inspection report.  As you can guess, the home inspector does not generally offer an opinion of value as the appraiser does, but rather a report of the condition of the home.  In the case where a “major defect” is discovered, the buyer may complete an “inspection response,” requesting that the seller repair the major defect.  The seller may choose to correct the defect, in which case the buyer is obligated to purchase the home.  Or, the seller may determine that they are not willing to correct the defect.  If the seller refuses the purchaser should be able to recover their “earnest money deposit” from the seller.  Occasionally the seller will disagree with the inspector’s findings, which can get pretty interesting, but that’s a different post altogether!

Hopefully you are now much clearer on the difference between a home appraisal and a home inspection. :-)

Your next loan in Indiana

When you’re ready to get your next loan in Indiana, I would love to help you.  My pledge, as always, is to treat your money as if it were my own.  I will treat you as a friend, not just a file.

Sincerely,

Chris Sanderson
Tech Savvy Lender
260-414-3511

Sincerity Is Not a Test of Truth

27 Jul

Sincerity is not a test of truth.

Sincerity is not a test of truth.  Sincerity is a test of magnitude of belief. Gandhi was sincere, but so was Stalin. JFK and Ronald Reagan? Sincere.
But Hitler was sincere as well. We can believe fervently, with never-ending sincerity and STILL be dead wrong. Our leaders, on both sides of the isle, are
certainly sincere. Their life experiences have led them to their current belief systems.

TruthHere’s what I’ve learned: Receiving handouts destroys our self worth. Lack of self-worth impedes our ability to take action in our own best interest. And lack
of taking action in our own best interest invariably leads to neediness. Yet life will not respond favorably to neediness, to victims. Life responds not to
what a person needs, but rather what he has labored for, mentally, physically and emotionally.

Bad breaks? Sure. Hiccups? Of course. But over the long run, those who have done the hard work and exerted the discipline will be rewarded. Those who
expected something for nothing will lead a life of frustration. These are natural laws that you and I cannot alter!

If we want a nation of cripples then let’s just keep handing out crutches.  Our future as a country will not be determined by the needs of our citizens. It
will be determined by what we deserve through our level of discipline, our work ethic, and our willingness to accept the natural laws that regulate our
existence.

If you believe me to be off course here, please help me understand where I have gone wrong.  I am interested in reason, not name calling or finger pointing, please.  If your life experiences have led you to a different conclusion please chime in.  I sincerely would like to hear your opinions.

Most sincerely,

Chris Sanderson

Have You Ever Seen a Real Estate Office Like Realtor Duane Miller’s?

10 Jul

Have You Ever Seen a Real Estate Office Like Realtor Duane Miller’s?

I hate to say it but it’s true:  Real estate offices (with a few outstanding exceptions) are just pretty darned impersonal, functional places.  Heck, let’s just say it:  They’re BORING!  But NOT Duane Miller’s out at the Coventry office of Coldwell Banker Roth Wehrly Graber!

DIFFERENT IS GOOD – Just ask Duane. He’s taken the Fort Wayne real estate market by storm, finding himself in the top 10% of Indiana Realtors within his first 12 months in business – a task absolutely unheard of in such a short period of time.

“That’ll never work here!” was a favorite refrain from the “old timers” back in my real estate days at Charleston Better Homes & Gardens.  It seemed back then that the majority of Realtors would fight every single attempt at differentiation.  It was as though they didn’t have the energy or boldness to try something new Customer's Intereststhemselves, and therefore, rather than encouraging me they would let me know ‘That’ll never work here.”  I didn’t let that dissuade me from become the “South Side Specialist.”  It didn’t dissuade me from running a fun, tongue-in-cheek TV campaign where I ran for “Fort Wayne’s Favorite Realtor” during the political campaigns.

MonitorsI’d bet there was a whole lot of grumbling when Duane began bringing in modern Scandinavian furniture and dramatic lighting.  And when he brought in 3 monitors and painted the walls (***gasp***) mustard, I would bet my rental houses that the words “That’ll never work here!” were expelled by at least a few die-hard old-timers!  LOL.

Duane Miller of Coldwell Banker Roth Wehrly GraberTo that I say “Congratulations, Duane!  It can work.  It will work.  And it DID work.”  See you at the top.

