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Common Myths About USDA Loans

By Brian & Val Mayer

Real Estate Agent with The Mayer Group of eXp Realty

July 17, 2012 12:35 PM

I was talking to a Realtor the other usda myths
day who was arguing with me that it takes 45 days
or longer to close a USDA loan.

I tried to explain that it was not true to no avail...

So please allow me to dispel a few misconceptions
and maybe share with you a tip or two about USDA Loans.

Myth - USDA Loans take 45 - 60 days to close
Truth - USDA is 1-2 days to approve loans right now
(I can close a USDA loan in as little as two weeks!)

Myth - USDA Loans are for farms or rural areas
Truth - Most of Maryland and Virginia are USDA Eligible

Myth - USDA Loans are for low income borrowers
Truth - Most of Maryland Virginia is 90k+ for a single person

Myth - USDA Loans have stringent guidelines
Truth - I can do USDA Loans using only alternative credit,
620 credit scores, no money in reserves, and up
to 41/48 DTI ratios

Myth - USDA Loans are for first time home buyers only
Truth - Not at all, there are no benifits or penalties for
being a first time home buyer with USDA

Myth - FHA Loans are better for most buyers
Truth - FHA's monthly MI is 4X higher than USDA.
USDA will give you a lower payment and no down
payment is required.

Myth - USDA can not be combined with
down payment assistance programs
Truth - Not true most of the time

USDA Loans require No Down Payment
Up to 6% seller contribution towards closing
You can get money for minor (lender required) repairs
You can even roll closing costs into appraised value above seller help!

So there you go...

If you want a second opinion about your loan or you need a USDA expert, please call me 443-624-9398 or shoot me an email Brian @ LoveMyLender .com

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Anthony Daniels

Coldwell Banker - San Francisco, CA

SF Bay Area REO Specialist

Not to be confused with the label on your package of meat.

That label doesn't mean much.

Jul 18, 2012 12:47 AM

Andrea Bedard

Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD

Fluent in Real Estate & German, M.A. ABR ASP CIPS

Hi Brian, thank you for shedding some light on the USDA loans! I so bookmarked your post for easy reference and to forward to clients interested in 100% financing options.

Jul 18, 2012 01:03 AM

Paul McFadden

Responsive Pest Control - Seattle, WA

Pest Control, Seattle, WA.

Brian: Thanks. Here in the Seattle metro. area USDA loans aren't always available. I wish you well. One of our senior underwriters thinks it's one of the best loans out there!

Jul 18, 2012 01:48 AM

Kevin Mackessy

Blue Olive Properties, LLC - Highlands Ranch, CO

Dedicated. Qualified. Local.

Great facts about the USDA here Brian. Important information to pass on.

Jul 18, 2012 03:02 AM

Steven Cook

No Longer Processing Mortgages. - Tacoma, WA

Brian -- the only problem I see with USDA loans (all of your points are excellent) is that they now have permanent Mortgage Insurance.

Jul 18, 2012 03:06 AM

Brian & Val Mayer

The Mayer Group of eXp Realty - Huntingtown, MD

Listing Specialist | Realtor in Calvert County MD

~ Mike, I wont tell hehe

~Anthony, its the same department but definitely a different focus

~Andrea, thank you there is lots of info on my website as well

~Paul, where they are available they are great for first time home buyers

~Kevin, thank you glad it was helpful

~Steven, yes but still 4x lower than FHA, at least 2x lower than 5% conventional. Its a no brainer for anyone who qulifies.

Jul 18, 2012 03:36 AM

Janice MacMillan

ERA Joyner Realty - Valdosta, GA

Associate Broker

Thanks for providing this information. We hear all these from lenders where I am at. They tell us to give them at least 45 days to process a USDA.

Jul 18, 2012 04:17 AM

Brian & Val Mayer

The Mayer Group of eXp Realty - Huntingtown, MD

Listing Specialist | Realtor in Calvert County MD

~Janice, some states have USDA offices that do run behind. Just make sure its the USDA office and not the lender that is really causing a 45 day approval.

Jul 18, 2012 04:25 AM

Dawn Maloney

RE/MAX Trinity Northeast Ohio Real Estate Specialist - Hudson, OH

330-990-4236 Hudson & Northeastern Ohio

Good post. Too bad there is nowhere in Summit County, Ohio where a buyer may use a USDA loan - it would help our economy!!

