Checking The Pulse Of The Kansas City Real Estate Market
The popular USDA Rural Development loan program is set to run out of money at the end of this month. If you have any plans to use this loan program it’s very important that you contact your Kansas City mortgage loan officer to verify your loan will not have any issues. If you are in the preliminary stages of considering a USDA Rural Development loan program, you’re advised to get moving and definitely contact a lender who is still offer the loan program – I’ve already from one who has removed it from their loan options.
Just yesterday, Rick Woodruff with Metropolitan Mortgage informed me that he will continue taking applications and staying on top of new developments with the loan program. So there is still hope! For those not familiar with the loan, this United States Department of Agriculture (USDA) mortgage loan offers buyers 100% financing. Yes, 100% loans are part of what got us in our current financial mess, but I don’t make the rules and there are many financially solid borrowers who can make use of this loan. In addition to not needing a down payment, borrowers will not have to pay PMI (despite obviously having less than a 20% down payment). The USDA loans are also your typical 30 year fixed rate loan, so no worries that loan may be an ARM or other foreclosure magnet.
Cost of the USDA loan include a 2% up front loan fee, which can be financed into the loan. But this could make the loan more like a 101% foreclosure magnet loan. Thank you for pointing that out random italicized voice. I’ll prefer to think of the lack of any PMI as making up for this 2% fee. Also, use of the loan is only available on homes in areas defined by the USDA as “rural”. So most areas of Johnson County Kansas would NOT apply. It does however apply to the outlying areas of Spring Hill KS, Gardner KS and De Soto KS, which are areas in which I sell real estate. You can go here to get a good view of the southern and western portions of Johnson County Kansas that qualify.
A few other important notes with the USDA Rural Development Loan Program… The USDA is not actually funding the loans, they are simply backing (insuring) the loans for the local investors who make the loans. I’ll save you the math but at least 85% of the loan is insured, which allows the lender to more easily sell the loan off to the secondary market – this practice is what allows you to access to the best possible interest rates and lowest loan costs. I’ve heard that borrowers with credit scores below 600 could have trouble qualifying for the loan and would certainly be subjected to a much more grueling loan approval process.
Posted by Jason A. Brown