topic USDA Direct Rural Loan (502 Direct) for very low or low income in Mortgage Loans

USDA Direct Rural Loan (502 Direct) for very low or low income

Macbookguy — Mon, 25 Jul 2011 02:05:13 GMT

This is going to be a long post, so only invest the time to read this if you're considering taking one of these loans out. When I first started looking for information on the USDA Direct Loan, there is not a lot of information on the FICO forums or online in general. The information that is out there is often limited or loaded with misinformation. I've seen quite a bit of confusion or misinformation even on these forums regarding the direct loan.

My Timeline:

1. Prequalification stage: 5/10/11

2. Determined eligible for processing: 5/26/11

3. Returned complete application: 5/31/11

4. Eligibility interview: 7/20/11

5. Under contract on house: 7/22/11

6. Projected closing: 9/22/11

Beginning with the prequalification stage, the USDA service center in your area will send you a short prequalification application. This application does not request any thing other than your basic identifying information and a disclosure agreement. I did have a collection on my credit which I sent documentation for so I wouldn't be automatically declined for having the collection. Around three days after pulling the initial TransUnion credit report (sometime around 5/23/11) a representative from their office called and said that it appeared I'd be eligibile, had been chosen for processing, and that they would be sending a complete application. I was asked to provide three alternative credit letters, two months of bank statements, one month of paycheck stubs, and any documentation for adverse credit.

The application that the USDA uses is a standard mortgage industry application. It will ask for all of your information for where you've lived and worked the past two years, assets, obligations, etc. You have to send them EVERY page of your bank statement even if the last page is a summary of the bank's privacy policy. If the last page of the statement you send says something like "5 of 6" and there is no page six, you're going to get a phone call. At this point they will begin your verifications and check all three of your credit reports. It's at this stage you're deemed to have acceptable credit or unacceptable credit. I'll elaborate below on the verifications.

Credit:

While the direct version of the USDA is not AS strict as other programs when it comes to your credit history, they are pretty strict. Your credit score absolutely does not matter. It's what is actually on your credit. You may have no unpaid collections or judgments and any collection or judgment you have paid must have been at least six months for collections and 12-months for judgments. You can have no more than one 30-day late on any credit card, student loan, etc. within the past 12-months. I assume there can be waivers depending on situations, but this didn't come up for me.

Income:

You must be considered low-income for your area. If you are $1 over the income cutoff, you will be sent to a bank to apply for a guaranteed loan. Your income must be consistent and must show a history. If my income had been just a little higher I would have had to apply for a guaranteed loan.

Employment:

Even though you send paycheck stubs, your employment will be verified. A verification will be sent to determine your eligibility and a follow-up phone call will be made before closing to make sure you are still employed. The USDA does NOT like The Work Number as it costs them money to verify your employment. If your company will only use The Work Number, log into The Work Number's website and print out your verification (you may have to pay for this yourself).

Landlord verification:

Your rental verification must be good. If you are currently late with your rent, have damaged your rental, or have been more than 30 days late more than once in a 24-month period, you are not considered to have acceptable credit.

After the USDA has determined you are eligible for the program, you will be scheduled for an eligibility interview. People have asked what happens at these interviews on this forum and received answers like "Just go and see...." I was completely stressed out when I had to go for my interview because I was unsure what would happen at this interview. At the eligibility interview you will verify that all the information you put on your application was correct. You'll initial and date your application to verify that you confirmed the information. Your interviewer will discuss your credit history, credit score (even though they don't care what it is - mine was 565 mid), and they'll let you know what you've been determined eligible for. You'll discuss a few program guidelines, sign off on a few disclosures, and have a quick program orientation discussing things like monthly payments, improvements, etc. The interview lasts one to one and a half hours. You'll receive a certificate of eligibility at the end of this interview.

Your certificate of eligibility will show how much you are eligible for, what your projected taxes and insurance will be, and what the note interest rate will be. The note rate can change until you are under contract on a house and the USDA has obligated your funds. My note rate is 4.25% and I was approved for $153,000. After you have the certificate of eligibility, you are free to sign a contract on a house. Your contract will need to allow for up to 60 days to close. My projected close date is by 9/22/11 but it could be as short as 30-45 days.

