usda subsidy payment assistance

[Anonymous]

hello everyone.  i talked to the usda direct in alabama, and she mentions about the subsidy payment that will add up each month, until you sale or finish the loan. 

[Anonymous]

ok, i understand they are paying part of the interest rate, but do they add interest to the payment assistance also. i understand i can defer at   the end of my loan, but if i sale in a few years, would i get anything from the equity?

[rockymtngrl]

It all depends on what house values do. If the value goes down or stays the same then no you probably would'nt get anything out of the sale. If values go up and say you've lived there for 20 years you may get something. It all really depends on how much subsidy your getiing (and have to repay) and what happens with the value.

[Anonymous]

thanks for the quick response. if anyone is going through this please respond. i saw another post saying their credit score went down because they were getting assistance for part of the payment. does this happen with usda?

[Anonymous]

I live in Illinois (if that makes any difference) and my USDA loan officer said that they have a formula to figure out how much of the subsidy you have to pay back when you sell your house or pay it off.  They figure a repayment figure of about 75% of what they paid and then take off any updates or big changes that you made (so keep your receipts.) 

For example she said if they paid $1000 in subsidy then they would expect you to pay back $750 but if you put in a new bathroom (not remodeled existing one) and the amount of materials came to over $750 then you didn't owe them anything. 

She also said that they will redo your income info every two years (in the USDA direct program) and if your income goes up to the point where you can get an conventional loan then they can request that you do this to free up their money to help someone else.  The formula that they use would then apply because you are essentially "selling" your house (they no longer hold the note.) 

If anyone disagrees with what I was told please shout out so that I can ask my loan person some more questions.

[Anonymous]

 ok, so if i wanted to cancel, can i just pay regular payments without the assistance? i havent applied yet, i just received the application in the mail. she told me i might qualify for direct based on my income.   

[Anonymous]

Does any one know if it show up as partial payment if you receive a subsidy through usda direct, in turn lowering your credit?

[Jazzzy]

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@Anonymous wrote:

I live in Illinois (if that makes any difference) and my USDA loan officer said that they have a formula to figure out how much of the subsidy you have to pay back when you sell your house or pay it off.  They figure a repayment figure of about 75% of what they paid and then take off any updates or big changes that you made (so keep your receipts.) 

For example she said if they paid $1000 in subsidy then they would expect you to pay back $750 but if you put in a new bathroom (not remodeled existing one) and the amount of materials came to over $750 then you didn't owe them anything. 

She also said that they will redo your income info every two years (in the USDA direct program) and if your income goes up to the point where you can get an conventional loan then they can request that you do this to free up their money to help someone else.  The formula that they use would then apply because you are essentially "selling" your house (they no longer hold the note.) 

If anyone disagrees with what I was told please shout out so that I can ask my loan person some more questions.

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My daughter recently closed with a subsidized loan. If I remember correctly, I think the amount of the subsidy you have to pay back if you sell the home is also dependent upon how long you have lived in the home...that the longer you stay in the home, the percentage of the subsidy you have to pay back goes down.

I'm not sure if this is accurate, but it's certainly something to ask your loan person.

I believe that what you said about making repairs is accurate.

[rockymtngrl]

No, your not able to just "cancel" the subsidy and start making the payment without assistance. If you no longer wanted the subsidy you would need to refinance into a different type of loan.

[Anonymous]

does usda say you cant cancel? i was thinking if they can do reviews and change your payments, then you can cancel if you didnt need the assistance anymore.