Big news over the last couple of days and the number 1 question I am being asked “Is the USDA Rural Development out of funds?” and “Can I close on my Loan?”
Well “YES” and “NO”
“YES” USDA has issued notice and gossip is that purchase funds may
be exhausted on or about October 27th 2009
However if your lender did their job properly, they should have already reserved your funds so your closings should be ok. Going forward might be a different story but at some point they will release funds again and Start funding. What most people don’t understand is that this happens every year. This year is different because more and more people are doing this type of loan.
“NO” They are not out of funds they are just so we say on hold. The solution to this problem is simple, there are a few lenders out there that will continue to process, issue approvals and close on MOST USDA loans while waiting for more funds to become available from USDA.
Basically what happens is said lender will hold your mortgage portfolio in what lenders refer to as a warehouse line of credit and once the funds are released by USDA they then summit the file and in essence sale your mortgage to the USDA. There is some risk to said leader because these files are not insured by USDA at closing, so for those who have marginal credit don’t be discouraged that you can’t get a loan you just might have to wait until USDA has funding before you can proceed to the closing table.
If you have any USDA questions or if you would like the contact information on a lender that can fund your USDA loan then give me a call at 205-338-5555 or send me an e-mail at miller.remax@gmail.com
P.S. A good alternative to an USDA loan is the Alabama step up Program with is only one half of one percent down payment. So if you buy a property for 100K your down payment is $500. I do have a lender that can close that loan before the Nov. 30th deadline for the $8000 tax Credit.
Sincerely
Realtor
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