You can reach Duane for all your real estate needs either by email at dmiller@cbrwg.com or via his batphone at (260) 437-8088.

And, by the way, HAPPY BIRTHDAY, Duane!  :-)

Kiss Your Landlord Good-bye! Complimentary Fort Wayne Home Buying Workshop

29 Jun

What?

At this complimentary home buyer workshop you will:

  • Understand HOW to buy your first home
  • Receive a copy of your credit report with your score
  • Determine whether you qualify for a mortgage loan
  • Know what loan programs are available for first time home buyers, and how much $ you’ll need (if any!)
  • Recognize the 10 deadly mistakes buyers make – and how to AVOID them!
  • Receive a planning guide to make home ownership a REALITY!

When?

Two workshops to choose from:Mark Your Calendar

  • Wednesday, July 20th from 6:00 – 8:00 pm or
  • Saturday, July 23rd from 10:00 am – 12:00 pm

Where?

Workshops are help at the downtown public library.  We’ll get you specific directions once you’ve registered.

Register Now!

To save your spot please either:

We look forward to meeting you and helping you KISS YOUR LANDLORD GOODBYE!

Goodbye

Fort Wayne Showcase Day 8 – Happy Mothers’ Day!

8 May

Fort Wayne Showcase Day 8 – Happy Mothers’ Day

special feature today for my jammin’, slammin’ Mom! 

Happy Mothers Day

 

I love you, Mom!

About the author:

I’m Chris Sanderson, Fort Wayne’s own “Tech Savvy Lender,” with Ruoff Home Mortgage.  As a life-long resident of Fort Wayne I continue to be amazed by the hidden treasures right under our noses.

When it’s time to get a mortgage in Fort Wayne please call me! 

Chris StandingChris Sanderson
Tech Savvy Lender in Fort Wayne, IN
Ruoff Home Mortgage
Direct:  (260) 414-3511
mrchrissanderson@gmail.com
www.TechSavvyLender.com

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Fort Wayne Showcase Day 7 – Baker Street

7 May

Fort Wayne Showcase Day 7 – Baker Street

Hopefully you can still get a feel for this fantastic Fort Wayne treasure!

Regarding the menu, my personal favorite is the coconut shrimp, house salad and (of course) the mouth-watering pretzel bread!  It was still about 10 degrees shy of being able to have our lunch out on the patio, but I highly recommend it when the temp gets over 70. :-)

Baker st salad

Best salads EVER!

Baker Street Exterior

Beautiful inside and out!

Baker Street interior

Terrific atmosphere!

Pretzel bread

 Don’t miss the amazing pretzel bread!  YUM!

And good news to all of us in the Fort Wayne social media community – These guys are embracing social media bigtime!  Drop by the Baker Street web site or connect with Baker Street here:

            

Baker St map

Just across North Clinton from Kohl’s (Northcrest)

About the author:

I’m Chris Sanderson, Fort Wayne’s own “Tech Savvy Lender,” with Ruoff Home Mortgage.  As a life-long resident of Fort Wayne I continue to be amazed by the hidden treasures right under our noses.

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Fort Wayne Showcase Day 6 – Hope Starts With A Meal

6 May

Fort Wayne Showcase Day 6 – Hope Starts With A Meal

Speechless.  Flabbergasted.  Stunned.  That’s how I felt when the sheer volume hit me.  190,000 meals, rattled off Pastor Donovan Coley, CEO of the Fort Wayne Rescue Mission..  Hold it a second!  “Is that even possible?” I asked myself…  Quick mental math told me that was 500 meals A DAY.  Up 40% since the recession began!

What if you woke up without hope that tomorrow would be better than today?  What would it do to your self esteem to sleep under a bridge and nearly freeze to death… literally.  What if the only smile, the only hello, the only handshake you got all day was the staff at the Fort Wayne Rescue Mission?  What an eye-opener!

“Hope begins with a meal.”

“A donor has a need as well.”

“We don’t go after a person’s money.  We go after a person’s heart.”

