Rural Development Loan

RURAL DEVELOPMENT AND DTI

mwilsonx2 — Wed, 14 Mar 2012 13:53:54 +0000

What is a DTI? DTI stands for Debt to Income. With Rural Development Loans, the requested debt to income ratios are 29/41 but these numbers may be able to go a little higher if you have compensating factors.

DTI Broken Down

Your DTI is comprised of 2 numbers. The first number represents what percentage your monthly mortgage payment, including taxes and insurance, is of your gross monthly income. A Rural Development Loan requires that your monthly mortgage payment not exceed 29% of your gross monthly income. This number can be adjusted with compensating factors.

The second number on your DTI represents what percentage all of your bills including your mortgage, when added together, is of your gross monthly income. Rural Development Loans request that this percentage not to exceed 41% of your gross monthly income. Again, this number can be adjusted with compensating factors.

Compensating Factors for Rural Development Loan DTI’s

Compensating factors are things regarding your personal situation that may make you a more secure borrower. These compensating factors could be your credit score, how long you have been on the job, income increases, and others.
For more information on Rural Development Loans and Debt to Income, please contact me.

Rural Development Loans and Your Credit Score

mwilsonx2 — Wed, 22 Feb 2012 15:32:20 +0000

When looking into purchasing a new home, usually the first thing that comes to your mind is your credit. All loans are based on that MYSTERIOUS CREDIT SCORE but a Rural Development Loan might be a bit more forgiving about “your dog eating your credit card statement” two years ago than you may think.

Rural Development Loans by the Numbers
Credit scores or FICO scores range from 300 to 850. A FICO score of 850 would be perfect credit but how many of us actually have that? With Rural Development, you don’t have to be perfect, just human. In most cases, for a Rural Development Loan, lenders only require a credit score of 600 or above to qualify (Below 620 more restrictions apply).

Rural Development Loans and Tradelines-

Tradelines are lines of credit that appear on your credit report. These tradelines are what helps generates your credit score. With a Rural Development Loan, you generally need to have 3 tradelines. But if you have less than three, Rural Development usually will allow us to substitute other accounts that do not normally appear on your credit report. These other accounts might be your monthly phone bill, car insurance, rent, or other bills that you pay monthly.

Refinancing Options with Rural Development Loans

mwilsonx2 — Wed, 15 Feb 2012 17:48:49 +0000

When rates drop, most home owners look to lowering their interest rate on their mortgage loan, saving them money monthly. A Rural Development Loan is no different.

Rural Development guidelines do allow for a home to be refinanced into a Rural Development Loan in order to get a lower rate, but the loan must currently be a Rural Development Loan to qualify.

Two options that are available to refinance a Rural Development Loan are: A Streamline Loan that does not require an appraisal and a full refinance that will require an appraisal.

Streamline Refinance

A streamline refinance loan with Rural Development will take the current unpaid mortgage principal balance only plus the 1.5% Guarantee Fee to generate your new loan amount. There is no appraisal required. With the Streamline Loan, you cannot roll any of the costs for the loan (other than the funding fee) into the new mortgage. If there are costs, you must pay for them yourself at the loan closing. You must carry an escrow account for your taxes and home insurance. This also can not be rolled into the loan and must be paid by you at closing as well. If you carry a current escrow account, that will be refunded back to you after your new Rural Development Loan has paid off the current Rural Development Loan.

Full Refinance

A full refinance with Rural Development will require an appraisal and the new loan can be written up to the appraised value of the home. As long as there is enough equity in the home based on the appraisal, you can roll in the mortgage costs for the loan. The 1.5% funding fee will be rolled into the new Rural Development Loan. This means that your mortgage can go up to 1.5% over the appraised value of the home. With a full Rural Development Refinance Loan, you must carry an escrow account for your taxes and home insurance. This can also be rolled into the new mortgage loan if there is enough equity in the property based on the appraised value. If you currently have an escrow account, that will be refunded back to you after your new Rural Development Loan has paid off your current Rural Development Loan. Some lenders can issue a credit to you at closing for the escrow balance. This is case by case.

