Aug 15

27

Can you qualify for a USDA loan with medical collections?

How do you qualify for a USDA loan with medical collections on your credit?

qualify for a USDA loan with medical collections

Don’t let medical collections bring your loan qualifying to a screeching halt!  USDA guidelines now offer more flexibility in situations where medical collections are reporting on your credit.  Today’ video tip will provide the details on how to qualify for a USDA loan with medical collections and also explain how other types of collection accounts are treated.

As a starting point, whether it is a medical collection or otherwise, this type of activity is considered negative and impacts credit scores. With that being said, USDA guidelines have been improved for situations involving medical collections.

Prior to 12/1/14, USDA loan requirements considered any open collection account as negative credit regardless of type, amount, or the rest of the applicant’s credit profile.

Current USDA guidelines now instruct the lender to consider the following during the underwriting process (regardless of automated or manual review):

1) Determine if the total outstanding balance of all collections accounts is equal to or greater than $2,000.

2) Remove all medical collections and charge-off accounts from the total balance. Medical collections and charge-off accounts must be clearly identifiable on the credit report.

3) If the remaining outstanding balance of collection accounts are equal to or greater than $2,000, any of the following actions will apply:

a. Payment in full of all collection accounts at or prior to closing.
b. Payment arrangements are made with each creditor for each collection account remaining outstanding. This must be documented by either a letter from the creditor or evidence on the credit report which validate the payment arrangements.
c. In the absence of a payment arrangement, the lender will utilize in the debt-to-income ratio a calculated monthly payment. For each collection utilize 5% of the outstanding balance to represent the monthly payment.

Simply paying a collection account does not immediately justify intent for good credit, and requiring a payment may cause the depletion of liquid assets that instead could be utilized for reserves after closing.

qualify for a USDA loan with medical collections

Remember that each potential applicant’s qualifying will be looked at differently which will determine the reasons for any open collections and if they are considered one time occurrences that are not likely to recur or if they represent a trend of unwillingness or inability to repay debts.

In summary, the new USDA guidelines provide clarification and additional flexibility when attempting to qualify for a USDA rural housing loan with medical collection accounts.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in Florida USDA loans, USDA Credit Qualifying, USDA Underwriting Guidelines

Aug 15

21

Are you working with a USDA Approved lender?

What are the benefits of working with a USDA Approved Lender?

USDA approved lender

USDA Rural Home loans are unique in their qualifying criteria, benefits they offer, and eligible areas that they serve.

With that being said, specific advantages can be gained by working directly with an actual USDA approved lender. Today’s video tip will shed light on what benefit this adds to a transaction.

Where can you find a USDA Approved Lender list? (Click the link below)

USDA Rural Development Approved Lender List – Guaranteed Program

For an applicant to obtain a USDA home loan, it may not be necessary for them to work directly with an approved lender. However, for those who are able to work directly with an actual USDA approved lender the following benefits may apply:

USDA Processing and Underwriting:

USDA Approved lenders have direct access to the Guaranteed Underwriting System (otherwise known as GUS). The GUS Automated Underwriting System is specific for USDA loans and their eligibility. When working with GUS, it provides a roadmap for eligibility, maximum debt ratios, and the all important qualifying limits that both Realtors and Homebuyers need to know when shopping for a home.
It will also determine whether the loan file is eligible for automated processing which allows for reduced documentation, or if manual underwriting will be required which is a more intensive review of the loan file.
The importance of this part of the pre-qualification and loan approval process cannot be underscored enough.

Ability to save processing times:

While it is true that there are more steps in the USDA loan process when compared to a conventional loan, USDA approved lenders are able to work directly with USDA field offices, which eliminates a middle man in the process.

The importance of managing the loan file and holding direct communication between our office and the USDA specialists is critical for responding to their questions, supplying additional documentation, or provided a quick clarification when requested.

Prioritize USDA Loan Specific Documentation:

USDA Rural Development requires specific documents as part of their approval process. We understand the steps needed and are able to prioritize and clear the necessary items needed in order for the file to be shipped to USDA.

Then while the file is already in line waiting for USDA review, we can satisfy remaining underwriting conditions and prepare the file while we wait for the USDA commitment to be returned. When there are increased USDA processing times, this is can be a decided advantage.

USDA Program knowledge and experience:

Another great benefit that goes without saying is the amount of expert knowledge that USDA approved lenders hold. USDA loans cover a specific market and it’s incredibly important that lenders know the ins and outs of this unique loan program. USDA approved lenders understand how the program can be maximized for both consumers and the real estate community.