Jul 18, 2012 06:00 AM

David Krichmar

www.DaveYourMortgageGuy.com - Legend Lending - Sugar Land, TX

DaveYourMortgageGuy.com

Brian, great job. You really addressed most of the myths and really the benefits of USDA Loans.

Jul 18, 2012 06:13 AM

Brian & Val Mayer

The Mayer Group of eXp Realty - Huntingtown, MD

Listing Specialist | Realtor in Calvert County MD

~Dawn, Sorry to hear that, there are a few counties in MD where there are very few areas as well.

~Dave, Thank you

Jul 18, 2012 06:23 AM

Anonymous

Great information. I've used USDA successfully and found the guaranteed program to be quite easy to work with. I can't say the same thing for the USDA direct program and I don't even know if it still exists. It seems to me that around here, the time required to close the loan is more dependent on the lender and their ability to push it through. Too many times they blame the program for things that are totally within the control of the process.

Jul 18, 2012 07:37 AM

#22

Diana Foster

BKG brokerage - Braselton, GA

Realtor- Helping you find the perfect home!!

Thanks for the info. I wish you could close one that quick in GA. I just spoke with a lender last week for a client who was pre approved for USDA but due to a 12+ week closing time the buyer chose to pay 5% down to close in 30 days. In our area the USDA is used quite frequently.

Jul 18, 2012 01:02 PM

Gary Frimann, CRS, GRI, SRES

Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA

REALTOR and Broker

Thanks for the info Brian. I am mostly unfamiliar with those loans, and I think housing prices are too high whhere I'm at, but it is good to know that stuff. Like the way you presented it.

Jul 18, 2012 08:14 PM

Brian & Val Mayer

The Mayer Group of eXp Realty - Huntingtown, MD

Listing Specialist | Realtor in Calvert County MD

~Diana, You might want to call another lender to verify its realy that long to close. I hear lots of myths about USDA loans hence the article!

~Gary, The max loan amount is 417k I sure there are a few around

Jul 18, 2012 11:51 PM

Anonymous

Kim Chambers

Brian,

Thanks for the information, this is good to know! However, I am the seller of ahome in Tennessee. My nephew and his wife are purchasing it. They were pre-approved several months before I even decided to sell the home. The aprasial, surverying etc has all been completed. Has been to the underwriter 2 times that I know of...I was told that if the house did not close by the 1st of October it would be another 3 weeks ~ well here we are with nothing....I have no closing date or anything.. They did bring my nephew and his wife in last week for yet another bank and employment statement...Can I please have some advise? This process was started in late July....would it help if I contaccted my lawyer? Thanks ~ your response would be greatly appreciated...

Oct 29, 2012 11:46 AM

#26

Brian & Val Mayer

The Mayer Group of eXp Realty - Huntingtown, MD

Listing Specialist | Realtor in Calvert County MD

Kim, I am sorry to hear that. I get 25% or more of my loans from lenders who dropped the ball. Lenders who are not farmiliar with USDA miss some of the common issues then buy time and try to fix it.

Please have them contact another lender and forward their paperwork over for review, just make sure they are farmiliar with USDA. I am not licensed in Ten or I would be happy to help.

The main thing is not to trust one opinion especially if the contract is at stake.

Oct 31, 2012 02:14 AM

Anonymous

Matt White

I have two lenders about to start processing the same paperwork at the same time for a usda loan. is that allowed? Also they both told me 65 days in Georgia. I am young and this is my wife and I first attempt to buy a home. this is all very stressful.

Nov 01, 2012 04:37 AM

#28

Anonymous

Marie

Um although it can take as little as 2 days to get final approval after the underwriter submits all forms we are on day 13 of waiting right now. Seller first accepted our offer April 1!! That's how long this process has taken. We are suppose to close in 4 days and it's not looking very good for us that they are going to get to our file in time :( if someone says USDA is fast they are lying lol it is a great option but be prepared to WAIT!!!

Jun 16, 2014 05:15 AM

#29

Anonymous

Brian Mayer

Yes this was written a while ago and in MD USDA has recently pushed approval out to 30 BUSINESS DAYS!!! Its not a good situation at the moment but I think things will get better this fall once some people get upset about it.

Jun 16, 2014 06:30 AM

#30

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