Hurry! USDA Rural Home Development loan program (no PMI, 2% fee into loan) zero down

[moneytree]

I cannot seem to find any info on this here, but we have been approved for this loan. We were going to wait until our 2 yr. anniversary, but with this USDA Rural Home Loan, we are able to get into a home now (preferably not a short sale, as the paperwork takes longer) and the home prices---as you know--are still falling.

We will also be qualified for the $7500 gov't refund for buying a home before Jan. 31? (to be paid off in 15 yrs...at $500 a year)

No PMI w/ this loan. FHA interest rates. 30 yr. fixed. Yes, this is REAL...and no $ down! Our credit scores are in the mid to high 600's. There is a 2% fee for this loan, worked into the mortgage.

We were told this loan has been around for 20+ yrs., but is being used more now.

We were also told to close within 30-60 days, because the zero down might be going away (just like the Nehamiah? Fund; which I've been told was not as good as the USDA loan, due to the 3% down + 3% in closing costs)

We are putting the 3% closing costs into the loan.

The 1st house we put an offer on was going to be $295, but we then decided to go with the $245 house. Smart huh. And no renovations, like the more $ house would have been. We are pretty happy, but nervous with homeownership...but then again, we've been paying SOMEONE else's mortgage for way too long w/ renting!

Not sure what you have in your area, but it is limited to what area we can buy in, but that worked for us, luckily.

There are websites that talk about this loan program...just google.

ch 7 discharged 2/14/06
...been building credit since then

[Flamingo]

Hope it all works out well for you and review the truth in lending closely when you receive it. Have an attorney review also before you sign anything. What interest rate did you get and it appears there are high fees (you mentioin a 2% fee (origination?)which is put into the mortgage and then 3% closing costs (also going into the mortgage). There will also be document prep fees, transfer taxes, insurance and taxes and other fees associated with settlement so make sure you review everything.

Best of luck to you!

[moneytree]

thanks

Yes, sorry, I forgot to mention the 3% closing costs into the loan, etc etc.

Another thing I forgot to mention, is that there doesn't seem to be a 2 yr. after BK wait w/ this loan? If you're reeeally wanting to buy a house, contact your lender and ask them about this loan.

You can also not make over a certain amt. But most here should be fine. lol
(that's a joke...that we are all broke...)

Also, the interest rate is wherever it lands, on the day we lock in. Hopefully under 6.5%!

;)

[fltoo]

If you are working with a mortgage broker, negotiate the 2% origination fee down to 1%. They are desperate for loans. Rates are cheap enough that you don't need to use discount points to buy down the rate. But, this might be the funding fee.

No PMI, but is there a funding fee or MIP (mortgage ins premium) with this FHA loan?

Check out all carefully.

[moneytree]

thank you...i'll look into that...

we were told today that we nearly did not qualify for the rural home loan due to income, but since the income level was raised recently, we were okay...whew!

we've been waiting for 3 weeks for a closing date and we were told we should have that info next business day

our mortgage guy is great...he even made a house call to go over paperwork! yes...sensing "times are tough!"

i'll write more as the info comes in...or as "things unfold" lol...

[moneytree]

no points...

Also, my husband was told today that he could have been charged a point, but the mortgage guy won't. Should we celebrate?? LOL What is your take on this?

[fltoo]

Since your income and house qualify, no PMI and the 2% fee being financed, you look like you are set to go. Congrats.

Were there any issues with the home inspection that needed fixing? If not, you should be able to settle quickly.

[Flamingo]

I cannot stress enough to you that after filing BK and obtaining a mortgage of this nature to carefully review the Truth in Lending statement that you will receive prior to settlement. If there is anything that appears on there that was not explained to you or appears out of nowhere, contact the broker immediately for an explanation. Always have it reviewed by an attorney before signing. I've worked on all sorts of settlements for years in the past working in law offices and when we received our Truth in Lending when we refinanced still in our Chapter 13, we had items appear that were previously not mentioned or explained to us and thankfully our attorney also reviewed it. One we got removed (fee) and the other was additional PMI which was required by the FHA even though we had well over 20% equity in the house (we had well 50% but it was still required). Do your homework on your situation, settlement and fees. Watch what you sign and you should be fine...congrats and best of luck to you.

[fltoo]

Looks like these rural loans don't require MIP, the FHA equivalent of private mortgage insurance. They are guaranteed by the government. FHA loans are only insured through the gov., not guaranteed by them.

The truth in lending statement should state your interest rate, (but don't forget it is quoting your rate plus all fees), so the APR, annual percentage rate, might be higher on the statement. Have no fear, though, the rate will be what was locked in, not the APR.

Since you are not buying down the rate, there should be no discount points. Only thing you have is the 2% fee to acquire the loan.

You can also ask for your HUD settlement statement ahead of time to check all the expenses. You will find all your closing costs there.

Do you mind me asking in what rural part of what state you bought?

[moneytree]

Ok, so they dropped the 2% fee to 1% (I had no idea!)

Wow--nearly too good to be true. But let me tell you, it's been a sticky situation the past 24 hrs. As I had said we were later told we nearly "didn't qualify" due to income and then after 5pm last night we were told by our broker that our loan was thru underwriting and now just needing the sign off from the rural dev. loan people. WHEW!

So maybe it hasn't been as easy as we first thought.
Our broker says they are tightening the requirements daily and where before they would accept people who have less than 2 yrs. out from the BK d/c date, the laws will be changing to possibly 3-5 years.

So guys...I wouldn't wait here. Contact a broker asap and see if you qualify.

We are on the west coast, btw.
Just google the USDA Rural Home Development loan.

[fltoo]

Great news.

Just like in real estate where all things are negotiable, so it is in the mortgage brokerage business.

I wish more people knew this.

[Sly_s13]

Sounds like awesome news. How long did they say till they start changing the lending laws for people recently out of BK

[ready2puke]

Did you buy a home in a rural area? I did a search and couldnt find anything is my area of so.ca.

[moneytree]

Yes, we are termed 'rural, but it's not really...we were surprised

We are in a growing suburb, so I imagine they'll be changing the location guideline eventually. I doubt for a few years, because our 'area' has many foreclosed homes (yeah, you too? lol) and so they need 'someone' (like me) to buy one.

The '2%' fee was lowered to 1% out of the kindness of our broker's heart. Wish I could say we negotiated that. Without you guys I wouldn't have even imagined the fee to even be negotiable!

Atty. review is not mandatory out here, like in our previous location, so we'll be going over everything very closely. My brother in law knows the ropes so maybe I'll have him take a look at everything.

As far as the laws changing to possibly 3-5 yrs, it might just be for this loan program. Even though the Neh. fund went away, I am sure there will be some sort of loan program after 2 yrs. post-BK, but don't you think the mort. co's are going to really tighten up on money down?? Something tells me the 3% down will be the going rate.

Give a broker a call and see what they have to say! Good luck!

[moneytree]

(the house we are buying was not a foreclosed home)

I was just saying there are a lot where we live. But the sellers will have to bring $5K to signing. I felt badly 'briefly', but then I realized that we are in essence 'bailing them out' of a SHORT SALE.

Without us, this house would still be for sale & the price dropping. But it is priced right (now) and we had to act quickly since it's just getting more complicated to buy with no money down.

The Neh. Fund should be back come springtime (that's the rumor anyway) But with the way that funding was set up, it's 6% in fee's. (3% down & 3% in closing costs) I'll leave that up to someone else to explain all the details!