For more information on Rural Development Refinancing of your home, you can visit the US Rural Development website at http://www.rurdev.usda.gov/MI/sfh/sfhmain.htm or contact me directly with any questions.

RURAL DEVELOPMENT LOAN BENEFITS

mwilsonx2 — Sun, 05 Feb 2012 22:42:53 +0000

There are many benefits of a Rural Development Loan. Here are those benefits broken down to what a borrower REALLY wants to know about getting a Rural Development Loan. Please click on any of the links below for more information on the benefits most important to you: :

- 100% Loan to value

With a Rural Development Loan, you can finance your home up to 100% of the appraised value of the home – which is not necessarily the same as your purchase price. If your home appraises for more than what your purchase agreement says, you can actually use the difference in value to help pay for some or all of your out of pocket expenses associated with getting a mortgage. An example of this would be if your purchase agreement says that you will buy a home for $100,000 and the appraised value of the home is $102,000, you would then be able to roll up to $2,000 of your loan closing costs into your new Rural Development mortgage loan.

- No down payment

A Rural Development Loan is one of the only programs still available today that does not require a down payment. (VA loans are another type of zero down program, but you must meet VA loan requirements).

- No payment reserves required

With a Rural Development Loan, there are no reserves required. You will only need to have the funds in your account to cover any costs you are not able to roll into your new RD Loan or that are paid by seller concessions.

- Low monthly mortgage insurance payments

A Rural Development Loan offers a lower private mortgage insurance payment (PMI) than traditional mortgages. Having a lower insurance payment monthly allows for a larger principal & interest payment – which means you may be able to qualify for a larger mortgage because of the lower insurance payment you are required to pay monthly. Rural Development Loans do have a 2% funding fee, but this fee is rolled directly into the RD loan.

- You do not have to be a 1st time home buyer

There are many loans available today to help first time home buyers. With Rural Development Loans you don’t have to be one. RD loans are available to everyone. Even if you have purchased a home in the past, you can still take advantage of the benefits of a Rural Development Loan. (Some restrictions apply on owning more than 1 home)

- No maximum on seller concessions

Rural Development Loans allow for the seller on a home to offer a buyer help with their mortgage costs. This is called Seller concessions. Seller concessions is an offer by the seller to help the home purchaser cover any closing costs, prepaid costs, tax pro-ration or other allowable expenses. With an RD loan, these concessions are not limited to 6% like other programs, but concessions greater than 6% may require additional information.

- 100% gift funds allowed

Rural Development loans allow for gifted funds. If a buyer is required to bring in any money to close on the RD loan, the funds can be gifted to them. Specific documentation is required with gifted funds.

- Refinancing options available

Rural Development Loans do offer a refinance program. You need to currently be in an RD loan to qualify.

Rural Development Loans – Guidelines on How To Obtain a Housing Loan From The USDA Rural Development Home Loan Program

Dean — Wed, 13 Jul 2011 11:18:40 +0000

Image via Wikipedia

What are Rural Development Loans?

First of all Rural Development (RD) involves actions and initiatives intended to develop the standard of living of the rural areas with the active participation of the local people. These are usually agricultural communities with few inhabitants but have a wide open space available for development like the State of Arkansas, Louisiana, Michigan and others. Rural Development Loans then, are loan grants intended to provide funding for the social and economic development of these areas. There are some requirements as to who would qualify for this loan and what places are eligible for development.

The primary goal of Rural Development Loan is to support essential living facilities like; housing, water and sewer system, health clinics, electric and telephone service. RD also offer technical support to farmers to help them get started and to improve their operations.

