Archive for USDA loans
USDA Loans – Encouraging Developments
Posted by: | CommentsUSDA Loans- Encouraging Developments
Last Friday morning, 4/23/10, a new bill named HR 5017 passed through the House Financial Services Commitee. This bill essentially replenishes the supply of funds to the USDA Rural Develpment loan program and even better, it makes it self-sustaining and not reliant on taxpayer dollars for continuation. Next the bill will next go to a vote in the House. The program had been essentially estimated to run completely out of funds by April 30, so the timing could not have been better.
The USDA program will likely carry some changes such as an potential increase in its Guarantee Fee from its current level of 2%, to 4% (Guarantee fees are financed into the loan amount, so the cost is spread out over 30 years). USDA loans may also start including a monthly mortgage insurance payment, so they will begin to be more in line with the FHA loan program. It would only makes sense, given that FHA has recently increased their upfront funding fee from 1.75% to 2.25% at the beginning of April. Regardless, the USDA loan will still be one of the best ways to purchase a rural eligible home with no down payment. For more information on USDA loans, please check out these articles.
Nashville Mortgage News- USDA Loan Program Running Out of Funds
Posted by: | CommentsNashville Mortgage News- USDA Loan Program Running Out of Funds
The Department of Agriculture, which oversees the USDA loan program has recently announced that its Guaranteed Loan Program will run out of funds by the end of April 2010. While this does happen every year, it’s usually not until the fall (August/September). Furthermore, this notice has a lot more serious tone than in the past because USDA will not be issuing “conditional commitments” subject to funding this time, because they have stated that they are not sure when new funds will be appropriated by Congress. And just like clockwork, multiple lenders announced they have stopped taking mortgage applications for USDA loans, and the remaining ones said they will continue as long as they can get conditional commitments from USDA offices. 
Having said this, if you are planning on using USDA for your (metro) Nashville mortgage and do not know if you will get final lender approval by mid-April (at which point it is sent to the USDA office to get the conditional commitment), I would urge you to start making backup plans to use FHA or other mortgage financing in case funds dry up more quickly than outlined in the USDA notice.
Final thought: the tax credits being offered to purchase homes have most likely been the cause for the accelerated depletion of funds. Congress allocates money every October for this program, which is a month or two after typically run out of funds, and we’re no where near October 2010! We’re very hopeful that Congress will be able to quickly address this issue well in advance of their normal timeframe. Otherwise, it’s certain to dampen the housing recovery across the nation, particularly in the more rural counties.
Nashville Mortgage News- LOW to NO Down Options- USDA Loans
Posted by: | CommentsNashville Mortgage News- LOW to NO Down Options in TN- USDA Loans
USDA Loans, or USDA Rural Development loans, are a legitimate 100% financing program, but as the name suggests, they are only for homes in rural-eligible areas. The vast majority of TN counties are entirely rural-eligible, so any single-family home or approved condo in those counties would qualify. For those 21 counties which are more “suburban,” you’ll have to check USDA’s website to see what specific areas of those counties are eligible. You don’t need to be a first time buyer, but you’ll need at least a 620 credit score. You’ll also have to meet the income requirements (can’t make too much money), and the home price cannot exceed the limit allowed for the county. Interest rates are very good, but typically just a tad higher than conventional or FHA (after all, it’s a 100% loan!). USDA loans are always 30 fixed terms. Two huge benefits are that there is no monthly mortgage insurance (PMI) and you can get a loan up to 100% of appraisal (rather than sales price), which means you can finance in closing costs if there is room, assuming the seller can’t or won’t. Also, there is no limit on how much the seller can pay towards the buyer’s closing costs, which comes in handy on the smaller sized loans (sub $75k). In other words, USDA loans can potentially make it easier on buyers to get in a rural-eligible home with little to nothing out of pocket. This is an awesome program.
In the coming Nashville Mortgage News article, we’ll be hilighting the FHA program.