One thing I do want to mention is dealing with real estate agents. Most people have never heard of this program and are quick to question it. One agent even told me she thought it was a scam and didn't want to be involved. My buyer's agent I eventually decided on then told me she didn't know how she would present my certificate of eligibility as an approval letter since it looks nothing like an approval letter. She stated I should look for alternative financing before we could contract on a house. I informed her that this loan is my alternative financing and if she doesn't know how to present the letter to a seller or seller's agent that we should void our contract and I would find someone who would. I looked at six houses with her and made an offer on the sixth house on Friday, July 22nd. My offer was accepted with no counter offer on Saturday, July 23rd.

I haven't explained the complete process in this post and I will make another post at a later time covering things like property eligibility, closing, etc. I'll also let you all know how the process is going for me. If this is your only hope of a home loan as it was mine, DO NOT GET DISCOURAGED. These loans do get approved and they do get closed. Applying for a direct loan and being approved is not an overnight process. As with any government program, they do take time. There will be days and weeks when you have no idea what is going on. There will be times when you want to give up. Just stick with it.

The payoff is there eventually. I'm purchasing a home that I would not have been able to purchase for many years using FHA or probably never using a conventional loan. My mortgage with the subsidy is $100 less than my rent and when I no longer need the subsidy my mortgage payment will only be $150 more than my rent. I'm moving from a 35 year old 650 sq. ft. apartment to an almost 2,000 sq. ft. four year old house.

If you have any questions, please feel free to post them and I'll be happy to answer to the best of my ability!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Booner72 — Mon, 25 Jul 2011 03:42:55 GMT

Well, I'm not going USDA but I did read your entire post. And I think that it was great - I hope that anyone who IS going USDA will find this post as it will be helpful.

Congrats!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Mon, 25 Jul 2011 04:12:34 GMT

I am happy you are having a better time of it. I applied in Jan and they still have not processed my app because of no funding in my area. The area I live in (GREATER Ft Wayne IN area) use a lot of these funds. We have a long waiting list and they are currently only to those who applied in early December! This month(mid July every year) I know a few more should be processed as they POOL all fund that have not been used across the US then send it to areas like mine with waiting lists. This process started a week ago Thursday. I was informed that they were not sure how much more funds they would receive but did not think it would be enough to reach my app. So that leaves me waiting till October when the new fiscal year begins and funding is depending on government budget again!!

So I wait and wait and call and call to see where my app is in the line. I have not received any letter etc. from them. Just a verbal confirmation that my app is in their office. Do not know how many are ahead of me or if and when the next batch of funds will be released in my area. I was also told that about every 6 months they will send a letter out asking if I am still interested in the program.

To top it all off my landlord has deceided to sell the house I have lived in for 3 years. It went on the market 2 weeks ago. I found this out the day I found out I will have to probally wait till October for funds. I had planed to build a new house and that will take 3 or 4 months so all I can do is hope for the best. Please do not sell before my funding comes thru and my new home is ready. My luck we will be homeless.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Mon, 25 Jul 2011 04:10:25 GMT

You may have no unpaid collections or judgments and any collection or judgment you have paid must have been at least six months for collections and 12-months for judgments.

From what Ive read they make exceptions & sometimes will have you pay off your collection before you close. Must be the case because I have an unpaid collection and they're still sending our application to the underwriter. Whats sad is I sent my application in the same day as you and my application is just now being sent to the underwriter. Im getting very ancy and impatient because we really want to move. How did you find a house so fast? Did you look or have one in mind before your approval?

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

ShanetheMortgageMan — Mon, 25 Jul 2011 06:31:39 GMT

Great information Macbookguy, it's hard to get an accurate idea on what the Direct process involves so it's nice to have the beginning steps all clearly explained.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

wednesdayaddamsd — Mon, 25 Jul 2011 16:20:58 GMT

HI Macbookguy,

Thank you for the most detailed explanation of the process. One thing I can't figure out (I'm applying for this loan myself in a few months) is how they calculate the subsidy. May I ask what your annual income is and what your monthly payment (principal, interest, taxes, insurance) combined will be?

I'm trying to determine how much I'll be eligible for. Thank you!

)

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Mon, 25 Jul 2011 21:22:55 GMT

Just a quick caveat or two...

First...a lot will depend on what state and even what region of the state you're in.

