A True No Money Down Loan?

When you hear 100% financing, no money down as an option for a loan most people say, “no way, not possible, what’s the catch?” Many people, including lenders do not even know this loan program exists.

 

What is the name of this loan and how does it work? It goes by a few different names: USDA Rural Development Home Loan, USDA Home Loans, RD Government loans.  No matter what you call them, there is no catch as far as the 100% financing. The main qualifying requirement for the loan is the property needs to be in a designated rural eligible area that USDA has established.

 

The loan itself is great, especially for first time home buyers who may not have a lot of money set aside for down payment. The rates are always great and the monthly guarantee fee is significantly less than the mortgage insurance on other programs.

 

The basic breakdown of how the loan works and why the option of offering the 100% financing is possible is the loan has an upfront funding fee of 2% that is automatically built into the loan amount itself; this money is not required out of pocket. The funds from this 2% funding fee are sent directly to USDA dpt, it works as their upfront insurance and allows the borrower to not have the burden of out of pocket down payment expenses.

 

USDA loans also allow for the seller to cover all closing costs, up to 6%, so once again no money required out of pocket. This now leaves the only out of pocket expense for the borrower the cost of the appraisal and any earnest money needed to hold the property through the underwriting (escrow) process.

 

For those who are able to qualify for this loan it definitely is the most cost effective program being offered today.

It’s Hard to Find Good Advice

When you are faced with the opportunity to purchase a home, it’s very common to have a lot of questions. You can research endless websites, go to the library or ask friends or family member who may have gone through the same process in prior years.  With the mortgage industry constantly changing, and with all the different types of loans you may qualify for (such as conventional, FHA, VA or USDA loans ) my suggestion is to contact a reputable company, as Consumer Real Estate Finance Company. Not only will you have the opportunity to talk with a licensed Loan Officer who understand all the different programs and by just a few questions answered, he or she can pre-qualify you for a loan that best fits your needs.

 

Another great asset that is offered through Consumer Real Estate Finance Company are “short films”. They may seem simple, but very useful. See attached clip.  https://www.usdaloanagency.com/respa/. Viewing this will not only give you a better idea of what you are about to experience, but it will most likely put your mind at ease. You will KNOW that you are being taken care of, when financing your loan with a Loan Officer from Consumer Real Estate Finance Company.

Appraisals Versus Home Inspections

Do I need both?  Home appraisals tell you how much a home is worth, and a home inspection tells you why you might not want to buy it, regardless of price. Both processes have the capacity to derail home purchases. Low appraisals sometimes sink loan approvals and disastrous home inspection reports might cause buyers to rethink purchase offers. Home appraisals are estimates of the market value of a home made by professionals, according to guidelines established by the industry and state regulation. Home inspections are estimates of a home’s condition based on an expert’s inspection of the mechanical systems and structure of the house.  Appraisals are critical elements in home buying and refinancing. Lenders hesitate to fund more than 80 percent of the market value of a home. When buyers and sellers agree to a sales price on a home, lenders do not automatically agree to provide a mortgage based on that number. The lender bases the amount it is willing to lend on the appraisal, so when a home appraises for less than the purchase offer, the buyer must come up with the money to cover the difference. Sometimes, the seller agrees to sell the home for less money in order to save the sale.  Buyers base purchase offers on the assumption that the home is in good shape. When inspections reveal items needing repair, buyers ask sellers to either repair the flaws or to credit them money back so that they can do the fixes themselves.  As unfortunate as both situations might be, qualified buyers and willing sellers often resolve impediments to a sale. Flexibility in negotiations is important, and setting priorities on both sides helps to keep emotions in check. Sometimes, a very low appraisal is a deal breaker. Buyers might balk at the idea of spending more than the home appraisal number. Sellers might refuse to lower the price or make any concessions. Likewise, a laundry list of physical flaws in a home inspection report might spook first-time buyers or those unwilling to deal with repairs. Sellers might not understand what all the fuss is, having lived with the flaws for years.  Bottomline, both are necessary during the process of purchasing a home.

Buying a Home is a Big Decision!