USDA approved lender

These were only a few of the major advantages which can be held through working directly with an actual USDA approved lender.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in Florida USDA loans, USDA Funds

Aug 15

14

Can You Finance Home Repairs With A USDA Loan?

Is it possible to finance home repairs with a USDA loan?

What happens if you have found that perfect property, but there are required repairs that need to be completed?  What if you could still purchase the home and then have the repairs done after closing?  Well this is exactly where a USDA loan can help out.

So, what are the steps to finance home repairs with a USDA loan?

Just to be clear, we are not talking about the FHA 203K program or any type of full blown renovation loan.  Instead, through the ability to finance home repairs with a USDA loan, it allows for an escrow repair option which can pinpoint specific repair items and allow them to be financed into a USDA loan

First off, let’s discuss the eligible types of repairs which include but are not limited to:

  • Plumbing, Flooring, A/C Units, Replacing shingles, or
  • Any type of repair that does not affect the livability or safety of the home

Repair Costs are not allowed to exceed the LOWER of either 10% of the proposed loan amount or $10,000.  In addition:

  • Contractor invoice will be required for all repairs
  • No self-help work permitted
  • Repair work must be completed within 21 days after closing
  • Repair funds are financed into the loan and escrowed with the title company at closing
  • Appraised value determines how much can be eligible to be financed into the loan.

There will be a required 50% deposit of the overall total repair cost due at time of closing.  This is allotted to cover any potential cost overruns and can be from either the buyer or seller.  This amount cannot be financed.

After successful completion of the required repairs are documented by a final inspection and approved, release of funding from the title company for contractor funds and the 50% deposit occurs.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in Alabama USDA Loans, First Time Home Buyer, Florida USDA loans

Aug 15

7

What are the differences between USDA and VA home loans?

Do you know differences between USDA and VA home loans?

USDA and VA loans are fantastic loan options that provide high qualifying flexibility, but sometimes get overlooked by lenders who do not have the necessary experience to be successful day in and day out.   As a USDA and VA approved lender, we are known for our Government program expertise and the specific systems we have in place to qualify, process, and close these special loan programs.  Today’s video tip will keep you in the know on the differences between USDA and VA home loans!

While USDA and VA Loans are both known for 100% Financing (No Down Payment(, they both hold unique qualifying and eligibility requirements. As a USDA and VA approved lender, one of the most common questions I received is“What are the differences between USDA and VA home loans?

What are the differences between USDA and VA home loans?

To answer this, let’s start by reviewing a few similarities.

First, both USDA and VA home loans offer 100% financing. In other words, there is NO down payment required for either a USDA or VA home loan.

Next, both USDA and VA home loans are very specific when it comes to eligibility. Both of these loan programs offer unique criteria for eligibility, which are completely different from FHA and Conventional loan qualifying guidelines.

Flexible credit qualifying is available under both programs through reduced minimum scores, manual underwriting availability, and shortened time frames for recent bankruptcies, foreclosures, and short sales. Remember though that minimum credit conditions will apply, so let us know if you have a specific scenario to discuss.

Now let’s review the differences between USDA and VA loans.

USDA and VA Program Eligibility:

As I previously mentioned, both USDA and VA loans have specific requirements that must be met in order to be eligible for these loan types.

-USDA guidelines specify that applicants must meet household income limits as outlined per county and the property being purchased must be located in a USDA eligible area.

-VA loans on the other hand, are only available to eligible military service members.

The USDA Guarantee Fee and VA Funding Fee

-The USDA Guarantee fee of 2% is a one-time charge that can be financed into the loan. There is also a monthly premium that is calculated at .50%; e.g. $100,000 * .50% / 12 = $41.67

- The VA Funding Fee is also a one-time charge that can be financed, but the amount ranges depending on from 0% to 3.3%. The VA funding fee is calculated based on previous usage, loan type, type of veteran, and the VA funding fee can be waived for eligible applicants who meet service connected disability requirements.

USDA and VA Loan Closing Costs 

While any loan program can have associated closing costs or settlement charges, outside of the VA funding fee, VA home loans will not permit the option of financing out of pocket closing costs.

On the other hand, USDA loans permit the ability to finance out of pocket closing costs/settlement charges in cases where the appraised value is higher than the sales contract purchase price.

Metroplex Mortgage Services is an approved USDA and VA lender, and take pride in serving both the military and rural communities we work in. Take advantage of our 100% financing Government loan expertise, and use us as a resource for your loan qualifying questions

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in Alabama USDA Loans, First Time Home Buyer, Florida USDA loans, Tennessee USDA Loans, Texas USDA Loans, USDA FAQs

Jul 15

31

Can You Qualify For a USDA Debt Ratio Waiver?