Second...credit score absolutely does matter for a Direct. If your mid-score is above 640, they are much more likely to "forgive" layers of risk. For example...my husband and I had a BK in 2007, foreclosed on the first investment property that same year. Rode through on the second investment property (we were residing in one of the rental units) but stopped paying in Aug of 2010 because they refused to entertain a modification request. The refusal was because we'd never been late on that mortgage and therefore, in their opinion, were not at risk of being in default.

So...we have a foreclosure and a bankruptcy that is outside of the mandatory 3 year seasoning period. We have a discharged mortgage that is currently in default and we were upfront with USDA and informed them that we were walking away from that property.

We had to quit-claim my husband's name off the title of our defaulted property to make him eligibile to apply for USDA Direct, but once that was done, with his mid-score being above 640, they were willing to overlook the defaulted discharged mortgage.

You can read the USDA Direct Handbook here: http://www.rurdev.usda.gov/handbooks.html Direct is 3550. Pretty much most of what you need to know is there. You can also google RD Instruction and more of their guidelines will pop up.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Macbookguy — Mon, 25 Jul 2011 21:52:36 GMT

I'll try to answer all of the questions I've been asked at once...

How did I find a house so quickly? While you can't contract on a house using this program until after you have an eligibility letter, nothing is stopping you from looking. I began looking at houses online, driving by them, and going to open houses in May of this year right after I applied. I narrowed the houses I was interested in down from 28 to six and the day after I received my certificate of eligibility my buyer's agent and I looked all all six of those houses.

This is a program that is entirely dependent on the availability of funding, as others who have posted have shared. Once you have the certificate you need to be ready to move. If you wait to find a house, it is very possible that the program could lose funding during your home search. Know your area you want to live in, visit a few houses, just don't get your heart set on anything. In the two months it took me to be approved I saw houses I loved go under contract everyday. These were houses I loved, but I also had a list of 28 other houses to choose from.

During the time it takes to get approved, make sure you are saving everything you can towards your prepaids. You can finance everything with the exception of the earnest money deposit and the first year of homeowner's insurance. My seller is paying my closing costs and my appraisal, home inspection, termite letter, and radon test will be billed to my closing statement. So far all I'm out of pocket is the $32 for the credit report, $75 for first time homeowner's education class (I'll mention this next), and $500 for the earnest money deposit.

Regarding the homeowner's education, you can do this online. It's $75 through a company USDA will refer you to. It is literally the most boring two hours you will ever spend if you are already aware of how the real estate industry works. If you truly are new to this, it can be informative. You don't have to complete the education course until after you're approved but before you close, however my USDA office urged me to complete it as soon as possible. If funding gets limited, they close the loans that are ready to go and aren't waiting on anything.

Wednesdayaddamsd, I don't mind telling you what my annual income is. I live in Greenville, SC and my annual income is $30,700. I go to school part time in the evening and work full time during the day. I qualified for the program and was $1,300 away from not being considered low income for my area. I was approved for $153,000 with a current note rate of 4.25%. The subsidy I qualified for brought down my rate to 1.25%, my annual insurance is estimated at $540, and my annual taxes are estimated at $1,040. I honestly don't know how the subsidy is calculated, however 1% is the lowest interest you will ever pay after the subsidy. The house I've contracted on is $135,000 with the seller paying my closing costs of about $3,500 and my payment with the subsidy, taxes, and insurance will be $540 over 33 years. This is $110 less than my rent on a 650 sq. ft. 30 year old apartment.

Keep in mind that if you take the subsidy, it is recaptured. It's recaptured when you refinance, sell, or transfer title to your heirs when you die. There are limitations on the subsidy and they can never take more than half your equity minus things like initial equity, capital improvements, etc. If you refinance and don't roll the subsidy recapture into your new loan, it is indefinitely deferred and does not accrue interest. You can roll the subsidy recapture into your new loan with a 25% discount as long as you are not cashing out your equity and you retain the title to the house.

