This post, in part, was inspired by my friend JL Boney. His sarcastic piece of script was asking why one should wait to buy in this market. Let this particular piece be not a wake up a call or a call to action, but a simple reminder. There are options, explore them.
The Top 10 Reasons to not use that 100% USDA Product:
- You can borrow 100% of the appraisal amount plus the guarantee fee (approximately 102% financing). It's not an uncommon occurrence for the applicant to be able to include all or most of the closing costs within the loan. I've been a big advocate of having money in the bank after closing for any costs that occur once you own the home, yet isn't it easier to have money (that you could be investing, at even the lowest returns) and save it by not making a down payment? After all, borrowing others people's money doesn't make sense at all, especially when you can invest yours instead.
- Most of the closing costs may be included in the loan amount, if justified by the appraisal. Or you can chose to spend every last dime you have on a down payment and closing costs!
- No private mortgage insurance necessary. This actually makes your monthly payment lower. But frankly, who wants that? Besides, mortgage insurance is our friend;)
- The processing on these loans is done by local lenders. There's no need to let local folks see up your skirt when you can spread your financial legs to a National Lender whose awareness of your community is akin to Charlie Sheen's awareness of fidelity.
- Repayment Ratios are somewhat Liberal. Compensating factors such as (credit score, rent payment history, cash reserves, ongoing increases in wages) are all factors. Common sense doesn't figure into the rationale for lending these days, though. Ignore that stuff. Common sense is no longer a part of lending.
- Whether they be new or existing homes, many qualify in areas across the country. "Rural" may not be what you think it is, as defined by the USDA. Sure, we are rural in some areas, but don't let that fool you... this is about lending on a piece of land that cows can graze and consume with acreages that would make Jed Clampit blush. If you don't live on a farm, you can't get this loan.
- If you are of moderate income, you are in like sin. But who in their right mind that has moderate income wants 100% financing?
- Low fixed rates with that 100% financing! Ugh, most folks want to pay out their ears in down payment money to get a low rate. Right?
- Hire a good Realtor. Why? Heck, there is no limit to seller's contribution if done that way. Your Realtor can help you negotiate this. Check with your funding source/lender and their particular overlay (meaning that government guidelines are what they are, yet the lenders making these loans may not always follow these guidelines to T). Or, take the alternative route and save thousands of dollars by not hiring a Realtor and doing it yourself. I mean, how hard could it be?
- One of the best Mortgage Deals across this Nation is awaiting. But who needs a great mortgage deal when cash is flowing through your accounts like beer through a tap at a keg party. I know, yet another alcohol reference. Speaking of which, it's 7:22 and I just got home an hour ago. Time to open the old adult malt beverage.
~ Jason Sardi is a Mortgage Consultant licensed throughout many states on the East Coast. While having no Best Sellers to his name, he's really a decent chap for all intensive purposes. By email, Sardiman can be reached at jsardi@ihmci.com. By phone, he can be reached directly at 610-653-0317. Don't you just love when folks talk in the third person?~
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Very clever My Sardiboy! Why would anyone want to do something that makes sense? Goodness knows I wouldn't!
I have a prediction to make about this post. Now I'll retreat into the crowd and see if I'm right....
MWA My Love!