topic Re: USDA Direct Loan Process in Mortgage Loans

USDA Direct Loan Process

iamwhoiam — Sun, 26 Feb 2012 17:11:47 GMT

Hello everyone! I wanted to share my loan process so far.

This has been such a long process my dates may be off inthe beginning but I can give estimates.

Submitted preapproval in September. Received a phone call first notifying my that the complete package would be sent for me to fill out and return. I submitted everything and anything I could think of, including a LOE for a judgment I was making monthly payments on. I sent this in the middle of October.

I received my certificate of eligibility in the middle of December and started shopping right away.

It took almost a month of going back and forth to reach an amicable purchase offer on a property that had everything I was looking for. The price was originally listed at $120k. They lowered it to $99.9. We settled on $87 with $4k in closing costs from seller. They wanted an addendum that they would not make any or pay for any repairs. I agreed since the house seemed to be in great shape, plus the contract stated anything over $500 I was allowed to walk away from the deal if I so choose. I also submitted $500 for good faith payment.

Sent in the paperwork to USDA the end of January. Received my GFE February 2nd.

Immediately scheduled the inspection for January 31st. A friend did this for $300. I received the report a few days later with some minor repairs that would need to be made.

I got many quotes and finally settled on an insurance agent and sent the quote to my underwriter.

My underwriter contacted me the second week in February saying that because the square footage was above the normal 2,000 by 112 feet they would need to determine if I could afford the utilities. I had already gotten a monthly average from the utility company verbally but USDA wanted 12 months worth of bills. After a week of going back and forth, and research on my part, it was determined that they are only supposed to count living space. The finished basement is not considered living space therefore I was in the clear.

USDA did their walk through 2/7. An appraisal was ordered and completed 2/17. I have no idea yet what it appraised at. I received my funding commitment dated 2/24 with a list of contigencies. They were able to set aside $2,400 for the repairs if I choose to finance them so I need to get 2 estimates for the repairs. I don't believe they will cost that much. They consist of loose outlets, a rubber boot is needed a pipe on the roof, some shingles needed to be nailed down, one piece of siding needs to be sealed and nailed in, the flue pipe on the hot water tank needs to be replaced, electrical tape around something on the furnace, a stair railing secured better, and some electrical outlets outside under the addition needs to be repaired. I also need to order a pest/termite inspection. If I had know this was to be required it would already be done. Grr. I need to choose a title agent. I need to submit proof that the judgment was paid off (recently). Still waiting for the seller to submit the survey, the contract states they are responsible for it. And I need to send in a month's worth of paystubs as well as sign some paperwork (funding commitment and attachment to GFE). The GFE lists things that I have already paid for or will need to pay for out of my pocket, i.e. inspection and insurance. It does not include attorney fees or real estate agents commission or my good faith deposit. But so far it is around $4k. They have estimated that I will need $50 at closing.

When I first received that letter I was overwhelmed. But I have since calmed down and made the list and it really isn't that bad. I am still shooting for a closing date no later than the end of March.

I knew this was going to be a long process and I thought I was prepared. This board helped tremendously. But there were still surprises that I had not anticipated (mainly how long the process takes). It is still worth the wait and headaches and work, so far :-)

Re: USDA Direct Loan Process

flusda — Sun, 26 Feb 2012 22:11:39 GMT

Wow that was pretty fast. I've been in the process for about a year and a half I filled out are full application in November of 2010 and still no commitment letter for funding. What state do you live in.

Re: USDA Direct Loan Process

iamwhoiam — Mon, 27 Feb 2012 00:48:46 GMT

I live in New York.

Re: USDA Direct Loan Process

flusda — Mon, 27 Feb 2012 04:16:30 GMT

Thank you and good luck

Re: USDA Direct Loan Process

521tipton — Sat, 09 Jun 2012 18:20:37 GMT

Here is my story. We filled out all the paperwork in October 2011 and put our current house on the market. We did not expect to sell our house as quickly as we did, we had an offer in three weeks and closed in January. We are buying a new house that the builder is letting us rent until our USDA Direct loan closes. I put $1000K down and am paying $750.00 a month in rent, since January. I have been told I will get $1000k back at closing since USDA direct is supposed to be a 0 down loan. However I will not get the rent money back that I have paid.