As you can see, there are a lot of hoops you have to jump through to be eligible for and to purchase a home using this program. It's not easy. This was my only chance and only hope of purchasing a home and with this program I can afford a house in a decent and safe area. I'm getting everything I wanted in a house and then some. If you're trying to purchase a home through this program and funding is lost, your application is delayed, etc., I know it's difficult but hang in there. It will happen. I'm extremely fortunate that my area does not have a lot of rural areas and my USDA service center closes only 20 or so of these mortgages a year. There are areas that are very rural and the USDA offices are understaffed, overworked, under funded, and under paid. It's just a part of dealing with the government.

You should definitely also keep in touch with the USDA office. If you are out of sight, you are out of mind... I called them on Monday and followed up with an email on Thursday of each week. I was never pushy, I always worded my emails to make it seem as if I would like to help ease the trouble of processing my application. Of course when the email was sent and the phone hung up, I cussed and screamed and called them names I felt bad about - especially after my eligibility interview and meeting them and my originator being a nice and sweet older lady. it's been my experience that the USDA staff wants to help you buy a home. If you treat them with respect and courtesy, they will do the same. They may not be able to tell you what you want to hear, but if you develop a working relationship with them they at least won't keep you in the dark.

Best of luck to everyone trying to make it through this process!

BTW - my home and termite inspection are Monday!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Macbookguy — Mon, 25 Jul 2011 22:02:16 GMT

sweetpea is right about the credit score... When I said it absolutely does not matter, I meant how low the score is. If you have above a 640 mid score, they are a little more forgiving. However, one thing to keep in mind, the direct loan is not a replacement for conventional credit - it is there for people who can not obtain or afford conventional credit. If you have a 640+ and a decent income, you are at risk of being referred out for the guaranteed program. Had I been eligible for the guaranteed program, I could have afforded less house.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

wednesdayaddamsd — Mon, 25 Jul 2011 22:21:05 GMT

Macbookguy: Between you and another user "angeldaria" you have answered so many obscure questions that I had, and I am sure many, many others. Thank you for taking the time to help all of us by not only sharing your story, but answering questions.

I am so happy for your upcoming closing. Thanks again, congratulations, and best of luck to you! You ROCK!

)

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Tue, 26 Jul 2011 03:26:47 GMT

Wow, I love your detailed responses. We, too, started looking at houses online and driving through the area right after we sent in our application. I get a little sad when houses we're interested in and have everything we want go under contract. Ive stopped looking for this reason. The foreclosures and short sales are being snatched up quick. The town we're looking to move in rarely has open houses which sucks.

Good point on being ready to move fast on finding a home because of funding. Thats my biggest fear. It would be my luck that by the time we get our eligibilty paper that funding will run out.

The home buyer's class we attended was free & HUD approved. It was also 8 hours long!! Want to talk about boring, they kept the a/c turned up to keep everyone awake. It is a great class though and urge anyone to go.

Appreciate the tips. Im trying so hard to hang in there through this long process. Its really hard when you hate where you live. I do call my LO every 2 weeks to check on the status of our application. Hope your inspections go well! Very exciting.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Tue, 26 Jul 2011 13:43:42 GMT

You know what...this is one of those things that's different depending on where you are located. We went under contract for our home before our eligibility was in. I was certain we were eligible and I knew USDA would have a litany of things they wanted done and I wanted to start those things as soon as possible.

If you do decide to go under contract before eligibility, make sure you know all of USDA's property requirements thoroughly. And make sure the property you are interested in would meet those requirements.

Our home needed a lot, a lot of work. USDA is ok with that...but make sure you have two estimates for every repair needed. That was one of the things that took so much time.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Tue, 26 Jul 2011 13:45:22 GMT

Mac,

We fought tooth and nail to be able to stay in Direct as opposed to Guaranteed. We can afford the higher payment without the subsidy, but it would be awesome if we can have the lower interest rate Direct provides through the subsidy and then pay more on the principle. Get it paid off faster.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Thu, 04 Aug 2011 23:15:37 GMT

Thank you for your post! I have been on the computer for hours a day reading forums for any possible direct loan info I can find. This post has been most helpful. I am still waiting to know if I'm eligible or not.

Here's where I am at... I e-mailed the local USDA RD office on March 31st, just asking questions to get more info. The secretary e-mailed me the application that day. I printed it out, and got all the information needed and mailed it back to the office on April 7th.

On April 25th, I got a letter from the USDA RD stating that they were out of funds, and that they weren't expected for 9 months (which would have been in Jan-Feb 2012). It said to mail back that paper if I would like my application to be put on the waiting list. I mailed it back, and forgot about it, since 9 months was a long ways off.

