USDA Rural Developement Repair Escrow

By
Mortgage and Lending with Hamilton Group Funding, NMLS#831824 NMLS# 831824

Image 34I believe it is important for home buyers and  professional deal makers to become aware of the USDA Rural Development Repair Escrow program.  You may be interested in or asked to locate properties outside of urban areas, and the USDA Rural Development Program is often your fastest and easiest way to get these deals financed.  It is a 100% loan, it allows a very high tolerance for seller concessions and gift funds, lower monthly mortgage insurance equals lower monthly payments for home buyers and the USDA Rural Development Loan can be qualified with a 620 credit score (most of my competitors require a 640).  In other words, it possibly requires no cash and little credit.

Most Real Estate Agents and home buyers see two primary challenges to the USDA Rural Development Loan:  there is an income limit and the property must be located in an eligible area.  But within one hour of Tulsa, Oklahoma, and Oklahoma City, Oklahoma, there are often thousands of USDA Rural Development properties available and eligible, and the USDA Rural Development income limits are not unrealistic at all.  The primary concern I experience with my USDA Rural Development deals is that many of the  rural homes are not newly constructed, but most often older and in need of a little repair.

USDA Rural Development Repair Escrow provides the funds for your repair solution.

Currently, I have repair escrow programs for Conventional, FHA and Jumbo loans, but the USDA Rural Development Repair Escrow is my favorite to use.  Repairs on done after closing, so we usually close within thirty days.  

And yes, it even works for REO, homes that were previously short sales and foreclosed homes.

 

Home buyers can finance the cost of Home Repairs into their mortgage with the USDA Rural Development Escrow Holdback Program. Image 141 - Handyman installing doorLast month we had worked hard on getting a USDA Rural Development mortgage for our client only to discover the roof was not insurable.  This caused a huge problem.  The professional inspector my client had hired had made no mention of the roof.  The USDA Rural Development appraiser was completely fine with it.  And now, just days prior to closing, the insurance agent has arrived and informed us that no company would insure the home with the roof in its current condition. Every mortgage loan program I know of requires the collateral to have hazard insurance, so to no one's surprise the underwriter required the roof to be repair.  My client was disappointed; he did not want to buy the seller a new roof.  The sellers were especially concerned;  they had contracted to close on a new house the same day, and did not have any money to give to a roofer.

The USDA Rural Development Repair Escrow allows for funds, in the amount up to 10% of the final loan amount (not including the renovation amount), to be used for repairs.

The solution: the buyer and the sellers contracted a modified agreement, and we used an escrow account created with the USDA Rural Development Repair Escrow to provide funding for all of the required repairs. Please note that the program is not available for cosmetic or buyer "requested" improvements; it is a program for repairs.  And there is an added fee in Oklahoma for managing the escrow account, requiring an additional $650.00 of total closing costs.  For that reason, sometimes I prefer to suggest down payment assistance or approved grant funds to be used to allow us to exceed the loan limitation of 100% of appraisal value.

If you would like to see if your income is within the limitations for an USDA Rural Development Loan, click here.

If you would like to see if a particular property is eligible for a USDA Rural Development Loan, click here.

Copyright 2015 John Regur All Rights Reserved - Originally Posted at: Tulsa Oklahoma Mortgages - John Regur

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If you have any questions on how these information could impact your personal mortgage situation, call me today at 918-949-7248 or email me at John@Tulsa-Mortgages.com.

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Tulsa-Mortgages.com
Phone 918-949-7248
NMLS #831824
 
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Tags:
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1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

John,

I've had clients use Rural Development financing fairly often. I've never heard of the hold back escrow.  I am assuming you are talking about the USDA guaranteed loan program and not a direct loan since, at least in our area, those are financing directly through Rural Development.  Do you ever work with clients in McCurtain County?

Apr 11, 2015 10:21 AM #1
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Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

Thanks for sharing that information.  I did not know all of that

Apr 11, 2015 10:59 AM #2
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John Regur

Branch Manager, Hamilton Group Funding NMLS#831824
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