How to Become Eligible for Rural Housing Development Loans

One of the many things that are financed by RD is housing loan. This is perhaps the most popular because the majority of the population that wants to avail of RD loan needs a home. Now the question of eligibility has been the constant source of confusions among home buyers, realtors and lenders especially those who are new in the business. As an overview, two things will be discussed here regarding how to become eligible for Rural Development Home Loan.

1. Property eligibility

As the name of the program suggests, to avail of Rural Development Home Loan, your home must be located in the rural area. This includes places like open countries with populations of 10,000 or less. Towns and cities with populations between 10,000 to 25,000 are also eligible under certain conditions.

2. Income eligibility

As a buyer, you should have an adequate and dependable source of income. That being the case, family income must be moderate in order to qualify and, there is no avoiding this because the tax return of buyers will be checked. Family income in this case, includes that of the applicant, the co-applicant and any adult in the family that is earning.

These two will be discussed in detail when we talk about USDA Rural Development Loans.

The USDA Rural Development Loan Guidelines

So you want to avail of the USDA Rural Development Loan but cannot make heads or tails of it. Well this can really be so complicated but to give you an idea, here are the “nuts and bolts” for the USDA Rural Development Loan application qualifications:

1. The location of the house is designated by the USDA. You can find the designated areas in their website.

2. The income of the entire household must be moderate and this will be determined by the USDA. You cannot leave the income of the rest of the household out just to make the income look lower because the USDA will need to see your tax return and that of your spouse. If your income exceeds the threshold, don’t just give up yet. The USDA allows for deduction of elderly members such as your gran, child care, medical expenses for children, students and handicapped members that will be living within the financed property.

3. This is a real no down payment loan. You don’t need any money for down payment to avail of it. This is also not a farmer’s loan because the value of the the property cannot go beyond 30% of the appraised value.

4. The property you are interested in must be in good condition. Make sure that there are no exposed wiring, peeling off paints and some missing bannister because the appraisal used is the FHA type.

5. Another good thing about this loan is that there is no monthly mortgage insurance therefore it is more affordable than FHA in terms of monthly mortgage payment.

6. The seller of the property can pay all the pre-paids and closing cost. In most cases though, the buyer will have to pay for the appraisal report cost which is $450 and this is your only out-of-pocket cost.

7. If the appraised value of the property is more than the purchase value, the difference will be used to pay for all the closing cost and pre-paids because this loan program allows for the closing cost to be rolled on top of the purchase price.

8. You should not avail of this loan as a second house investment because it is not allowed. But there is no restriction for first time home buyer or a move up home buyer.

9. You should have a minimum credit score of 640. It used to be that the USDA will ignore derogatory credits with a score of 640 but they have become less lenient recently.

10. Although there is no maximum mortgage amount, the house must be moderate in size and it is the USDA that will determine what is moderate.

11. Your mortgage is fixed to 30-33 years fixed rate terms. If you cannot afford the 30-year term, this can be raised to 38 years.

These points are basically what you need to know about USDA Rural Development Loans in order to make sense of it. There are two kinds of USDA Rural Development Home Loan; the Guaranteed USDA Rural Development Home Loan and the Direct USDA Rural Development Home Loan. These will be discussed in details below.

What is the Guaranteed USDA Rural Development Home Loan

With the Guaranteed USDA Rural Development Home Loan, your loan is funded by private lenders. This means that in case of default or failure on your part to pay the mortgage, the lender will be paid by the USDA.

This type of loan is intended for those who belong to the low and moderate income families that reside in the rural areas to be able to acquire a modestly priced housing to be used by them as a primary residence. This means that if you already have an existing home and you want to avail of this loan as an investment, you will be denied. But you can use this loan to purchase or repair a newly acquired home.

The advantage of this loan program is that there is no down payment but you should be able to pay the mortgage, taxes and insurance. All you need to do is to prove that you don’t have an adequate dwelling and you cannot obtain credit somewhere else, but you have to have a good credit history. This type of loan is fixed to 30 years.

