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Sent in USDA 502 Direct Loan application today.

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joevdenne
Member

Sent in USDA 502 Direct Loan application today.

I just want to document the process for any that are interested.  There does not seem to be a lot of info online about people's experience with this USDA program.  I am not sure if I will get approved, but I will give updates as they occur.  I have been waiting for home prices to start coming down before applying.  That is finally happening.  Hopefully, it continues throughout my application process.  One thing that I am worried about is funding for the Direct Loan program.  I believe the USDA fiscal year ends Oct 1st.  So, there is a chance they will not have funds once I get approved.  We will see.

 

11/04/2022 - mailed USDA Direct Loan application to office in Jefferson, NC with tracking so I would know when it arrives.

 

 


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Current Score: 639
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11 REPLIES 11
IamWesty12
Frequent Contributor

Re: Sent in USDA 502 Direct Loan application today.


@joevdenne wrote:

I just want to document the process for any that are interested.  There does not seem to be a lot of info online about people's experience with this USDA program.  I am not sure if I will get approved, but I will give updates as they occur.  I have been waiting for home prices to start coming down before applying.  That is finally happening.  Hopefully, it continues throughout my application process.  One thing that I am worried about is funding for the Direct Loan program.  I believe the USDA fiscal year ends Oct 1st.  So, there is a chance they will not have funds once I get approved.  We will see.

 

11/04/2022 - mailed USDA Direct Loan application to office in Jefferson, NC with tracking so I would know when it arrives.

 

 


@joevdenne congrats and best wishes for getting approved!  I was approved in September.  Granted, I live in Vermont and even though our housing market has been incredible and like the nations, keep in mind it is Vermont and much smaller numbers to deal with on all fronts including funding from the government to number of buyers vs houses for sale.  Nonetheless I was approved for $331K maximum loan andlike you are probably aware already, no money down.  I also found out that for the life of my mortgage through this program I will also get a monthly subsidy towards the loan payment that is based on my income, dependants, etc.  I think my guy Alex said my monthly subsidly based on the max loan would be roughly $438 monthly, again towards my mortgage payment.  I had done so much research on this program and although stringent in some ways, it seems like an amazing program and cuts out much of the red tape involved with a regular house purchase.  He said as long as I can find a home of my liking and it fits w/in the parameters set forward in my approval letter, timeline can be as quick as 6-8 weeks once an offer is accepted.  My DP's so far:

Emailed full application second week of Sept 2022

Received an email as well as a letter a few days later of two additional items of need in order to process application; which I sent back in 1 day later via email as well as USPS.

Received September 21, 2022 my COE (certificate of eligibitlity) with exact approval

So all in all, at least in my case living in Vermont and having direct email access to my loan approval official Alex, it took just a hair over 2 weeks to be approved.  

Like I had feared though, I am still looking and will continue to do so.  I can say that there seem to be more homes for sale and prices are not as disgusting, but still looking just the same.

I hope this timeline helps you and others as I agree.  When I was researching about this process, there really isn't a lot of info on here for the 502 anywhere!

Keep us posted, I am sending positive vibes your way.  LMK if you have any more questions in general and if I can help I will certainly answer.

Starting Score: 461
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Message 2 of 12
joevdenne
Member

Re: Sent in USDA 502 Direct Loan application today.

Received an email from the USDA on 11/16/21 that they needed some additional documents.  I was able to gather them and sent them via email today as they requested.  My original application was sent via snail mail.  My credit report was pulled via equifax, yesterday.  Pretty sure it was the USDA.  So far seems like things are moving along.  Good to see they are working on my file.  The documents they requested were the last page of a savings account statement that I did not include.  But, it was essentially blank, that it is why I did not include it in the original mailing package.  Additionally, they wanted the "Closing Disclosure" from the sale of my home following my divorce in 2020.  They wanted to know the amount of funds that I received following the home sale and an explanation of what I did with the funds.  They requested a copy of my divorce paperwork.  Not sure why they wanted this.  Maybe just to see if I receive or pay any allimony or child support.


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Message 3 of 12
joevdenne
Member

Re: Sent in USDA 502 Direct Loan application today.

Wow...IAMWESTY...that was a really quick approval!  Two weeks!!!  I hope mine is that quick.  Yes, home prices are getting better, but are still a bit over inflated.  The inventory of homes is improving as well.  These are good trends for us buyers.  Good luck finding your dream home.


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Message 4 of 12
IamWesty12
Frequent Contributor

Re: Sent in USDA 502 Direct Loan application today.


@joevdenne wrote:

Wow...IAMWESTY...that was a really quick approval!  Two weeks!!!  I hope mine is that quick.  Yes, home prices are getting better, but are still a bit over inflated.  The inventory of homes is improving as well.  These are good trends for us buyers.  Good luck finding your dream home.


@joevdenne just checking in to see how your process is going?  Any updates?  I am happy to report I have finally found a house!  So far we have made it to the appraisal period.  My LO for USDA now sends for this and from what I have been told once the appraisal has been completed, barring any hiccups, it is clear onto final details and in 4-6 weeks I should be signing on my first forever home!  Keep us posted on your progress.  There is not a lot on DP's and posts on here for the USDA 502 Direct program and in general, so please if you can post!  Best wishes!

