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Old 09-10-2009, 11:29 PM - Thread Starter
 
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Anyone have experience with these? Pro's? Con's? Anyone know if you can pay them off or down early without penalty?
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Old 09-11-2009, 02:42 AM
 
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Old 09-11-2009, 04:07 AM
 
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We are currently in the process of purchasing a home with a Rural Development loan....so I don't have a ton of experience yet, but have a little. There are not any penalties for paying the loan off early. There is no downpayment required and the interest rate is fixed. You don't have to have mortgage insurance, either. This is our first home purchase so we don't have any experience with a conventional loan, but so far I'd recommend the RD loan. Everything has gone so smoothly for us so far. We close on Monday, yahoo!

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Old 09-14-2009, 11:30 AM - Thread Starter
 
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I've dug for the last couple days. I found the 502 USDA loans are what I'm wanting. There are direct loans ( these I'm reading are rarer and they can be a pain ( well your borrowing from the Fed so of course) ). Then we have the Guaranteed Loan , this is the USDA backing the loan through a private bank. They take on the risk and if you fall into the income guide lines AND the house is under a % of population ( small rural cities also are included ) then you are good to go! Also the GL can be paid off early etc because its a conventional loan.

If anyone knows of any thing that would be a issue down the road with this type of loan LMK!
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Old 09-14-2009, 11:35 AM
 
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The biggest challenge with a RD loan in our area is getting the house approved. It has to be modest, well-insulated, not have any easements (no driveways running through someone else's property), no barns, no pools, etc.

Stacia -- intrepid mama, midwife, and doula. Changing the world one 'zine at a time.
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Old 09-16-2009, 06:30 PM - Thread Starter
 
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The biggest challenge with a RD loan in our area is getting the house approved. It has to be modest, well-insulated, not have any easements (no driveways running through someone else's property), no barns, no pools, etc.
Hum.. no barns on a rural property is hard to find..Are you sure?
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Old 09-16-2009, 09:13 PM
 
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We are currently in the process of purchasing a home with a Rural Development loan....so I don't have a ton of experience yet, but have a little. There are not any penalties for paying the loan off early. There is no downpayment required and the interest rate is fixed. You don't have to have mortgage insurance, either. This is our first home purchase so we don't have any experience with a conventional loan, but so far I'd recommend the RD loan. Everything has gone so smoothly for us so far. We close on Monday, yahoo!
I bought a house with a rural dev. usda loan when I was 19. The above is pretty much right on, except yes, you do have to have insurance (as well as pay for property taxes). It's all rolled into the loan. You cannot have a mortgage without mortgage insurance.

The loan is subsidized so depending on your income you'll mortgage will vary. If your income goes up or down you report it to them and they adjust your mortgage payment (although, it can only go SO low...). There aren't any prepayment penalties and you can always refinance into a normal mortgage. Just be aware when you sell the house or refinance you have to pay the government back what they were subsidizing you (I still made a little ($7k) when I sold my house).

My mortgage was 0% down, 38 year fixed loan. Which, clearly, isn't ideal. Once you finally pay that off...time to start paying back the subsidy. Which is why I sold my house. I didn't want to be owing someone for-ev-er. (Although, I was young, and never took into consideration that my financial situation would change, then i could've refinanced the house for less years...although I'm not in that rural area anymore so I guess it worked out for the best!).

My dad also works for a company that builds houses for and WITH low income families with rural housing loans. It's the same loan - just a tad different because you actually build the house. It's pretty neat
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Old 09-16-2009, 09:32 PM - Thread Starter
 
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Ok I'm reading about the barns and no structure with income making possibility Two places we are looking at have barns but they are OLD and falling down...how useful of a structure do they have to be? Or is it no barn no loan? Because almost all the houses in our price range even in the small towns have barns even as garages.

How much is the subsidy? the down payment that you didn't pay? I think Id rather get a conventional loan if thats the case.
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Old 09-16-2009, 09:37 PM
 
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We did it! Its awsome, even though its hard to find just the right house that fits the requirments.
We got a special downpayment grant, that paid $30,000 for us.
80% of our loan is set at 1% interest through RD, with the rest at the bank and set at 5%.
Our mortgage runs us just under $700 per month on a 2,000 sqf home.

We were not under restrictions as to only one building on the property.
We have the original cabin/house that the owners/builders lived in, connected to the house by a large deck with ramps.
Plus another shed that we turned into an awsome chicken coop, plus a large greenhouse.

THe restriction that does stink, is that we cannot run our dream B&B off of this property.
If we can buy another lot, and put the cabins on it, we will be fine.