What is the Direct USDA Rural Development Home Loans

The Direct USDA Rural Development Home Loan, on the other hand, is the type wherein the loan is directly granted by the USDA. This loan which is awarded to eligible applicants can be used to repair, build, renovate, relocate or buy new homes and this is given at affordable interest rates. This can even be used to refinance the house on certain conditions.

Applicants for the direct loan must fall within the low to very low income category. If your income falls below 50% of the Area Median Income (AMI) then you are defined to belong to the very low income category. On the other hand, if your income is within 50% to 80%, then you fall within the low income category.

Like the guaranteed loan, there is no down payment required for this one but you must be able to pay the mortgage, taxes and insurance and you must not be able to obtain credit elsewhere but at the same time, you must have a good credit history.

This type of loan is fixed at 33 years and can be extended to 38 years if you cannot afford the first option.

These are everything you need to know in order to become eligible for Rural Development Loans. These guidelines for USDA Rural Development Home Loans will definitely help you in your endeavor to avail of its benefits.

Property Acquisition Types

mwilsonx2 — Wed, 05 Jan 2011 20:02:56 +0000

RD loan may be made for different types of acquisitions. RD allows for the purchase of new dwelling, manufactured, stick built, modular or condominiums. Consumers can also use the RD loan to purchase existing dwellings, stick built, modular and condominiums. The difference between existing and new is you cannot purchase an existing manufactured housing unit. These units are not eligible unless the property is currently RD financed.

Purchase transactions are not the only loan purpose RD offers. RD also offers refinance transactions for the borrower(s) that have an existing RD loan that would like to lower their rate.

Income Requirements for Qualifying Eligibility

mwilsonx2 — Wed, 05 Jan 2011 19:52:37 +0000

Income used to approve the borrower for an RD loan may not exceed the moderate income level issued by RD. To determine if your income meets the moderate income you can reference the RD website: http://www.rurdev.usda.gov/mi/sfh/MI%20GRH%20(2).pdf

Income calculation must be based on the income received by borrower, co-borrower and any adults within the household regardless if they are on the loan or not.

Moderate income limits are based on a projection of income for the 12 months. Additional factors to determining eligible income are taken into consideration such as: retirement income (social security, annuities, pensions, retirement funds), Alimony, child support, unemployment, insurance policy, disability, severance pay, AFDC, recurring cash contributions, net farm or business income or earned income tax credit, actual or computed from net family assets (when over $5000.00), net educational grants/scholarship/VA benefits and any other income.

Borrowers can also utilize deductions (on an annual basis) from the gross income to determine an adjusted gross income. The deductions are for any household member under the age of 18, household members that are handicapped or disabled (other than the applicant/co-applicant) over the age of 18, and any full time student (disabled adult student entitled to one deduction) over the age of 18, child care expenses, elderly family (one only), medical expenses (>3% of gross income)

Watch: Guarantee Rural Development Loan Program

Rural Development Loan (Guest) — Sat, 06 Nov 2010 12:14:54 +0000

Rural Development Loan Benefits

Rural Development Loan (Guest) — Fri, 05 Nov 2010 18:57:37 +0000

Who Should Use a Rural Development Loan?

There are very few ways to purchase a home these days without a typical 3.5% down payment that is required for an FHA loan. Many home buyers are surprised to find that a rural development loan offers not only a lower payment, doesn’t require a down payment. You may be wondering how that’s possible. The answer is simple, there is no mortgage insurance added into the bottom line of the loan.

Are you dreaming of purchasing your first home or maybe buying the next dream home? Do you lack the typical down payment that most banks require or maybe you’d rather keep your savings in the bank? A rural development loan may be the answer you’re searching for. These government insured loans are one of the only options in the market today that do not require a down payment.

What is a Rural Development Loan?

We are committed to helping more people achieve the American dream of homeownership. A rural development loan is a government insured loan created to increase the population and strengthen the economy in rural america. A common misconception is that rural development loans are only for farmers. Almost any area outside a major metropolitan city will qualify.

