Zero Down Mortgage Options for New Jersey May Soon End
by Steve Kappre, NJ Loan Officer
One of the strongest loan options for buyers these days is the USDA Mortgage Loan, which has some great features such as 100% financing (zero $$ down) and NO MONTHLY mortgage insurance. It also allows home sellers to pay for most or all of a buyers closing costs.
Some may think this loan is too risky to even consider, but there are checks in place. In fact, this program has common sense guidelines such as debt ratios that can't be "out-of-whack" and some minimum credit score requirements. It also requires full documentation of income, assets, job history, etc.
Here is the bad news ...
When a USDA loan is written for a home buyer, there is a guarantee for the mortgage that is "locked in" once the loan is approved. The issue right now is that USDA estimates that it will be out of money around late April of 2010, which means that this great financing option will no longer be available, at least until the government decides to allocate more money to this program.
What to do now?
If you require this type of financing, than you need to get under contract ASAP on a home. Let us look at an example time-line; If USDA is out of funds by the end of April ... and it takes 2-3 weeks to fully approve a USDA loan ... and it takes one week to negotiate a contract for a home and have it signed by all parties ...
That puts us at the middle-to-end of March ... or RIGHT NOW.
Some buyers will be counting on the USDA loan and the first time buyer tax credit, and with even just a little delay or hiccup can miss out on everything.
Steve Kappre is a mortgage loan officer in New Jersey. For more info or questions feel free to contact Steve.
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