USDA loans

[Anonymous]

I have been reading as much info as I can on USDA loans, but I still don't really know where to begin. How/where do you begin the application process? I would really appreciate any advice or even just some info as to how anyone else's experience with these types of loans was. Thanks in advance! I also wanted to know if USDA  loans apply to fixer-upper homes and/or foreclosures.

[JayTee1]

I can't tell you too much other than what you can find online, but I'm using a USDA loan to purchase a condo, new construction, in the next year.

What I did was find a loan officer first with a mortgage company from a list of mortgage companies who had experience with USDA, FHA, and down payment assistance programs.  I got this list from a home ownership class I took last year, a free class provided in the county in which I live.

Once I started chatting with the loan officer, she actually gave me some ideas about where to look, and I found what I wanted.  I've made a deposit on the condo I want, made my selections, signed a prepurchase contract and am working through the preapproval process right now.  I believe I already  meet USDA requirements; I'm just now meeting the mortgage company's requirements, and that still may take some time for me as my middle mortgage score needs to hit 660.

RD loans cover a huge portion of the country -- essentially anything that's not inside city limits from what I can tell.  The USDA site can tell you a lot more.  The interest rates are good, but you'll have to deal with the USDA guarantee fee, which is, I suppose, one of the prices you pay for not having a down payment.

For me, the key was finding a knowledgeable loan officer who would take the time to start working with me, even though my goal wasn't to purchase until 2017.  I had contacted at least one one other loan officer who didn't even bother to reply to my email.

So far, this has worked out great for me.  

[Anonymous]

JayTee, thank you for your info. I guess my first step would be to find a loan officer who is experienced in USDA loans in my area. I probably won't be ready to purchase until 2017, so for now I will probably continue to research and learn as much as I can!

[JayTee1]

I also did not plan to be ready until 2017 (and I still won't be).

I don't see anything wrong with finding a loan officer super early.  The one I'm working with has been very informative and helpful about everything I need to do in order to make sure I get a mortgage in 2017 and that it goes smoothly.  

[RonM21]

From things I've heard and read, getting a Loan officer early can be beneficial. Gaining the knowledge you need early is a bonus on your side!

[Anonymous]

There are two types of USDA loans.  The Guarantee, where you pay a fee, smaller than PMI, and then there is the USDA Direct.  That one provides you a subsidy on your interest rate and can go down to 1%.  There are income and location limits but the website will tell you everything.  You can type in your income and they will tell which which loan you qualify for.  You need to know which area you want to buy in for Direct as your have to go through that counties main USDA office to send in a pre=qualification form.  But with the Guarantee loan and if you choose a qualified lender, you may be eligible for a GSFA Grant which is 3.5% of the purchase price.  Something to definitely look into and research from all avenues.

I was going to go this route but I have also heard of NACA and am researching that avenue also.  No closing costs, no minimum credit score but you can't have late payments and you need to show every month that you can make the mortgage payment by showing payment shock savings as the sum of all your bank accounts increading by that the payment shock account.  It seems like a long process but I read about NACA on here and believe it will be worth it for me if I can stick it out!  I would go to theNACA wesbite and read the handbook and also go to NACA forum and get information that way. Attend a workshop ASAP (their website will show you when the next one is) even if you aren't sure about it because some offices you have to wait a few months for an appointment and you have to attend the workshop first.  You will get lots of valuable information at the workshop.

[Anonymous]

Thank you Giggles, I am going to look into that!