A Loan Program You Need in Your Arsenal
/I’m talking about USDA. This is a phenomenal program and if you are not familiar with it, it’s time that you get well acquainted. It may be somewhat of a niche program, but for the right buyers, it is a game changer. I have four of these loans in process right now and every customer that is getting this program is thrilled. For example, I locked one in last week at 3.25% on a 30 year fixed with a $232,000 sales price in Mt Juliet, paid a 1% lender credit to help with closing costs, and got the seller to contribute $3,500 plus title. The buyer is getting this home for no money out of pocket and a payment based on a 3.25% rate. I’m still a little giddy thinking about what a great deal it is. Below are the main highlights and drawbacks (although I should probably just call them parameters versus drawbacks).
Benefits:
- Requires no money down
- Seller can pay closing costs and prepaid items
- Credit qualifying is very reasonable
- Rates are phenomenal
- Monthly mortgage insurance (called a guarantee fee) is cheaper than FHA by 35 basis points
Parameters:
- Must be in a designated area (rural property)
- Household income limit (most of our MSA is $75,650 per year)
- Can’t own another home (don’t have to be a first time buyer, just can’t own another home at closing)
To find if a specific property is available, simply go to http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do, click “single family housing” under the Property Eligibility tab and type in the address. You can also zoom out from this spot and see the areas that are eligible (anything that is not in the shaded area is eligible). With properties so difficult to find in the city limits, it might be worthwhile for your buyer to look a little further out (Spring Hill, Mt Juliet, Thompsons Station, parts of Nolensville, Fairview and Pegram are just a few that might surprise you). You might just find a diamond in the rough – and get them a great loan program at the same time!