Paula, wife to Steve, mother hen to 38 , busy doing : TTC after 6
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Old 09-17-2009, 03:10 PM
 
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I bought a house with a rural dev. usda loan when I was 19. The above is pretty much right on, except yes, you do have to have insurance (as well as pay for property taxes). It's all rolled into the loan. You cannot have a mortgage without mortgage insurance.
You have to have homeowner's insurance, which is built into the monthly payment, but you do not have to have private mortgage insurance (which is different). You do have to pay PMI with an FHA loan and usually with a conventional if you put less than 20% down. We are doing a guaranteed USDA RD loan through a mortgage company, though, so if you do a Direct loan it may be different.

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Old 09-17-2009, 03:18 PM
 
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Ok I'm reading about the barns and no structure with income making possibility Two places we are looking at have barns but they are OLD and falling down...how useful of a structure do they have to be? Or is it no barn no loan? Because almost all the houses in our price range even in the small towns have barns even as garages.

How much is the subsidy? the down payment that you didn't pay? I think Id rather get a conventional loan if thats the case.
The subsidy depends on your income. If you qualify for a rural dev. loan it means you are low income and cannot afford a normal mortgage. Let's say your actual mortgage payment is $1000 a month but you can only afford $700/mo. The gov. subsidizes the extra $300/mo...so EVERY MONTH you are being subsidized. Depending on how long you have that loan for, and how much you're being subsidized...it just varies.
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Old 09-17-2009, 03:19 PM
 
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You have to have homeowner's insurance, which is built into the monthly payment, but you do not have to have private mortgage insurance (which is different), which you have to pay with an FHA loan and usually with a conventional if you put less than 20% down.
I had to have both...rolled into the one payment of course. But then again, That was 7 years ago, so maybe it's changed? I'm not sure.
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Old 09-17-2009, 03:40 PM
 
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The subsidy depends on your income. If you qualify for a rural dev. loan it means you are low income and cannot afford a normal mortgage. Let's say your actual mortgage payment is $1000 a month but you can only afford $700/mo. The gov. subsidizes the extra $300/mo...so EVERY MONTH you are being subsidized. Depending on how long you have that loan for, and how much you're being subsidized...it just varies.
As far as I understand that is how it works with a Direct USDA RD loan (which is underwritten by the government). There are two different kinds of RD loans. The Direct loans are for very low incomes, for those that can't afford the payments of a Guaranteed USDA RD loan (underwritten by a mortgage company), so the government subsidizes what you can't afford. With a Guaranteed you are paying the entire payment so you don't have to pay back any subsidies when you sell (but your monthly mortgage is higher, obviously).

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Old 09-17-2009, 03:42 PM
 
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I had to have both...rolled into the one payment of course. But then again, That was 7 years ago, so maybe it's changed? I'm not sure.
It must have changed because we were told that we don't have to pay private mortgage insurance with our RD loan.

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Old 09-17-2009, 03:43 PM
 
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subbing!! :

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Old 09-17-2009, 03:47 PM - Thread Starter
 
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The subsidy depends on your income. If you qualify for a rural dev. loan it means you are low income and cannot afford a normal mortgage. Let's say your actual mortgage payment is $1000 a month but you can only afford $700/mo. The gov. subsidizes the extra $300/mo...so EVERY MONTH you are being subsidized. Depending on how long you have that loan for, and how much you're being subsidized...it just varies.
Ah yes this is the direct loan. We are looking at the 502 guaranteed loan , we fall into those income guidelines but we just don't want to pay a down payment...still trying to find a place in our price range that doesn't have a barn... I think we though are going to just go the conventional route considering I want have a little land and that is hard to come by without a barn or a garage with a work shop

PMI is NOT in the RD loan
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Old 09-17-2009, 04:07 PM
 
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okay now i can type

so, can you use this program to move elsewhere in your state or nationally, or just within your current county of residence? i notice that they calculate your eligibility by which state and county you're currently in--but we'd be more than happy to move elsewhere, LOL!

fascinating info, don't know what i'd do without MDC

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Old 09-17-2009, 05:31 PM - Thread Starter
 
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okay now i can type

so, can you use this program to move elsewhere in your state or nationally, or just within your current county of residence? i notice that they calculate your eligibility by which state and county you're currently in--but we'd be more than happy to move elsewhere, LOL!

fascinating info, don't know what i'd do without MDC
I know! I think its the county you are moving into but I'm not sure.

I appreciate all this collective info its really helped me figure out what direction we wish to take
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Old 01-07-2014, 10:48 PM
 
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I saw your comment please let me know the company your dad works for i'm thinking about buying some land and applying for a usda loan

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Old 01-07-2014, 10:50 PM
 
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I saw your comment I would like more information on the company your dad works for me and my husband cant agree on any already built homes so maybe  getting one built is an better option

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