topic Re: USDA Difficult process? in Mortgage Loans

USDA Difficult process?

Shellie — Mon, 20 May 2013 18:51:59 GMT

I am currently working to repair my credit like all of you have/are. I spoke to a mortgage company and they said they could get me approval with a min of a 620 score thru USDA. They said I must have $0 balances on anything negative listed on my credit. I'm working toward that! I spoke with a realty company today and she said that USDA and FHA are extremely difficult and long drawn out processes to get a home loan. She said I'd be better of to go thru my personal bank. She said that it is also very difficult to find a house that USDA will approve. Does anyone have any knowledge about this? Any of it! I have read thru the forums lightly and I haven't found much directly related or closely similar. Any help is greatly appreciated.

Re: USDA Difficult process?

Anonymous — Mon, 20 May 2013 21:15:17 GMT

Honestly I would say find another realtor. Is USDA/FHA a little longer process than conventional? Yes. But I am currently in processing of a USDA home and thank God I have not run into any crazy issues and no my credit is not perfect. There are income and location requirements for USDA but if you find a home in the accepted location and you are within the income requirements I think it's a good program. You have to understand that USDA is a 100% financing program so yeah things are going to be a little more complicated. But I don't see where it is so long and drawn out. My realtor just recently closed on another USDA loan in 45 days and he said they could have closed a few days earlier but there were scheduling conflicts. And so things are in order for me to close on time which we've based on 45 days. But it sounds to me more like the realty company you spoke with just doesn't want to deal with USDA/FHA programs. My realtor has been great he knows USDA/FHA and what type of things they look for. Find someone who knows USDA/FHA and I'm sure they will be more than happy to help you. Don't let someone else decide what is best for you and your financial situation. You will be paying the mortgage not them. There was even about $100 difference with my FHA monthly payment vs USDA so USDA was the best choice for me.

Good Luck!

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 13:14:12 GMT

Thanks for your reply. The realtor was telling me about a house and thru the conversation she let out more and more about what was wrong with the house. Initially it was in need of some new flooring in a couple rooms, not a big deal. Then she mentioned the plumbing problems etc. She said with USDA you cannot buy a home that needs any work. Luckily she isn't my realtor. I just called to get some additional info on some houses offered thru the realty company that she works for.

Re: USDA Difficult process?

brownj12 — Tue, 21 May 2013 14:12:14 GMT

You can certainly buy homes that need work with USDA. USDA requires them to be livable, the plumbing stuff may need to be fixed before purchase depending on the problem. USDA requires the water to run and toilets to function. As long as you could move into the home it will make it through USDA, even if it needs repairs before you would want to live in it. Find a realtor who does a lot of USDA loans, they will know exactly what will pass through and what wont.

To confirm what the other poster said my payment is $75 less per month with USDA than with FHA, and I saves about 3.5% at closing.

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 14:37:16 GMT

She didn't go into great detail about the plumbing issues. She said "the house is being sold as is". She was odd to begin with. It kinda sucks because it seems like it could be a really great house for my circumstances. I am not very knowledgeable as to whether I have to deal with her or if I can deal with some one else? I am not ready to buy yet tho so it doesn't matter...yet. I have just been keeping my eye open to see what's out there.

Re: USDA Difficult process?

Jaguars28fan — Tue, 21 May 2013 15:27:36 GMT

It doesn't sound like the house would be a great choice for usda. USDA wants the house to be in pretty good shape, if not they'll have to make repairs. The house also can't appraise for under what you're paying. It also needs to be in the accepted area.

USDA isn't the easiest process. It's rather long and the wait is rather stressful, but it was well worth it. With FHA, not only do you need the 3.5 % down, you'll be paying the larger PMI each month (which adds up quickly). Talk to a lender asap, many can be very unhelpful, but it only takes one. Once you find the right LO, he or she can tell you exactly what you need to do. My credit score was as bad as you can get, with many unpaid chargeoffs, and many negatives. Within a year in a half, I only had one remaining unpaid chargeoff (lender didn't require it paid) and my score was over 640.

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 16:09:29 GMT

I have better than half of the stuff on my credit either paid or supposed to be falling off by the end of this year. One of the mortgage people I spoke to said not to hold my breath about things falling off because she rarely, if ever sees it happen. She said I need a minimum of a 620 with everything on my credit showing a $0 balance. The only thing I am really concerned about right now is a state tax lien for around $2800. I have either paid off or am making payments to OC's for everything with the exception of the things that are supposed to be falling off this year.

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 16:11:24 GMT

I am shooting for the end of this year or beginning of 2014 to be able to buy. I am still paying things off. Everything should be paid or fallen off by December. I am also adding to my savings account during all of this also.

Re: USDA Difficult process?

rebuildingincb — Tue, 21 May 2013 17:27:48 GMT

I am a builder, and most of our new homes fall into USDA territory (I believe it is set up by zipcode). I would recommend you try to find a new home community under the USDA area (a realtor should be able to help if they are worth their weight, if they aren't willing, move on). We are selling homes to people in the USDA homes with no money down other than closing costs, and we are paying up to $3500 in closings (covers most homes in the $100-$175k range here). And yes it takes a little longer sometimes (45 days vs 30), but it is worth it in the end.

I don't know all the qualifications, I know you have to have 620 and all negatives paid, and I believe there are income restrictions.

Best of luck to you!

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 17:50:57 GMT

I don't think I would be able to afford a $150,000 home. I make around $25,000/yr. Single mom of two. The morgage lady I initially spoke with said a $85,000 home would likely be in the $600/mo payment range.