How can a USDA Debt Ratio Waiver help you purchase a home?

What happens if the home you want appears to be just out of budget? Well, one solution may be with a USDA Debt Ratio Waiver which provides increased payment flexibility and improved qualifying ratios.

In today’s short video tip we will cover a critical USDA qualifying option which can help maximize a buyer’s potential price range and open up the range of eligible properties.

What is a USDA Debt Ratio Waiver?

Just to clarify, please note that debt ratio waivers are NOT required on loan files that receive a GUS Accept. Today’s topic will cover any loan files that receive either a GUS Refer, Refer with Caution, or have to be manually downgraded by underwriting.

A USDA debt ratio waiver may be granted if ALL of the following conditions are met:

  1. Principle & Interest, Taxes, Insurance (PITI Payment) is between 29% and 32% (This would be considered your housing expense and would also include any association fees if applicable.)
  2. Total ratio is between 41% and 44%
  3. Credit score of all applicant(s) is 680 or greater, and….
  4. At least one of the following compensating factors is identified…..

Compensating Factors

A. Proposed PITI payment is equal to or less than the applicant’s current verified housing expense for the past 12 months as documented by either a:

  • Verification of Rent forms (VOR) – (Non Family), or
  • 12 mos. cancelled rent checks may be required

B. Accumulated savings of liquid assets available post loan closing of at least 3 months or greater of PITI payments after closing as verified by:

  • Verification of Deposit form (VOD)
  • 2 consecutive recent bank statements
  • NO Cash on hand

C. All employed applicants have been continuously employed with their current primary employer for a minimum of 2 years as documented by.

  • Verification of Employment Forms (VOE)
  • This is NOT applicable for self employed applicants

 A USDA debt ratio waiver request must be submitted to Rural Development, in writing, with the compensating factors listed to support the request.

This is just another example of how a USDA loan can provide qualifying flexibility when the documentation supports the request.

As you can tell, USDA Rural Home Loans have guidelines that are very specific to this unique program.  Always be certain that you are working with a mortgage professional that is well versed and understands the full potential of this powerful loan program. As an approved USDA lender, we are experienced in these situations and are here to help guide you through the process.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Jul 15

25

FHA, VA, USDA, and Conventional – What are the requirements when qualifying for a mortgage with a private road?

I received such a great response from last week’s post about how to qualify for a USDA loan on a private road, that I wanted to provide additional details for FHA, VA, and Conventional loans.

Remember now, it does not have to be a rural community to have a private road – so this video tip is a great resource for a variety of situations.

FHA, VA, USDA, & Conventional – What are the requirements when qualifying for a mortgage with a private road?

Here is a 1-2-3 formula for situations when the property is located on a private road:

#1. Call your local county roads & bridges department to confirm the exact type of road classification. Do not always assume that it is a private road just because it may be dirt or unpaved. Many counties have a variety of classifications for road types and it is always best to make the extra call and double check.

#2. Once you have confirmed it is a private road, make sure that the lender, bank, or broker handling the mortgage is experienced with private roads so they can properly determine what programs are available.

#3. Follow up with the closing attorney or title company handling the transaction to help determine the following:

A.  Are there recorded easements such as one allowing right of way onto the property.
B.  Is there a recorded private road maintenance agreement, which may be required depending on the type of mortgage.

Here is a tip on conventional loans, Fannie Mae will require a private road maintenance agreement, but Freddie Mac guidelines do not. Check with your lender if they are have ability to work with Freddie Mac programs.

* VA Loans will also require a recorded maintenance agreement
* FHA does not have this requirement
* USDA loans also do not have this requirement, but they have specific guidelines regarding the type of road which must be considered an all weather surface roadway.

Each and every transaction can be different, but this will provide you with a strong overview of the available programs and steps needed to close a successful transaction when the buyer is trying to buy a home located on a private road.

Keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert 2nd opinion.

Whether it be USDA, FHA, Conventional or VA loans, just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here!
Toll Free: (800) 806 – 9836 Ext. 280

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Jul 15

17

Can you qualify for a USDA loan when the property is located on a private road?

How do you qualify for a USDA loan when the property is located on a private road?

This is one of the most common questions that I receive when working with USDA loans. Private roads can be found in very rural areas, but also in communities controlled by an HOA (Homeowner’s Association).  Don’t be scared when you come across a private road – be aware! In today’s video tip we will cover the USDA qualifying guidelines when dealing with private roads.

