Re: USDA Direct Rural Loan (502 Direct) for very low or low income
08-14-2011 02:17 AM
For a few of you who have been following my posts, I wish you the best and hope you will be able to realize the dream of owning your own home. I also want to apologize because this may turn into a rambling and long winded post. I want to share as much of my experience with this loan as possible so others will know what to expect.There's really no information online and the only way to really know how this program works and progresses is to get it firsthand from someone going through the program.
This has been an arduous process and I am almost at the end. I had a lot of sleepless nights and a lot of " Please God, let me get approved" prayers.... Then once I was approved it turned into "Please God, let my loan get funded."
I have come to realize only recently that the "Certificate of Eligibility" means nothing. It means you are eligible for the program but it does NOT guarantee you will be able to buy a house. The step that ensures you will purchase a home is the "Commitment of Funding." This only happens if the RHS has money to loan. Once you are funded, you are buying a house! Once your funds are there - no one can take them away.
My direct loan has progressed fairly quickly for a direct loan. As you will see, there are a lot of days and weeks between some of these dates. I'll share my timeline with you:
Prequalification stage: 5/10/11
Determined eligible for processing: 5/26/11
Returned complete application: 5/31/11
Eligibility interview: 7/20/11
Under contract on house: 7/22/11
Home Inspection: 7/25/11 (minor repairs like the ridge vent, securing screws on the dishwasher)
Appraisal: 08/01/2011 (my house appraised for $152,999 which is $1 less than the cutoff)
Loan funded/obligated by USDA state office: 08/09/11
Sent to attorney for title work and survey: 08/10/11
Closing costs (estimates from the attorney):
Closing costs based on a purchase price of $135,000
and a loan amount of $135,000 are estimated as followis:
Attorney's fee: $275.000
Title search: $195.00
Title Binder: $125.00
Owner's Title Insurance: $180.70
Lender's Title Insurance: $403.50
Courier/Wire/ACH Fee: $20.00
Email Pkg: $20.00
Survey (required by USDA) $400
Home Inspection: $320.00
Termite Clearance: $100.00
Radon Test: $100.00
USDA Required Closing Costs:
Tax and insurance escrow set up fee: $125.00
Escrow deposit: $1,000.00
Mortgage: $10 for the first four pages and $1 for each additional page
Total Closing Costs: $3,749.20
Seller Paid Closing: $3,500
Credit on the HUD statement for property taxes I don't owe for the year: $626.66
Total net closing costs the buyer (me) is responsible for after seller contribution and credits : -$377.66
Since the HUD-1 form can not have negative balances, the seller paid closing will be reduced to $3,122.34 on the HUD-1 closing statement and the credit for the prorated taxes which comes from the seller wipes the slate clean for me.
My earnest money deposit: $500 = BACK TO ME!!!!
Pending no catastrophe or anything else unexpected like losing my job (God forbid), I will be sitting in my house in 10 days. I have begun to pack up my apartment and so far have packed my kitchen and everything on the mantle over my fireplace (I have a lot of stuff! Where did that turkey roaster come from? I don't even cook!). In the past when I moved I would have just thrown everything in boxes and lugged it into a moving truck. Now that I have accumulated things I care about, I've been packing with bubble wrap and foam cushioning. I spent about $100 on boxes at U-Haul and I've come to the conclusion that paying for the move will cost more than the initial costs of my house!
As I said before, if you are in this program DO NOT GIVE UP! People buy homes using direct loans everyday. This was my only chance of purchasing a home. My credit scores are low, I have a recent bankrupty (discharged in 2007), and my credit is a wasteland. While most things are discharged through the BK, I have established very little since. This program is helping me to get out of a 600 sq. ft. apartment which is inadequate and overpriced and into a home of my own. I am a 32-year old man and when I received the email from my person at the USDA saying my loan had been funded, I was on the verge of tears.
I'll be home soon.