USDA GUARANTEE AND BORROWING THE FULL APPRAISAL AMOUNT

[germaine47]

I have just gotten my pre-approval amount  for the USDA Guaranteed  Loan for (150,000) and I wonder if anyone have ever borrowed the full appraisal amount, I would like to to updates to the bathrooms and kitchen.  The list price is 76000, the house is a foreclosure and  missing the central air unit and have peeling paint around the trim which I know they have to be replaced to pass inspection. The house has to be move in ready and the cost for fixing these things  cannot be placed into escrow account. I want to borrow 15,000 to get the house just the way I want it , bringing the loan amount to 91.000.

Thanks Germaine47

[boomhower]

They are going to loan the lesser of two amounts, the contract price or the appraisale price.  If you want to do updates you are going to have to sourse the funds somewhere else after the fact.  You may want to look into an FHA 203k loan as well.

[sophmore]

I'm in the process of going USDA Direct and not Guaranteed.  I will share with you what I have been told but please take it with a grain of salt.  I don't know how accurate the information is at this point.  I looked at a house with a realtor that seems fairly knowledgable about USDA. 

We were doing a walk through on a property and  discussing the work that needs to be done on the home.  Some issues would definitely have to be fixed like the heat but most of it was cosmetic.  I was talking to my husband about the cosmetic changes and how we would be responsible for them.  The realtor interjected and told me that that was not necessarily the case.  She said that if we were approved for $140,000 (I'm using generic figures) and we purchased the house for $110,000 and the appraised value was higher than the amountt we purchsed the house for then we could finance the difference up to the amount of the approval.  So, if the house appraised at $140,000 or more we could use the $30,000 to complete renovations. 

I'm skeptical and I told her that.  She assured me that it had been done before and she encouraged me to talk to my local USDA loan specialist.  Like I said I am going Direct and not Guaranteed.  So, I would definitely talk to your LO and see if it is a possibility.

[Anonymous]

I was told that same answer. Usda said if there is repairs on the house or updating to be done you have to get two estimates on the repairs and they will calculate them into the mortgage as long as you don't go over appraised amount. I am also getting a direct loan how is your process going.

[sophmore]

flusda,

I'm just beginning the process.  I just got the phone call today telling me I made it through pre-qualification and now it's on to the regular application. 

[Anonymous]

That's good I was just told yesterday that are loan is being funded. It's been a long and stressful process but worth the wait.

[SuzyStellar]

Hello all.  I just got our certificate for usda direct loan.  I called the office and asked questions almost the same as yours.  I was told no they do not pay for repairs unless it poses a safty issue, and falls between the appraised amount and the max loan amount that you qualify for.  I am telling you this because we just went through one of the most painful experiences ever, and lost the house we were in love with because we assumed something.  If I learned anything so far, never assume, always call and ask. 

[Anonymous]

May I ask what your experience has been so far. Before you got your COE did you get a approval letter.

[germaine47]

I went to a mortgage broker and received my pre-approval letter on February 28,2012.  I was trying to find more of a house for my dollar and I kept going to foreclosures in which they all had a ton of work to be done.  I went to a realtor that was well versed in foreclosure properties and she knew what would be acceptable to pass the USDA loan process.  She stated, "most foreclosures are tagged as is, but she gave it a try.  I offered the full asking( 76,000 )price with conditions that if they fix everything to move in ready status that we would have a deal. My realtor sent them my pre-approval letter and a copy of earnest money check and they agreed.  The home already has a new roof, they agreed to replace the heating and a/c and  paint trim on the outside.  The rest is cosmetic I pray there isnt any other major issues with the house.

Thank You Fico Forum  for getting me here

[Anonymous]

That sounds great congrats.