Re: USDA Difficult process?

credit4life — Tue, 21 May 2013 18:18:22 GMT

Hi Shellie,

First of all Congrats, on your journey! I wish you the best.

If I may add my 2 cents. I am mortgage underwriter and have been for several years. USDA loans do have a longer processing time due to the structure of the loan around conditions. I would encourage you prior to going through the loan approval process to speak with a lender that works with USDA loan programs. They would be able to more accurately give you the information you need to purchase a home through this program. They will also be able to tell you how much of home you could afford based upon your DTI. Debt to income ratios. Which USDA loans are very forgiving towards DTIs because they include your dependents into their calculations and tuition for children.

FYI: some realtors shy away from this program and try to discourage home buyers because they don't want to wait for their commission check!

I agree with all the other post, USDA is a wonderful program. If you qualify, you should go for it for sure!

Good Luck.

Re: USDA Difficult process?

Jaguars28fan — Tue, 21 May 2013 19:19:37 GMT

From your income and since you aren't in a rush, you should really consider USDA Direct. You won't be talking to any banks, just with the USDA office. I was eligible to go that route, but we didn't have the time. They normally run out of funds quickly, but they should reload every september ? I believe. They are very flexible with your credit score, I believe a guy on here (macbookguy has a great post) got one with a score of 580? You definately have to take care of that tax lein. You would need all your credit issues to be 0. You'll need a few tradelines over a year ( credit cards, rent, car insurance, etc.)

I don't know if they require a PMI, but they'll subsidize your interest to 1% most likely. You could probably afford more than an 85k house with it as well. Definately call your USDA office, they are a lot more helpful and willing to work with you than banks, atleast mine in PA was.

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 20:01:40 GMT

RIght now I have 2 Credit cards from Capital One, both in good standing. The older one has a $300 limit that I was told would be increasing to $500 in June, the second I just opened this month and it opened with a $500 limit! I am hoping for the increase in my credit score in June. SInce March I have paid off, to the OC's, 4 medical bills, paid down two separate utility bills, also to OC's. I have a few other debts that are scheduled to fall off in July and one in December. The only other thing is the tax lien. I just recently got my first car loan ($350/mo) thru my personal bank and they do not report. He told me that up front and made sure I understood that it would not help my credit score since they do not report. I chose to o ahead with that route because he offered me 7% interest and the other places were offering around 21% interest. I also have some student loans. There are 4 of them and they total around $11,000 and I pay $144/mo on those. Those and utilities are my only monthly debts. I am concerned because all of the bills I paid off still show a high balance and I paid them over 2 months ago and the utilities also still show the high balance. My credit score was 595 3/18 and fell to 568 4/27 from a high balance on a cc and some shotgun pulls from car dealers. I plan to get all my ducks in a row before I even start the application/approval process for a home loan. I am trying to avoid a bunch of hiccups after I start the process or hopefully avoid delays!

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 20:03:39 GMT

As far as the price of a house, I am trying to stay within an affordable budget for monthly payments. I don't want to get in to a home loan and not be able to make the payments. What is PMI and how do I find out where my local USDA agent is?

Re: USDA Difficult process?

Shellie — Tue, 21 May 2013 21:17:07 GMT

Ugh..I've looked everywhere for a calculator to see how much how I could afford, monthly payment wise, and the either range from -$ amounts to needing 30% down. I guess I'll just have to wait.

Re: USDA Difficult process?

Shellie — Wed, 22 May 2013 14:40:24 GMT

Bump!! This site is to helpful! I am so greatful

Re: USDA Difficult process?

Anonymous — Wed, 22 May 2013 16:30:48 GMT

We are in the process of getting a USDA guaranteed loan right now. It's not hard, and it's not that long and drawn out. We're at the very end of the process right now...as in my phone should ring at any minute saying the USDA commitment is in and we can close. Waiting at this point is the hardest part. USDA has had our loan for 10 business days as of today and we're so anxious to move this weekend. This is really the hardest part.

Find a realtor who doesn't mind working with sales going through the USDA. Ours apparently doesn't like it and isn't being helpful for us at this point. I've had to chase a lot of stuff down and make sure she did her job. I don't like that I've had to do that.

Re: USDA Difficult process?

Jaguars28fan — Thu, 23 May 2013 19:43:49 GMT

This post is very helpful. http://ficoforums.myfico.com/t5/Mortgage-Loans/USDA-Direct-Rural-Loan-502-Direct-for-very-low-or-low-income/m-p/984926/highlight/true#M78933

You should try to google USDA and your state, that should pull up the contact information you need. USDA Direct is a long process, but like you said, you aren't in a rush. PMI is just an extra payment you have to pay USDA or FHA a month. For guarantee it's not that much, maybe 40 dollars / month? for FHA, it's a little more. I don't know if Direct has it. Direct will also subsidize your interest rate, so your monthly payments will be lower than someone who has a guaranteed loan. I used www.mlcalc.com for calculating my monthly payments. You need to know things like your PMI (your guaranteed is .4%), your property tax (i wouldnt know that), your house insurance (my guess is around 600), your interest rate (anywhere from 1% to 3.5% at the moment, depending which route you go), and your mortgage term (guaranteed is 30, direct is 33 years i believe).

Re: USDA Difficult process?

Anonymous — Tue, 11 Jun 2013 01:13:16 GMT

Someone I know closed on a USDA loan this year. From what I know, it did take 4-5 months from start to finish and the bank seemed to need more and more information but this might not be the typical experience.