Whenever I tell people that our mortgage is through the
USDA they automatically think "beef".....LOL Not the case. If you are a rural resident,
USDA offers an amazing opportunity for funding where you may otherwise not be qualified through FHA, your bank or other lenders. Here are the two types of residential loans, and my two cents on the one we got for our first home.
First off, let me just tell you that people love to say no. They love to tell you you aren't ready or do this first or you need this....I wasn't having it....If there is a will there is a way, damnit! :P Seriously, I had already tried 2 times to get buy our first house, each time being turned down, but learning some valuable things. We had even gone to our banker about a car loan, but also talked to him about buying our first home. He looked at our credit report and of course told us that we would need to save 20% and pay off some of the debt and increase our score well over 650, etc., etc....This was the Summer of 2009...In August 2010 we closed on our first house. I'll tell you how.....
Our situation was something like this:
#1. We had lots of old debt - so here's what I did over the course of several months: I went through our credit reports, you can get a free copy from all 3 bureaus once a year. I used annualcreditreport.com , wrote letters to creditors listed in my reports (be sure to check for misinformation or duplicates) either disputing or asking for proof that it was even my/hubs debt. This takes a month or two to start hearing back, but because some were so old, they were not verifiable from being sold off so many times, they were deleted from our reports. The debt that was verified, I went through and offered settlements. I found some letters/templates online and just customized them. Because some were so old like over 3 years, I offered ridiculously low settlements and was accepted on all but just a few. For example, Hubs owed an old Verizon phone bill that had been sold off to a debt management company several times over, the bill was over $1,000, I settled it for $25. No lie. You just need to be diligent, write the letters disputing and then offering settlements, you do not have to be a lawyer or know one, just find the right letter to imitate online for free and make your offers. (that you can afford to pay promptly upon their acceptance).
Other debt we made payment arrangements for and within about 6-8 months, our credit score went from being in the 400's to 580, which awesomely is acceptable for a USDA loan. Also, USDA will somewhat dismiss or forgive debt that is over 3 years old, medical or school related.
#2. We had no $ saved for a down payment (I had just spent anything we had on resolving our debt) but I was determined to buy a house, I was sick of renting from slumlords and I went ahead and applied for a loan, provided all the information they required to make a decision and waiting on a pre-approval letter so I could start house hunting (although, I was already house hunting - but to let the sellers and Realtor know we were serious and qualified buyers, you need this letter)...Seriously, the loans can be up to 100% including closing fees, so don't freak out thinking you need 20% down, because you don't always need a down payment.
#3. Realtor or Not - We had a realtor that we had working with us, and I say "with" not "for" because I did about 95% of the work. She pretty much just printed MLS sheets for us and opened doors. I found all of the houses and did the research for the area, vendors, etc. We are a family of 6..She was wanting to show us 2 bedroom houses...Grrr!
We eventually found our new home - for sale by owner and she did not want to use a Realtor. This was fine. Her and I both did what we could to get things done for the title company, USDA and whatever else needed to be done. We learned a lot along that way, too! Especially, trying to understand the inspections report! :P I wish I had a better realtor, but hey, she inspired me to know what is expected from a home buyer, especially a first time rural homebuyer. She had no idea the programs available to me. I was actually telling her. This is a huge investment and you will need to do a lot of reading and asking and comparing....Its worth it, you should not go into this assuming other people will let you know what you should or trusting that everyone is working in your best interest. Always prepare and educate yourself.
Here are the Single Family Housing Programs offered through the USDA. Click on links to be directed to the USDA's website on the topic with the details you need to find out if you qualify and how to apply. These loans are directed to low income families in rural areas (now, don't assume you are or aren't low income, Click here for
Income Eligibility. )
Direct Home Loans:
Guaranteed Home Loans: (this is what we have)
Housing Repair Loans & Grants:
USDA offers hope where you think there may be none anytime soon. Spend some time on their website for details on eligibility and where/how to apply and answers to other questions you may not realize you have. I encourage you to at least talk to someone about your options and as always, message me with questions! I'd love to help you!
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Until next time!