We got our approval letter the end of May and have had the house inspected and appraised, hopefully we will close in early July???

It has been a long process for us because in the state of Indiana there is only one office and I think one person to handle USDA loans for the entire state and of course being a federal employee they get a lot of time off!

Re: USDA Direct Loan Process

Fixinit2009 — Wed, 13 Jun 2012 02:52:24 GMT

.... HARD SWALLOW .... I have to move on 08/15/12.

You guys are making me sooooooooooooooo NERVOUS right now! :smileysad:

I am in the process of one now... USDA Direct I am in NY and called my local office (EARLY MAY) , they sent me some pre qualification jargon, and then a letter in the mail. An application in the mail, and a request for documents. I returned all the info 5/24/2012, got a letter 05/28/2012 advising me that my documents have been received in Syracuse (where the UW's are). 06/05/2012, I received salary verification at my job. On 06/07/2012 I received a request for additional documents. On 06/08/12 I returned all of those documents. On 06/08/2012 I also received a written verification of employment at my job. Returned it the same day. I am signed up for First time homebuyer education class this Saturday 06/16/2012. I still have yet to receive letter knowing what I am qualified for, and have eyes set on a home in which the seller is motivated and keeps lowering price. BUT its the perfect USDA direct purchase.... the AGONY!

Re: USDA Direct Loan Process

Kg1977 — Wed, 05 Sep 2012 05:15:08 GMT

I am also doing the USDA direct loan (in Ohio)...I just started at the beginning of August in this process. I have recieved my letter that my application has been selected for processing and that they needed additional info. I sent in my additional info that they needed to make a final determination. It's been alittle over two weeks. I had called them today and left a message just to see where I am at in the loan process. I had gotten a call back at the end of the day. The person that called me said that my application was sent to the underwritter and she still has not recieved it back. Does anyone know how long it takes to get an approval and what happens next? Thanks so much in advance for any replies!

Re: USDA Direct Loan Process

521tipton — Tue, 11 Sep 2012 03:02:04 GMT

My process began in October 2011 the final approval came the end of May this year. My wife & I had a new house built and the builder let us move in and rent from January till we closed on July 9th. Yes it's a long process but it's worth the wait.

Re: USDA Direct Loan Process

Kg1977 — Tue, 11 Sep 2012 03:47:31 GMT

Just wondering. How long did it take you to get your certificate of eligabilty? And Was the 6 months wait for final approval because of funding not being available? Also, what state are you in? Sorry for all the questions.

Re: USDA Direct Loan Process

Fixinit2009 — Tue, 11 Sep 2012 18:02:37 GMT

Interesting that you are in NY and got the approval over the 2000 square feet.... I too am in NY and got my GFE yesterday, and found that the funds were WAY lower than what was originally proposed to me. Then when I called to Syracuse today to find out why she told me that because the taxes and the homeowners insurance were more than they calculated is what brought my $ down..... but then she proceeded to tell me that they WOULD NOT over look the 47 square feet that I was above 2000. REALLY USDA????? 2047 sq. ft. ??? a freaking closet. They are rejecting my housing package over a freaking closet.! I am so not happy right now.

Re: USDA Direct Loan Process

521tipton — Mon, 17 Sep 2012 02:34:24 GMT

Part of the delay was waiting on funding but the biggest problem was lack of staffing for the state office (Indiana) there are only 1 or 2 people processing applications for the whole state! We got our certificate sometime in June about 7 months from the start of the process. Then the appraisal came in lower then the seller was asking for the house (a NEW build). Ok with us though, but there was a further delay waiting on the builder to resubmit the new selling price. We finally closed on July 9th this year. Our builder was very nice he let us move in, in January and pay rent till we closed.

Re: USDA Direct Loan Process

iamwhoiam — Thu, 20 Sep 2012 17:03:05 GMT

I haven't been back since closing 4/9/12!!

Fixinit2009-is any of that square footage in the basement? She insisted they would not overlook it either-but they would do a verification that I could afford it based on utility bills. I insisted that only living area counted, basements do not (even though some of it was finished). She insisted not. I insisted she double check. I was correct and she wasted 2 weeks of my time. Grrrr...

