Usda Rural Development loans have become a new and hot loan source for buying homes outside of metro ares. They have become so hot the USda has ouble their prouction from the prior year. For those of you not familiar with this loan program it still allows no money own and up to 6% in seller pai items and the program also allows improvements to be finance n the pruchase money loan up to the appraised value of the property that is being purchased. There are some draw back though, income limits and geographic restrictions apply. Doesn't this program sound great. I t sdoes sound great but right now in my area it took 9 business days for the loan to come out of underwriting and it came back with new conditions. WE have sent these back in now and are waiting for them to be cleared.
The purpose of this post is to warn anyone attempting to use this program or benefit this program to plan ahead. I would give 45 days to close from the day you submit the pruchase agreement. This allows time to get an inspection and appraisal and then be able to have seller or bank to fix repairs that need to be done. It also gives the overworked title companies reprsenting banks to get the tite work done. It also sets the expectation of your buyer to be patient.
Another key to this program is to choose a property that fits the program, if it needs lots of work you need to make the appraised value is high enough to finace the repairs. This program has special guidelines very similar to FHA so paint cannot be flaking, if its mentioned it needs to fixed or an esrow needs to be set up for future repairs. Many repairs of the property can be set up in an escrow account. So either pick a real nice property an it will go pretty smoothly or one that nees reapirs but plan on extra time for negoiating and or making the repairs.
Please coontribute your thoughts or experiences with this program.
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