USDA loan guidelines require that streets and roads must be hard surfaced or all-weather surfaced.  They define an “all-weather surface as a road surface over which emergency and the area’s typical passenger vehicles can pass at all times.”

A very key point that has been clarified in the new USDA 3555 guidelines states “A publicly maintained road is automatically assumed to meet this requirement.”

Another important point of clarification is that USDA loan requirements and guidelines do not require a private road maintenance agreement.

qualify for a USDA home loan when the property is located on a private road

Now that we have defined the guidelines, let’s walk through the steps on how to qualify for a USDA loan with a property located on a private road:

Step 1.  It is always a good idea to confirm with your local county roads & bridges department the exact type of road classification.  Just because it may be a dirt road, don’t assume that it is also considered private.  Many counties have different classifications of road types and it is always best to make the call and double check.

Step 2. Once determined that the road or street is private the following USDA private road guidelines are required:

  1. Private streets must have a permanently recorded easement, or
  2. Be owned and maintained by a Homeowner’s Association (HOA)
  3. Don’t forget, the private road must also meet the all-weather surface requirement

If a HOA is responsible for maintaining streets and roads, it must meet the criteria set forth by Fannie Mae, Freddie Mac, the U.S. Department of Housing and Urban Development (HUD), or U.S. Department of Veterans Affairs (VA).

qualify for a USDA home loan when the property is located on a private road

All recorded easements must be reviewed and approved prior to closing.  Your title company or attorney handling the closing can help with easement questions. For further understanding, here is a definition of an Easement from Wikipedia.

In summary, do not always assume just by the road type that it may be a private road.  Always check with the county where the property is located to get proper street classification on whether it is actually public or private.

As we all know, different factors can evolve on each transaction, but this will give you a great start to staying organized with the steps needed to qualify for a USDA loan when the home is located on a private road.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA FAQs

Jul 15

10

Can you buy a condo with a USDA Loan?

How can you buy a condo with a USDA home loan?

Welcome back everyone, this is Sean Stephens here again with Metroplex Mortgage Services & another USDA Loan Pro video quick tip.

Are condos eligible for a USDA loan??

When it comes to USDA eligible property types this is a common question for markets where condos are available.

In today’s short video we will discuss what are the requirements needed in order to purchase a condo with a USDA loan.

As a quick reminder, don’t forget to join our USDA Real Estate Network Groups on LinkedIn and Facebook by clicking below. Members can use these groups to market and post new listings, ask questions, and connect with the online UDSA Real Estate community which includes home buyers and agents.

So, How can you buy a condo with a USDA loan??

So, can you buy a condo with a USDA loan? Well yes you can, but remember that Condominiums are a form of ownership and not tied to a specific property style or building type. With that in mind, USDA guidelines have the following definition:

“Condominium projects typically consist of multi-unit buildings governed by an HOA. Each unit is individually owned, and the common areas such as hallways and recreational facilities are owned by all the unit owners.

Although less common, it is possible for condominium projects to consist of detached or attached single family dwellings. In these cases, it is the HOA and not the individual unit owner who is responsible for maintaining the exterior of the dwellings in addition to the common areas.”
Can you buy a condo with a USDA Loan

Additionally:

■ Condominiums are deemed eligible for USDA guaranteed financing if the condominium has been approved by either HUD/FHA, VA, Fannie Mae (FNMA), Freddie Mac (FHLMC).

I have included the approved condo links below as a quick reference. This is a great resource when researching if a condominium project already has existing eligibility by one of these agencies.

■ HOA dues for dwellings in a condominium project must be included in total debt-to- income ratios.
■ Applicants remain responsible to obtain individual homeowners insurance or flood insurance as applicable

Please keep in mind that when dealing with condominiums, additional underwriting guidelines or project eligibility factors may be considered when determining eligibility.

FHA Approved Condo List
VA Approved Condo List
Fannie Mae Approved Condo List

Just call or email if you have any USDA qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2nd opinion service which is great for both existing transactions & pre-qualifications.
800-806-9836 Ext. 280 SeanS@MPLX.org
Remember to click the links below to become a member of our free USDA Real Estate Network groups

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

Comments

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Posted in USDA FAQs

Jun 15

26

Are Closing Costs Included With A USDA Loan?

“Will my closing costs be included with a USDA loan?”

This is a very common question that we receive at Metroplex Mortgage Services, and in today’s video tip we will cover the details about how a USDA loan can offer flexibility with closing costs and help reduce out of pocket expenses.