Re: USDA Direct Loan Process

Fixinit2009 — Thu, 15 Nov 2012 17:32:56 GMT

I eventually let that house go. Not because of the 47 square feet but because come to find out the property COULD be divided (at 2.8 acres) and USDA wont allow that.

NOW... I have found a house that falls below program limits in square footage as well as acrage, have had it inspected, and am currently waiting on completion of appraisal that they have ordered, AND signing of contracts.

Can you tell me what happens next?? Any more credit checks or pay verifications?

Re: USDA Direct Loan Process

STEVIE1023 — Tue, 22 Jan 2013 18:10:26 GMT

I wish that I could give you some insight as to what to expect, but Im in the same boat. I applied for and direct loan about 2mths ago and Ive submitted every document that was requested of me. I waited about two weeks or so called just to make sure they had everything necessary to complete the app, and was told that there were some ppl ahead of me and they'd call me if they needed anything. The lady I spoke with sounded as though I was a bother to her and I dont want my persuing after the loan to be the determining factor as to if Im approved or not. Aiken,SC

Re: USDA Direct Loan Process

JM-AM — Wed, 23 Jan 2013 19:50:54 GMT

Seems like your lender isnt being very friendly. USDA is not a quick process majority of the time. Hang in there.

Re: USDA Direct Loan Process

JenniElle — Fri, 08 Mar 2013 17:10:13 GMT

Wow. You all should count yourselves lucky with your USDA experience.

I am in Central MA, have been working with the USDA on a Direct Loan since March of 2011, and STILL have not closed on my property and it's now March 2012. I have had NOTHING but problems with the USDA office in Holden with my lovely mortgage representative who refuses to acknowledge or return a single phone call from me and I literally have to call six times a day and hope, by chance, he picks up his line (that you can't dial direclty, because he won't answer).

I submitted my prequalification last March and I did not receive prequalification until May of 2011. By the time I received my prequalification, I was notified I had 30 days to submit all of the information to apply for the Direct Loan. Submitted all information within 3 weeks and was then notified, "sorry, funding is now put on hold" you can be put on a waitlist.

Finally released funding in September, I get a call telling me I should have 'never been approved for prequalification because I have too much monthly debt'. Went over my monthly liabilities with them, and they had multiple student loans listed twice. You'd think they'd realize this when they were going over everything. So fast forward another 3 weeks with me getting copies of every statement from every debt past and current that I had so that they could complare. I get my approval amount just prior to Thanksgiving.

Found a home the end of December. Submitted my offer the beginning of January, which was accepted and have been going back and fourth with the USDA and the attorneys since January. The sellers attorney now won't accept the USDA's letter of approval (with condiitions) post appraisal, because they clearly state that it's not a guarantee of loan funding. The seller's attorney is requiring that the USDA guarantee loan funding, which was supposed to be done by March 2 per the purchase and sales, and still has not been done. Of course, I cannot get a return call from the USDA representative to save my life.

When any of you have gotten this far, how long did it take from the appraisal for them to secure your funding and issue the notice of final approval for funding? The sellers need to replace the septic tank of the home I'm purchasing, which they have agreed to do upon notice of final mortgage approval, in order to sell the home. I agree with them 100% that they do not want to spend $3500 for this repair not knowing if the funding is 100% guaranteed because the notice of funds I received post appraisal states the appraisal amount and clearly notes that it is NOT a final approval.

Also, has anyone out there had the displeasure of dealing with the Holden, MA USDA office? I've already told my real estate agent that I am at my ropes end and if I can't get this straightened out by the initial close date of 3/27 I'm going to explore the option of the USDA Guaranteed Loan directly through a bank. I can't imagine that if you qualify for the Direct Loan you wouldn't qualify for the Guaranteed Loan. I also can't imagine that the process is NEARLY as difficult and frustrating working with a bank as it is with the USDA directly.

I can honestly say, with 100% conviction, I would never do it again through the USDA. It's just not worth the stress and being made to feel like a p.o.s. whenever you call their office and can't get anywhere with your mortgage representative.

Re: USDA Direct Loan Process

JM-AM — Fri, 08 Mar 2013 17:59:58 GMT

Truthfully they prefer you to go the other route. Government programs are all hurting, if I had to take a wild guess eventually all these government programs will be non existent.

This is why qualifications are becoming stricter so you look at other options that are comparable.