                                        -Pastor Donovan

Chris RichardsonThe answer to my simple question: “What is your biggest need right now?” surprised me!  “Individuals who will extend their compassion.”  Their compassion?  Didn’t see that coming. 

Seriously, friends this is not what you might think.  For example, the budget is $2.8 million – NOT funded by the government in any way.  Looking into it a bit further I saw this on the (fabulously informative) Rescue Mission web site:

How Can We Help?

  • Fort Wayne Rescue MissionShow them kindness and respect. Your smile can be a break in the isolation and hopelessness that many of them live with every day. Treating the homeless with courtesy can give them the energy to begin to lift themselves out of a bad situation. It tells them they are not invisible!
  • Don’t give money. Money won’t solve their problem. It can be used to buy drugs or alcohol. It may help them to avoid facing the root causes of their problems for just one day more. Instead, give them certificates to restaurants. Or better yet, direct them to our Mission or another shelter where they can get help to begin the journey out of hopelessness.

The reality is that my little post here doesn’t begin to do justice to what Pastor Donovan is attempting for our community.  I really recommend taking a look at their web site, www.rescuministries.us.  It’s LOADED with info – easily understandable and navigable.  This is an extraordinarily difficult undertaking.  Donovan’s passion, energy and enthusiasm is contagious.  Certainly they are changing the future of our community for the better!

Want to get a first-hand look at the work they’re doing?  A great place to start would be by taking a tour of the facilities.  Just call my friend Diane Richardson at 260-426-7357, extension 12.

Ready to roll up your sleeves and put your compassion and your unique talents to work helping these folks move people from hopelessness to hope?  What better mission could there be?  For more information please contact Lynn Isenbarger, Volunteer Coordinator 260-426-7357 

About the author:

I’m Chris Sanderson, Fort Wayne’s own “Tech Savvy Lender,” with Ruoff Home Mortgage.  As a life-long resident of Fort Wayne I continue to be amazed by the hidden treasures right under our noses.

When it’s time to get a mortgage in Fort Wayne please call me! 

Chris StandingChris Sanderson
Tech Savvy Lender in Fort Wayne, IN
Ruoff Home Mortgage
Direct:  (260) 414-3511
mrchrissanderson@gmail.com
www.TechSavvyLender.com

Ruoff logo

Let’s Connect Online!

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Thanks for sharing

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Fort Wayne Showcase Day 5 – Lauren Sanderson as Chuckie Finster

5 May Lauren_980400 GREAT so cute

Fort Wayne Showcase Day 5 – Lauren Sanderson as Chuckie Finster

A Fort Wayne Showcase just wouldn’t be complete without hi-lighting my uber-talented kid, Lauren Sanderson!  Want to get a feel for where I get my energy?  Check out what I’ve got to keep up with every day!!!

Lauren_980400 GREAT so cuteFor the first 10 years of her life I told her every day, “I love you.  I’m proud of you.  And I think you’re very special.”  Then it became a little uncool somewhere around 12…  Now I generally just get an exaggerated eye roll if I try it now.  Nonetheless, Lauren, I’ve started saying it again, eye roll or not!  So, Lauren…. If you’re watching, “I love you.  I’m proud of you.  And I KNOW you’re sooooooo darned special!”  :-)

To be honest, I could write on and on and on about the things I’ve learned from Lauren.  Heck, I didn’t even want to get on “The Facebook,” but had to do it just to snoop on her!  Now she’s turned me into a Facebook junkie!  LOL. 

Let me share with you some of my many fond memories of this fabulous young lady!

Disneyland

Pink Duct Tape

Lauren_981027Hallow3100-0005_IMG103-0397_IMG

101-0109_IMG (2)Lauren's tri- run

 mask

 Zombie Walk 10-2010 041

 Picture 009

 pumpkin carving 2004

OK, friends!  If that’s got you thinking about your family, I’d strongly suggest pointing your mouse right here for one of my favorite stories of all time in this post: Parents – Read On If You Dare!

About the author:

I’m Chris Sanderson, Fort Wayne’s own “Tech Savvy Lender,” with Ruoff Home Mortgage.  As a life-long resident of Fort Wayne I continue to be amazed by the hidden treasures right under our noses.

When it’s time to get a mortgage in Fort Wayne please call me! 

