While most people in US continue to relocate to urban areas, there is a vast majority that lives in rural areas. In fact, to encourage and help people secure a home in rural areas, the United States Department of Agriculture (USDA) offers loans to individuals from low and medium income groups. The USDA partners with local lenders to meet the objective of providing affordable housing to people residing in rural areas. USDA loans aim for rural development in Texas and offer multiple benefits as compared to other private and government funded loan programs. Continuing the discussion further, in this post we list five reasons for choosing a USDA loan in Texas. Take a look. 1. No Down Payment While home loans such as the FHA and conventional loans require the borrower to supply a 3.5 to 5 percent down payment, Texas homebuyers can get up to 100 percent financing without spending a penny as down payment. On top of that, you also save a significant amount on the upfront fee required for financing. No matter whether you are a first time or repeat home buyer in Texas with little or no amount to pay a down payment, simply apply for a USDA loan in Texas and save yourself from the burden of paying large down payments. 2. Competitive Interest Rates Most borrowers think about monthly mortgage payments going over the roof when it comes to securing conventional home loans. USDA home loans, on the other hand, are federally backed by the US Department of Agriculture, which is why lenders feel comfortable in lending to people who fulfil the eligibility guidelines. Due to federal backing, borrowers can also expect to get competitive interest rates than conventional loans that doesn’t fluctuate according to credit score, income, and other factors. 3. Flexible Credit Score Requirements Many home buyers fail to qualify for conventional loans due to stringent credit score guidelines. USDA loans don’t require you to have a phenomenal credit score and in most cases, even a 640 credit score would also suffice. Remember that USDA loans in Texas are federally backed and therefore, lenders consider applicants with a blemished credit score provided they meet other eligibility criteria for securing the loan. Even if your credit score is not at par, lenders also accept rent slips, utility bills and cell phone bills to assess suitability. 4. Zero Private Mortgage Insurance Home loans that have a high loan-to-value ratio or low down payments require the borrower to pay an upfront PMI fee, which isn’t applicable to USDA loans. Borrowers only need to pay an upfront premium that insures the lender against borrower defaults, should any situation arises. Nonetheless, the upfront premium is much lesser than PMI costs and can be rolled with the financing and can be closed without putting any money down. That said, the borrower can notice a visible reduction in their monthly mortgage payments. 5. Exclusively for Low and Medium Income Group Individuals The USDA aims for rural development in Texas by providing loans to qualified homebuyers at competitive rates. The USDA hasn’t kept a limit on the maximum amount of the loan, however, there are certain limits on the income requirements of an individual. The rule says that the borrower’s income can’t exceed 115 percent of the area’s median income. You are eligible for any given amount, provided you fulfill the income guidelines and other required criteria. The Bottom Line The USDA home loan program is ideal for those living in rural or suburban areas and wish to purchase their a home in that area. Though funding is available all year around, the USDA processes applications on a first come first serve basis. The approval of loan is based on furnishing of required documents and meeting the eligibility criteria. The best way to increase your odds of getting a loan approved is to consult a mortgage professional to guide you from start to finish.
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AuthorDarrick encourages readers to post issues that need immediate attention in terms of home buying; such interactions will enhance reader engagement and provide a road-map for others Archives
November 2017
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