USDA Rural home loan program

[summer_time]

Anyone have experience/advice with this?

We are looking at moving to a small town outside of the city we are in. I have checked into this program a teeny bit and it looks like we'll qualify for both the Direct and Guaranteed loans, as does the property. We are looking at a property that is less than double my DH salary. We don't have debt. Because we are currently living in the city, we can't save enough to put down the traditional 20%, so I am assuming we won't qualify for a traditional mortgage, which opens up the Direct option?

[AllyRae]

We were on the other end of it...we sold our house to a couple that were a part of the program. For the seller, it is a royal PITA because you have to do a *lot* of pointless upgrades to your house to meet the loan criteria. We had to put in an extra $10k on top of all of the other upgrades we did (about $50k in 6 years) just to sell our house for barely more than we paid for it.

For the buyer though, it's a killer deal...our buyers put 0% down, and got a house from the 1970's that had to be completely upgraded with things you generally only find in newer houses (for example, the battery operated smoke detectors that all but newer houses have were not acceptable...we had to remove them all and have every single one of them hard wired together...there were like 6 of them.). And they didn't have to pay anything towards those upgrades--it was all on us. So for the buyer, it's a great deal. As far as I know, they had no problems at closing--we never had to delay closing.

[summer_time]

The house we are looking at was built in '02, so it should have less of those issues, but I am sure there are some. I didn't realize they were so strict with those things, so that is good to know!

[AllyRae]

Oh yeah, they are very strict! I think they pretty much take the building standards that a house built *today* would have and apply that to houses that were built decades ago. While that's great for the buyer, it's unusual in the house selling/buying field. Of course there are some things that have to be upgraded in almost every transaction. But we had to do weird things, like the drainage pipe for the hot water heater had to be lowered 6" to meet the new standard, which was different from the standards 30 years ago.

[kittywitty]

This is how we bought our house. It was great. The sellers didn't have to do anything that we wouldn't have specified anyway-like finish putting up the molding that was sitting around, some safety concerns, etc. I would go for it!

[vannienicole]

Wow! I never even knew these existed. I am going to start reading into all this now.

[summer_time]

Yeah, I know! I am super excited... like, seriously, one step away from calling my DH while he is in the middle of teaching 2nd grade and going sqeeeeee! I called my local extension office and they are going to email the prequal info and we'll go from there.

[EmsMom]

Can someone please tell me what is the advantage of these loans. I believe I would be eligible, but it is a lower interest rate? Cash? Or is it just easier to get the loan?

[pitter_patter]

Originally Posted by EmsMom

Can someone please tell me what is the advantage of these loans. I believe I would be eligible, but it is a lower interest rate? Cash? Or is it just easier to get the loan?

Lower, fixed interest rate. No or low down payment, easier to qualify for.

We did the program for my home and it was a very smooth escrow and closing. We bought a foreclosure so there wasn't really anything to go back and forth with this the house was as-is.

[lmonter]

Originally Posted by EmsMom

Can someone please tell me what is the advantage of these loans. I believe I would be eligible, but it is a lower interest rate? Cash? Or is it just easier to get the loan?

I have a friend that just went through this USDA thing. Welp, it was a gov't office, so she had the usual red tape headaches. But they got their brand new house, so it worked for them. The problem though? The land cannot be more expensive than the house. So while my friend would've loved to have had a small house on 5 acres with lots of room for their chickens, they ended up on a small lot on the backside of a high school's football field. That was her compromise.

But. In my county? It's only for people who absolutely cannot qualify for a traditional loan at any banks, can prove it, and have zero to little down payment money. As in, we're not eligible since hubby and I have had a traditional mortgage for 7 years now, with no problems on our end. If we sold this house we might end up with enough leftover for a down payment on something else and have few problems getting another traditional mortgage. Yes, I perused the info booth at the fair several weeks ago.

[EmsMom]

Originally Posted by pitter_patter

Lower, fixed interest rate. No or low down payment, easier to qualify for.

We did the program for my home and it was a very smooth escrow and closing. We bought a foreclosure so there wasn't really anything to go back and forth with this the house was as-is.

Would it be too personal to ask what the interest rate you are paying is? This is extremely interesting to me. I was planning to save up a fairly substantial deposit, but with less of a deposit, it could be a go sooner. And I wonder if they count retirement savings? Anybody know????

[vannienicole]

Originally Posted by EmsMom

Would it be too personal to ask what the interest rate you are paying is? This is extremely interesting to me. I was planning to save up a fairly substantial deposit, but with less of a deposit, it could be a go sooner. And I wonder if they count retirement savings? Anybody know????

I would still put as much down as you can, even if it says no down payment. Less to finance, less to owe

[pitter_patter]

Originally Posted by EmsMom

Would it be too personal to ask what the interest rate you are paying is? This is extremely interesting to me. I was planning to save up a fairly substantial deposit, but with less of a deposit, it could be a go sooner. And I wonder if they count retirement savings? Anybody know????

It is 4.75%, which was a good rate at the time. I'd definitely look for a local mortgage broker who is certified to do USDA loans, not every broker can do them.

[EmsMom]

That would have been a good rate a while ago. I think that even with cash in the bank (which I will have after my divorce is final), it will be hard for me to qualify for a mortgage. So this might just be a very good option. I would still be paying down the mortgage asap. But if I could hold off on a large down payment, I would have more flexibility. According to information on the USDA website, I would have to buy in the next town over from my preference. But there are some benefits to that town, too, such as cheaper and smaller houses and larger lots. Also because it is more rural, things like chickens are less of an issue. And it really is not that much farther. Actually, in many, many ways I would prefer it, but I would have to spend the next 9 years driving my kids into this town for school, though. But, yikes, my dd could be driving herself in 4 years!!!!