Purchasing a home, especially for the first time can be intimidating to most people. They say that it is the largest purchase any one will make throughout their life time. Having been with Consumer Real Estate Finance Company for almost 9 years now, carrying many different hats from being a Loan Officer, Loan Auditor, ordering title work, verification of employments, appraisals to handing closings up until the very end, I have learned a lot.  I must say though, working within the business have taught me so much over the years that I can certainly use in my personal life. If that involves purchasing another home for myself or helping a friend/family  through the process.

 

I recently helped my in-laws purchase a home in Ohio. We went back and forth with the builder, deciding if we should “let” them handle it all. Including the financing part. I was somewhat against it as I felt I could provide a much more reliable outcome by doing the work myself. We talked about USDA loans, with no money down, since they were purchasing the home in a rural area of the city. My Father-in-Law is a retired career Air force Veteran, so a VA (Veteran) loan made more sense.  I started the process myself by providing them with a VA application. Took it home and explained every single page to them. From a Loan Officers perspective, I think you need that personal touch to not only gain another customer, but also build the rapport with them. Make them feel that you DO care about this very large purchase they are about to make. Of course in my case, they were family, but I still felt the need to put on the Loan Officer hat at the time so I could really explain what they were getting themselves in to.

 

Being in the Air Force for over 28 years, my in-laws have lived all over the world, but had never purchased a home for themselves, as they knew they would always be on the move. At the end, my in-laws DID end up going with the lender’s finance company. The reason behind this was simply due to some extra credits they were giving out by staying with the builders finance company and title company.

 

I still feel good about their purchase as we DID review the finance company’s paper work as well, making sure we still felt comfortable with what they were providing.

Who is a USDA Loan Best For?

The USDA Home Loan helps a variety of people from all walks of life.  It’s a government loan that is 100% financed which allows buyers who may be in tough financial situation to achieve the American Dream of homeownership.   Whether you are fresh out of school or have been retired for years, this loan allows people to get into new homes with little to no money out of pocket.  Whether you are going through a tough stretch in your life or trying to buy your first home, the USDA home loan has something to offer to everyone looking into a home purchase.  The qualification process is simple and easy with us.  It starts with a simple phone call or a quick email to www.usdaloanagency.com and within 24 hours you should hear from one of us eager to help you get into a new home.   Whether you have homes picked out on Zillow or Trulia or haven’t even looked into a home purchase before, we can help get you on the right path to home ownership quick and easy.  All it takes is a few minutes of your time speaking with us to see how best we can help.  Our highly trained, seasoned loan officers will be with you every step of the way until we can get you to the closing table ensuring a smooth loan process from start to finish.  Stop renting and throwing money down a bottomless pit and start building your future and equity in a new home.  Let us help get you home!  CREFCO

CREFCO Can Help With A USDA loan

USDA surprises and excites the market!!  This is the traditional 30 year mortgage with an affordable payment.  That’s right, affordable as in really little MI or MIP or PMI or whatever it is that you know it as.  I did say affordable and so yes, without a huge jump in rate.  No down payment is the answer to many folks living pay check to paycheck.

Purchasing a home sure can rock the emotions.  Keep in mind it’s a process and takes time.  CREFCO is the team that will walk you through it step by step.  Why CREFCO, maybe it’s our knowledge and experience.  Maybe it’s our loving staff that makes the extra effort to answer the call when you have questions.  Maybe it’s our honesty in preparing expectations… I hear it all from the good client that keep the referrals coming, a big Thank you to you all!!

Let’s take a good look before getting to far… what starts out right ends up right!!  USDA does have income limits that can disqualify… what what?  The variable’s to calculate this can be more than a one night study, just give us a call and let us do what we do ; )  Really, with USDA being our passion nobody noes it like we know it.  It’s not just the income that can make or break it but location is another.  USDA was originally set to endear or pull folks out of the big cities and put the smaller towns on the map.  Get your very own home with no down payment sure can be appealing, maybe just appealing enough to move a little farther out.  Good for many, this mortgage product wasn’t born yesterday and so many of these (what were small towns) are now on the map and in a big way!!

This product is either for you or it’s not.  If it’s not, no worries… USDA is exciting but is not the only exciting product we have (just our favorite: )