USDA Loan Program
The USDA loan program is a good thing for people in rural areas who previously could not afford to take regular mortgages. The amount of money needed as down payment and to cater for mortgage costs such as the insurance, thwarted them off, leaving them stuck in rental units for eternity. However, this program fostered by the government aims to trigger development in rural areas.
What is the USDA Loan Program?
This program is backed by the United States Department of Agriculture, as part of a bigger strategy meant to stimulate economic development in rural areas. In a nutshell, it gives lenient terms to low-income people in rural areas, allowing them to buy residential homes.
It is offered by third-party lenders that are backed by the USDA. This way, you go to the accredited lenders to apply for the mortgage usually, but you and the house will be subject to some scrutiny to ascertain that you meet the requirements set for these loans.
The USDA loan program offers full financing of the home, and rates that are below the average market rates. Borrowers are not required to pay any amount as down payment, and most of the costs that one would typically pay upfront are added to the loan balance. The credit score requirements are less strict as people with a low score can still get the mortgage, albeit at higher rates.
Like all the other mortgages, the USDA loan program is not much different, and you have to do some due diligence to ensure that your application is approved and you get the best rates possible. Here are the tips;
Set Your Preferences
Before you quickly dive into a USDA loan program, it helps to establish your preferences. Assess the available loan options to you and see what they have to offer. The rule of thumb is to get one that suits your needs and that you can pay back as quickly as possible. The USDA loan program offers the best option for home loans.
Understand the Fine Print
You will come across websites giving some basic information about the USDA loan program. However, if you want to take one, you need to dig deeper than that. There are a couple of USDA loans to choose from, and you need to find one that suits your needs. Go to the USDA website and get more details about the loan. You need to know what you are signing up for since this is an engagement that you are getting in for the long term. Ask about the eligibility requirements, the documents needed, and the timelines for the approval and repayment process.
Note that if you pick the USDA loan program, you need to match their low income and credit criteria. Your income will be compared with the median rate for your area, and it helps if you know this amount. If you do not meet the requirements, it is advisable to start looking at the other options in the market.
Check Your Score
Note that since the USDA loan program is subsidized, it does not imply that you will automatically get low rates. The mortgage application and approval processes still hold, and your credit score goes a long way in determining the rates that apply to you. Most lenders will check this, and it is crucial to ensure that your credit score is in order. If your score is low, try and go through your report to point out any discrepancies that could be derailing your score. Try and clear any debts that might affect your score and, if possible, do this way before the application date as it will get you better rates and save you a lot of money.
Stick to Your Job
USDA loan program is made for a specific group of people. This way, your employment history, and income record are some of the things that are analyzed before your application is approved. If you want to apply for this loan, it is advisable to stick to your job. Employment changes can affect and delay the whole process. It is good if you have a minimum of two years of solid employment history, as it will get your loan approved faster.
Raise Some Cash
The USDA loan program tries to make the mortgage application process as painless as possible for borrowers. This way, most of the costs that you would normally incur upfront are added to the balance. However, if you can pay, do it as it will reduce the loan balance. Aside from that, you will need to pay for credit reports, appraisals, and inspections, among others. Having some money to facilitate this process will make things easier for you.
Some of the tips for applying for the USDA loan program have been mentioned. Buying a home has been made easier for you, and if you are eligible, go for it!