Chris StandingChris Sanderson
Tech Savvy Lender in Fort Wayne, IN
Ruoff Home Mortgage
Direct:  (260) 414-3511
mrchrissanderson@gmail.com
www.TechSavvyLender.com

Ruoff logo

Let’s Connect Online!

 Twitter Facebook  Tech Savvy Lender on YouTube  Tech Savvy Lender on WordPress  LinkedIn

Thanks for sharing

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Parents – Read On If You Dare

4 May

Parents – Read On If You Dare

Hey friends.  I’d like to share something VERY special with you.  This is dedicated to my soon-to-be-grown up daughter, Lauren.

Milk does a body good

I first read Father Forgets again while re-reading “How To Win Friends and Influence People” by Dale Carnegie.  It doesn’t require much in the way of pre-amble.  Just grab you Kleenex and read on, if you dare.

“Father Forgets” by W. Livingston Larned
Originally published in the 1930s in the Readers’ Digest (at least that’s my understanding)

Listen, son:
I am saying this as you lie asleep,
one little paw crumpled under your cheek and
the blond curls stickily wet on your damp forehead.
I have stolen into your room alone.
Just a few minutes ago,
as I sat reading my paper in the library,
a stifling wave of remorse swept over me.
Guiltily I came to your bedside.

There are the things I was thinking,
son: I had been cross to you.
I scolded you as you were dressing for school
because you gave your face merely a dab with a towel.
I took you to task for not cleaning your shoes.
I called out angrily
when you threw some of your things on the floor.

At breakfast I found fault, too.
You spilled things.
You gulped down your food.
You put your elbows on the table.
You spread butter too thick on your bread.
And as you started off to play
and I made for my train,
you turned and waved a hand
and called, ‘Goodbye, Daddy!’
and I frowned, and said in reply,
‘Hold your shoulders back!’

Then it began all over again in the late afternoon.
As I came up the road I spied you,
down on your knees, playing marbles.
There were holes in your stockings.
I humiliated you before your boyfriends
by marching you ahead of me to the house.
Stockings were expensive -
and if you had to buy them you would be more careful!
Imagine that, son, from a father!

Do you remember,
later, when I was reading in the library,
how you came in timidly,
with a sort of hurt look in your eyes?
When I glanced up over my paper,
impatient at the interruption,
you hesitated at the door.
‘What is it you want?’ I snapped.
You said nothing,
but ran across in one tempestuous plunge,
and threw your arms around my neck
and kissed me,
and your small arms tightened
with an affection that God had set blooming in your heart
and which even neglect could not wither.
And then you were gone,
pattering up the stairs.

Well, son, it was shortly afterwards
that my paper slipped from my hands
and a terrible sickening fear came over me.
What has habit been doing to me?
The habit of finding fault, of reprimanding
- this was my reward to you for being a boy.
It was not that I did not love you;
it was that I expected too much of youth.
I was measuring you
by the yardstick of my own years.

And there was so much that was good and fine
and true in your character.
The little heart of you
was as big as the dawn itself
over the wide hills.
This was shown by your spontaneous impulse
to rush in and kiss me good night.
Nothing else matters tonight, son.
I have come to your bedside in the darkness,
and I have knelt there, ashamed!

It is a feeble atonement;
I know you would not understand these things
if I told them to you during your waking hours.
But tomorrow I will be a real daddy!
I will chum with you,
and suffer when you suffer,
and laugh when you laugh.
I will bite my tongue
when impatient words come.
I will keep saying as if it were a ritual:
‘He is nothing but a boy – a little boy!’

I am afraid I have visualized you as a man.
Yet as I see you now, son,
crumpled and weary in your cot,
I see that you are still a baby.
Yesterday you were in your mother’s arms,
your head on her shoulder.
I have asked too much, too much.

- W. Livingston Larned

Moms & Dads – Not sure about you, but I’m shutting my computer down and giving my kid a hug…

About the author:

To your abundant success!

TSL standingChris Sanderson
Tech Savvy Lender in Fort Wayne, IN
Ruoff Home Mortgage
260-497-0800
MrChrisSanderson@Ruoff.com
www.TechSavvyLender.com

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