Rural Development Loan Facts

Don’t let someone you don’t trust handle one of the most important financial transactions in your life. Make sure you are working with an experienced rural development loan expert who will analyze your situation to determine if a USDA rural development home loan meets your needs. Many banks and lending institutions are not familiar with USDA guidelines and some are not even aware these no money down home loans exist.

Few people are aware that Rural Development Mortgages provide government guaranteed financing for 100% loan to value for home mortgages. With a Rural Development Mortgage, there is no recapture because it is not a subsidy loan.

There are many benefits to Rural Development Mortgages that include 100% LTV based on the appraised value of your home, zero down payment, and low 30 year fixed mortgage rates. USDA’s Rural Development guidelines provide flexible credit guarantees and require no mortgage insurance.

More rural families and individuals are now able to become homeowners with the help of the Rural Housing Service Programs. There are various programs available to aid low-to-moderate income rural results to purchase, construct or repair a home. Rural development mortgages allow qualified homebuyers the opportunity to get loans with very minimal closing costs and no down payment.

Section 502 Rural Housing Guaranteed Loan Program states that a loan guarantee through RHS means that, should the borrower default on the loan, RHS will pay for the loan to the private financier. The rural development loan program’s purpose is to enable low and moderate income rural residents to acquire modestly priced housing for use as a primary residence. There is also a program available to purchase and repair an existing or newly constructed home.

The Section 503 Single Family Housing Direct Loan Program states that individuals or families receive direct financial assistance from the Rural Housing Service in the form of an affordable interest rate home loan. Loans are typically made for 30-33 years and eligibility is based on the family’s income.

Have Questions about a Rural Development Loan? Contact Us

Unsure If You Qualify for a Rural Development Loan? Check Requirements Here

Are you equipped to snag the best mortgage loan?

Rural Development Loan (Guest) — Mon, 01 Nov 2010 19:10:56 +0000

If you’re contemplating a new house in 2012, have you done your homework for snagging the best loan in the market? If answered no, what are you waiting for? A mortgage loan is a loan with a huge amount and you have to be watchful enough so that you don’t take the wrong decision that can make your finances go haywire. There are certain points that you need to take into account when you prepare yourself for taking out a home mortgage loan. Unless you understand the pros and cons of defaulting on your home loan, you can take wrong decisions that may lead to a foreclosure. Here are some vital essentials you should equip yourself with before taking out a mortgage loan.

• Did I check my credit score?

The first thing that you need to check is your credit score as this is the number that will be checked by the lenders before lending you a loan. If the credit score is low, the lender will consider you to be a risky borrower who can’t manage his finances and debt obligations. To reduce his risk, he may charge high interest rates on the secured loan. If you don’t want to be subject to high rates on the loan, you should improve your credit score before taking the plunge.

• Did I try to boost my monthly income?

The mortgage lender will check your total monthly income so as to make sure that you’ll be able to manage all the debt obligations that you owe in a particular month. If your monthly income is not enough for you to bear all the monthly debt obligations, you may either be turned down on the loan amount that you ask for or be charged high interest rates on the loan. Therefore, if you could boost your monthly income by looking for some passive income sources, you can easily make your way to a loan that is within your means.

• Did I repay my debt obligations on time to lower the DTI ratio?

Haven’t you heard about the importance of the DTI ratio or the debt-to-income ratio? This is the ratio between the amount of income that you earn and the total debt obligations that you owe your lenders. If you want to lower the interest rate on the home mortgage loan, you have to repay your unsecured debt obligations so that you can lower the DTI ratio and thereby directly affect your interest rates. You can save a lump sum amount every month if you can lower the rates on the loan.

Therefore, when you want to buy a new house with a financing option, you should take into account all the above mentioned points so that you may be able to take a measured decision with the secured loan. Also try to manage your monthly payments so that you can pay back the loan on time and thereby save your credit score from being badly hit.