I received a letter on July 22nd saying "The application you filed with Rural Development has been selected for processing. The following information must be submitted to this office in order to determine your final eligibility for loan services:" (It was my w2's... I just sent the tax returns the 1st time) I went into the office on July 25th to turn them in personally since I was in the area (an hour away from my current rental). I was lacking my last 4 pay stubs, because I was on Maternity leave from May 25th-July 16th, and I get direct deposit, so I don't go to my work to collect my check stubs. She had me write a statement stating that I was on Maternity leave. I managed to get the last 2 stubs before I went on leave, and my 2 that i've gotten so far now that I've returned to work, so I think I'm good. I've also read about them not doing the while "work number" thing... and my job is all about that. Grrr! So, here I am on August 4th... with no updates what so ever.... I'm trying to be patient...

I've been wondering if they've gotten funds or what??? Why would they tell me they would process my application in 9 months, but then do it in July? Doesn't make sense to me. Oh well.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Macbookguy — Sun, 14 Aug 2011 08:33:02 GMT

Krumble, sorry it took me so long to respond! If you received a letter stating your application was selected for processing, that means funds are available or projected to be available. Based on the results of your prequalification, they believe you will quality. As funds for the program are extremely limited, they only process the applications they know are eligible based on the prequal! Best of luck to you!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Macbookguy — Sun, 14 Aug 2011 09:17:11 GMT

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:

Timeline:

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: 08/24/11

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

Copies/Postage/Fax: $30.00

Courier/Wire/ACH Fee: $20.00

Email Pkg: $20.00

Survey (required by USDA) $400

Inspections:

Home Inspection: $320.00

Termite Clearance: $100.00

Radon Test: $100.00

USDA Required Closing Costs:

Appraisal: $425.00

Tax and insurance escrow set up fee: $125.00

Escrow deposit: $1,000.00

Recording Costs:

Deed: $10

Mortgage: $10 for the first four pages and $1 for each additional page

Survey: $10

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.

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

sharpie — Wed, 17 Aug 2011 13:14:28 GMT

Thank you for the wealth of information!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Sun, 14 Aug 2011 19:03:25 GMT

Congrats! Stories like yours give me hope! The only thing I'm having issues with now is what I've read about how if you want to sell the home (which I'd have no intention on doing) or leaving it as an inheritance when I die will cost thousands. I will ask for further details if I ever get an interview, did they clarify anything about this to you? If that's the case, I will try to go the unsubsidized route... if I can afford it. If not, then I will have to back out, which I am so not wanting to do... but I think it will be a waste to have this house, my and my boyfriend die, and our 3 kids are left with nothing. Ya know?

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Tue, 16 Aug 2011 12:25:58 GMT

I agree this is the best information I've seen on USDA Direct, wish we had this a few months ago:-) Anyway, we are currently going through the program and TRYING to be patient. I'm not sure if I overlooked it but we were just informed that we have to pay Homeowner's Insurance before we close. Were you able to receive a credit as part of your closing cost? Our agent nor attorney have never dealt with a direct loan before, so this is new for all and we are unable to get a solid answer. Also, why does USDA not release the appraisal amount till closing, they just say you can continue with inspection-it has appraised. If I'm not mistaken we are paying for the appraisal???

But, I must admit USDA Rural Direct is an amazing program, however for those starting out ask ALOT of questions to try to understand the process whether it's on this forum or your LO. I must say our office here has been very helpful but they are definitely overworked. Feel free to ask any questions. Thank you Macbookguy! The best explanation on the web...I was a little nervous about commenting but with USDA Direct you need all the support you can get! Our inspection is this week....all I can say is 4 letter word-PRAY!

Re: USDA Direct Rural Loan (502 Direct) for very low or low income

Anonymous — Tue, 16 Aug 2011 12:51:54 GMT

They cannot recapture no more than half the value of the home. Also, remember if you can get some type of mortgage insurance your home will be paid off once you or your mate dies. Actually, purchasing a home whether Direct or another program is helping secure your 3 children future. Hope this help and feel free to ask other questions-I have all the paperwork here (well up to the Inspection-that's this week..)