Showing posts with label $0 down. Show all posts
Showing posts with label $0 down. Show all posts
Wednesday, May 12, 2010
5/12/2010 08:02:00 AM | Posted by
Arbor Mortgage
UPDATE: 5/25 - Senate convenes today at 10:00 am for consideration of HR 4899, Emergency Supplemental Appropriations
UPDATE: 5/14 - Funds are now officially exhausted for this program and there is STILL no further guidance.
UPDATE: 5/12 - USDA recalled their announcement to continue issuing conditional commitments in the wake of fund exhaustion. Their bulletin states that new guidance will be issued within 24-48 hours of that date. Back to the waiting game!
Funds for the USDA RD Guarantee program are likely exhausted today (or will be shortly). No word on the bill in the Senate to increase funding to the program. The good news is that on May 11, 2010, the USDA National Office released a statement authorizing the issuance of Conditional Commitments for the Single Family Guaranteed Loan Program. The Commitments will be issued "subject to the availability of funds and Congressional Authority to charge a 3.5 percent guarantee fee for purchase loans and a 2.25 percent guarantee fee for refinance loans".
UPDATE: 5/14 - Funds are now officially exhausted for this program and there is STILL no further guidance.
UPDATE: 5/12 - USDA recalled their announcement to continue issuing conditional commitments in the wake of fund exhaustion. Their bulletin states that new guidance will be issued within 24-48 hours of that date. Back to the waiting game!
Funds for the USDA RD Guarantee program are likely exhausted today (or will be shortly). No word on the bill in the Senate to increase funding to the program. The good news is that on May 11, 2010, the USDA National Office released a statement authorizing the issuance of Conditional Commitments for the Single Family Guaranteed Loan Program. The Commitments will be issued "subject to the availability of funds and Congressional Authority to charge a 3.5 percent guarantee fee for purchase loans and a 2.25 percent guarantee fee for refinance loans".
What this means is that the Rural Development offices will continue to accept applications and issue commitments. Lenders can continue to close and fund these loans with those commitments. RD will "obligate" funds for those loans when they become available, as long as Congress authorizes the increase in funds and fees.
The big change here, of course, is the increase in Guarantee Fee to 3.5%. This was certainly expected based on the bill currently in the Senate, but now we're seeing it right from the horse's mouth - RD. Anyone who hasn't closed their RD loan yet, will be paying more for the program. It still is a small price to pay for a 0 down payment loan program with no mortgage insurance.
For more information on the USDA Rural Development loan program, Contact Us.
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Wednesday, April 28, 2010
One of the best, and most under appreciated, home purchase loans today is the USDA Rural Development Section 502 Guaranteed loan. This program is a $0 down purchase loan intended for rural America. These loans are for buyers with low to moderate income that are purchasing homes that fall within the USDA’s rural maps. The maps happen to be very outdated, meaning that there are many places you or I wouldn’t consider rural, that actually qualify for 100% financing.These loans aren’t just great for buyers, but for lenders, too. The lender funds the loan, but the USDA Guarantees it up to 90% of the original loan amount – that’s far and away better than conventional mortgage insurance. Guarantee funds aren’t unlimited, though. In the past, it has taken an act of Congress each year to appropriate funds for the program.
With credit becoming tighter every day, more and more people are turning to this (used to be) little know loan product to secure $0 down financing. As a result, those congressionally appointed funds are running out faster and faster. In 2009, the program ran out of funds midyear, only to be funded again by the stimulus package. Funds are again running low and are not expected to be available past May. Many lenders stopped taking applications a month ago, in anticipation of the funds being drained, with no hope for Congress to step in.
Luckily, there has been a new bill introduced to turn the USDA into a self funded program. H.R. 5017 has already been approved by the House of Representatives, but has not yet been introduced in the Senate. The bill authorizes up to $30 billion in loans during the 2010 fiscal year. In order to make the program self-funded, the Guarantee fee, paid by the home buyer, would be increased from 2% to as much as 4%. While this is a hefty fee increase, this is one of few programs with no monthly mortgage insurance, even at 100% financing.
This bill is more important than ever, because this loan program aids an under served community. Lower income families in rural communities often have less financing options than those in urban areas. This program is also the only option for many people to secure 100% financing. Loan guidelines allow buyers to finance their closing costs and even appliance purchases up to the appraised value of the home. There is no other loan program like it.
For more information on USDA Rural Development loans, Contact Us.
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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