Starting Score: 461
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Message 5 of 12
805orbust
Valued Contributor

Re: Sent in USDA 502 Direct Loan application today.

Hey @joevdenne and @IamWesty12  would y'all mind sharing a few data points?  Like Scores at the time of app, income, and amount approved?



Message 6 of 12
IamWesty12
Frequent Contributor

Re: Sent in USDA 502 Direct Loan application today.


@805orbust wrote:

Hey @joevdenne and @IamWesty12  would y'all mind sharing a few data points?  Like Scores at the time of app, income, and amount approved?


@805orbust of course, great idea too.

My scores at time of app for Tri merge - 657

Income at time of app - $72578 (single Mom of 3, plus I believe after they did their math with AGI the income was off $67452

Amount approved at time of app - $331500 

 

Amount approved was the biggest shocker to me.  When I was originally going to go through conventional loan I was approved for $190K.  So when I applied through USDA 502 Direct and got my COE and the max was $331K I almost &&&& myself.  I will not even look close to that amount but was shocked.  I understand now, the difference in amounts approved are due to the added feature of the 502 direct loan kicking in a monthly % of a subsidy towards my mortgage for the life of the mortgage.  For instance my loan amount on paper is $272K (due to them tucking in a large amount of repairs into the loan if needed up front but thankfully I don't so it will drop), all the costs factored in like down payment, closing and with the life of this loan being 33 years at 3.75% interest my monthly mortgage payment will be $1429, but $282 of this will be kicked in by the loan.  I hope this helps all out here that are desperately looking for any information on the USDA 502 direct, bc I did the same prior to applying.  All I can say rn is for anyone out there that is in a "rural" area (and that word alone is loose as the house I found is in a city) with limited funding for a tradional down payment and extraordinary income to keep the USDA 502 loan programs in mind.  It is not a tradional mortgage and apparently has some weird quirks that my realtor has voiced out loud but overall if you can get an COE and find a house, go for it.  As much as my realtor was weary of this, she only keeps saying "if this program works I am going to suggest so many of my clients to apply" because there is zero down payment, very low interest rate and if needed repairs and closing costs and whatever else can be rolled into the loan up front.  Happy holidays guys, gosh I am so excited I almost forgot that!!!

Starting Score: 461
Current Score: 689
Goal Score: 775


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Message 7 of 12
805orbust
Valued Contributor

Re: Sent in USDA 502 Direct Loan application today.

Wow that's amazing... awesome approval terms.  And great that you can find what you're looking for under that number.  I will take you up on that for sure!



Message 8 of 12
IamWesty12
Frequent Contributor

Re: Sent in USDA 502 Direct Loan application today.


@joevdenne wrote:

I just want to document the process for any that are interested.  There does not seem to be a lot of info online about people's experience with this USDA program.  I am not sure if I will get approved, but I will give updates as they occur.  I have been waiting for home prices to start coming down before applying.  That is finally happening.  Hopefully, it continues throughout my application process.  One thing that I am worried about is funding for the Direct Loan program.  I believe the USDA fiscal year ends Oct 1st.  So, there is a chance they will not have funds once I get approved.  We will see.

 

11/04/2022 - mailed USDA Direct Loan application to office in Jefferson, NC with tracking so I would know when it arrives.

 

 


@joevdenne just checking in with you, wondering if you have heard any new progress on your USDA app?  Keep us posted! 

I have very giddily passed the home inspection phase w/ flying colors, the independant appraisal with no surprises occuring and just was tasked with providing a quote for my home insurance for the year as well as choosing the closing agent/company for the title process.  I sent this info to my LO this morning at USDA RD and within the next 30 minutes was cc'd on the email to the closing agent with all the forms and details asking to start the title process immediately.  I also received a seperate email from the LO with my mortgage truth and lending and 2 other attachments that make this process feel very real.  They all had pertinent information to my mortgage with details I have known about the payments, years, interest, etc.  But two other attachments were the about cash at closing and another form for me to sign off on acknowledging my info for family size, income for the current year and notifying me that this form would be updated yearly for any changes.  My LO stated that the numbers would most likely change once we had the exact fees that lawyer would be charging based on the $250K home purchase price but for me to look it all over so I would have an idea of the numbers.  I guess once the lawyer does the title search and then my LO plugs in the final numbers, we will have the clear picture of numbers and I will also get that closing date!!!  I am so grateful that the process has been how it has been and although I am trying to temper my excitement until keys are in hand, I am ready to dance a jig I tell ya!  I will continue updating as the steps proceed so we can document the DP's as we all know how little info is available that is accurate about USDA RD 502 direct loans!!!  Happy New Year all!

Starting Score: 461
Current Score: 689
Goal Score: 775


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Message 9 of 12
805orbust
Valued Contributor

Re: Sent in USDA 502 Direct Loan application today.

Wow @IamWesty12  that is fantastic news. Seems like your experience has been overwhelmingly positive and straightforward. Not to mention spot on with their estimates?  Crossing fingers for your timely closing.  Smiley Happy



Message 10 of 12
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