Let me start by saying that although there are challenges in our great state of Florida right now, we also have some things to celebrate for home buyers, especially those people who thought home ownership was out of the question for them. Many years ago when I bought my first home and you heard about Rural Development loans you thought about going to the back 40 or beyond to be able to afford a home that qualified for this program. Today things have really turned in our favor especially in Panama City Beach where much of the beach falls into that zone so to help you find your way I am going to share a little great news for would be home buyers.
Rural Development financing is most likely the fastest financing program in the US at this time. Although it has been around for years, we did not see much of it being used in the boom time. At this time conventional and other alternative programs increased their financing allowances to 100% and more, most people chose those other programs over the USDA guaranteed financing. This choice was mostly due to Rural Development income limits.
So the tide shifts…..A few years back conventional guidelines tightened and other more aggressive alternative programs disappeared. Rural Development increased their income limits which combined with greatly decreased home prices making RD financing a great alternative to home buyers who were unable to put much money down.
The great news is that RD allows for 100% financing, and requires NO monthly mortgage insurance. There is however an upfront funding fee which recently increased from 2.04% to 3.626925. This funding fee can also be financed into the loan, resulting in a loan to value of 103.62%.
And if that was not enough GREAT NEWS, unlike other conventional programs as well as conventional guidelines, this program bases value on the higher of the contract price or appraised value, and still allows cl0sing costs and prepaids to be financed in as long as there is available equity and if borrower still qualifies at the higher loan amount.
Underwriting guidelines are typically the same as other government loans (FHA & VA) but with two additional stipulations:
– Maximum annual income must fall within their income requirement
Income is based on family size
– Property must be in a Rural Development Eligible Zone.
SURPRISINGLY much of Bay County falls in the Rural development area INCLUDING much of our beaches!!!
As with FHA and VA, the property must be the borrowers primary residence and with RD, there must be extenuating circumstances to qualify if the borrower already owns a residential property.
Now for me that sounds like something to celebrate for many potential buyers. As I have stated before I am not a loan officer nor do I play one on TV so please for the real low down call your favorite banker. They can walk you through the process and you may just find that home ownership is right around the corner for you. It is always the best idea to be pre-qualified before you even start your home buying adventure.
This week more than ever lets stick to my life philosophy and reach out a helping hand to all of your fellow beach lovers and do what you can to be a part of the solution. If you look there are many reasons to be joyful no matter the circumstances and make the best of what you have, where you are. Remember, “The only people we have to get even with are those that have helped us.” My list is growing longer each week and so many of you are on it and I am so beyond grateful. Until next week… be sweet!!!!!
Karen K. Smith