Information On USDA Home Loan Program Benefits
The downturn of the economy has hit the rural communities especially hard. Many families who need a safe and clean home to live in cannot afford to buy one. The government has created the USDA home loans program to help households borrow the money that they need so that they can afford these homes. These loan programs provide tremendous benefits to the low income families who otherwise would not be able to qualify for a home loan. For more info , contact USDA Loan Direct .
Some of these benefits include a financial subsidy that will help the qualified borrower with his monthly mortgage payments. If the value of the borrower’s assets is within the limits of the amount set by the USDA for this program, then the lender may not need a down payment for the property. This removes a big financial burden from the borrower because for most families, one of the biggest obstacles is not being able to afford the down payment of the house, even if the applicant earns enough to make the monthly mortgage payments. If a down payment is not required, more families can be eligible for the loan.
Another benefit is the low interest rate that is offered on these loans. The initial interest rate is usually the market rate at the time when the loan is approved or when the lender closes the loan. The borrower will be able to get the lower of the two rates. In addition, payment assistance from the government can modify the interest rate down to about one percent.
The payback period of the loan is also typically longer than a conventional loan. Conventional loans are generally 15 to 30 years long. With USDA loans, the life of the loan is from 33 to 38 years. Stretching the loan period will reduce the monthly payments and make the mortgage more affordable.
The funds that the borrower receives from this loan can be applied to a new purchase or to the improvement of a qualified piece of property located in a region that fits the USDA’s definition of a rural property. Improvements can be anything that is done to the property in order to make it habitable by the family. Examples are the installation of a sewage system or a system for running water. Repairs and renovations that are necessary to make the house into a safe and clean living space are qualified.
A piece of property in an area that looks rural does not necessarily meet the USDA’s requirements automatically. The property that the applicant would like to purchase must be located in an area that is officially defined by the USDA as being a rural community. The applicant cannot just go by the way the property looks. He must first make sure that the property is eligible. Also, the property must be used as the primary residence of the applicant and his family. It cannot be used as a place of business because these loans are not business loans.
The applicant must meet certain USDA eligibility requirements. He must be a citizen or permanent citizen of the U.S. He must demonstrate that he can not qualify for any other type of conventional home loans that have reasonable terms. The income level of the household must be at or below the prevailing low income limit set by the USDA.
This program is designed to help those who otherwise cannot afford to buy a clean and safe home in a rural area to live it. The many USDA home loan program benefits are a positive way to infuse life into a community to help it thrive and grow. When homeownership is affordable, the quality of life of the people in the community can greatly improve.