USDA loans offer the benefit of 100% financing, or no Down Payment.  However, that should not be confused with No Money out of pocket.

When you are buying a home, there are customarily 2 sets of out of pocket expenses:  Your Down payment and Settlement Charges otherwise known as closing costs.

With 100% financing, USDA loans eliminate the need for a down payment, but that does not have anything to do with closing costs.

USDA loans provide for the ability to finance closing costs into the loan.  However,  In order to finance closing costs, the home must appraiser for more than the purchase price you have agreed to.  This feature is unique to USDA loans, and not available with conventional, FHA, or VA programs.

Examples of what charges could be financed with a USDA home loan are:

  1. Closing Costs such as Title Charges, Loan Costs, Survey, Recording Fees, etc.)
  2. Pre-Paid Items such as your Escrow Accounts, Homeowner’s Insurance Premium, and Pre-paid Interest.

For example, if your sales price is $100,000 and the appraiser determined the value of the home at $103,000, then the loan amount could increase up to the appraised value and include $3,000 of out of pocket settlement charges.

The one exception to this rule is for the 2% USDA Guarantee fee, which can always be financed into the loan amount regardless of the appraisal.

As always, the buyer can contribute their own funds at closing or if possible can also negotiate for the seller to pay up to 6% of the sales price towards a buyer’s settlement charges.

When trying to finance closing costs, it is important to remember that there is no guarantee of what the home will appraiser for so be sure not to put all of your eggs in one basket and hope for the best.

If you do need assistance with closing costs, it is critical to address this upfront with both your mortgage professional and Realtor – before a sales contract has been written.

As a summary, USDA loans do not automatically include customary out of pocket settlement charges, but through a combination of the buyer’s own funds, possible seller concession, and the ability to finance closing costs it allows for flexibility when budgeting for out of pocket expenses.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

Comments

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Posted in USDA FAQs, USDA Loan CLosing Costs

Jun 15

19

Is your lender working with the USDA “GUS” Underwriting System?

Can the USDA “GUS” Underwriting System help you qualify for a USDA home loan?

Whether you are a Home Buyer or a Realtor working with USDA clients, having a lender that properly utilizes “GUS” has a tremendous impact with USDA loan qualifying. This short video tip will provide the necessary details to help give you the advantage when qualifying for a USDA home loan.

And don’t forget to join our USDA Real Estate Network Groups on LinkedIN and Facebook by clicking below. Members can use these groups to market and post new listings, ask questions, and connect with the UDSA Real Estate community which include buyers and agents.

USDA Real Estate Network – LinkedIn Real  USDA Estate Network – Facebook


The Guaranteed Underwriting System also known as “GUS”, was created by USDA Rural Development to serve as their automated underwriting system (AUS). The system’s purpose is to help lenders process Rural Development Guaranteed loan applications.

Authorized lenders can utilize GUS to submit:

- An application for eligibility determination

- Pre qualification, or…

- Final submissions to Rural Development

The Guaranteed Underwriting System is a rules based decision engine and a modified version of the FHA TOTAL scorecard.

With these combined functionalities GUS can indicate recommended levels of underwriting and documentation to determine a USDA loan’s eligibility for the Single Family Housing Guaranteed Loan Program (SFHGLP).

After the loan data is entered, GUS then delivers a recommendation based on a risk evaluation analysis, which can be as follows:

  • Accept
  • Refer, or
  • Refer with Caution.

Important factors that GUS will determine are:

  • Eligibility for:
  1. Income
  2. Credit, or
  3. Property Location
  • Accepted qualifying ratios (For example debt ratio waiver requests are NOT required for GUS Accept files)

Please note, that as with any Automated underwriting system, the findings are only as good as the data entered. This underscores the importance of accuracy at this stage of the process, because although GUS is not a final underwriting stamp of approval, it does provide a roadmap for eligibility and what is needed for approval.

As a USDA approved lender, we utilize the GUS system and are able to maximize the benefits it provides to help both qualify homebuyers and process USDA loans.

We realize that qualifying for a USDA loan may seem overwhelming, but when you are paired with a lender who can maximize the potential of this unique program, it is a match that can help open the door to home ownership.

My team is ready to help with your next pre qualification, or if you happen to need an expert second opinion.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

Questions? Contact Us Here.

Toll Free: (800) 806 – 9836 Ext. 280

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

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Posted in USDA Advantages, USDA Credit Qualifying, USDA FAQs


Sean Stephens

Metroplex Mortgage Services

Contact Me Here
Toll Free: (800) 806-9836 Ext. 280
NMLS ID# 185288

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