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What is a USDA Rural Development Mortgage?

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Where's home for you?

 

Is it living in a quiet suburb with friendly neighbors, just a car ride away from your favorite Italian restaurant or movie theater? Or have you always longed to live in a more secluded and natural setting, miles away from your nearest neighbor? 

 

Whether you choose the suburb or the country, the USDA Rural Development Loan might help you reach your destination. What is it, exactly? The Rural Development loan is a 100% financed home loan, insured by the United States Department of Agriculture to promote homeownership in less-dense communities. It can be a good option if you're buying your first home or having trouble saving for a down payment. It's one of the few loans, other than the VA loan, that doesn't require you to have cash upfront for the down payment. 

 

The main criteria for the loan is that the home needs to be located within certain geographical areas that are rural, or less-populated, as designated by the USDA. This often includes villages, small towns and suburban areas near larger cities and includes many locations that may surprise you. Many people do not realize that properties in almost every area of the country outside major metropolitan centers can be purchased with a USDA Loan. Check here for USDA Rural Development Eligibility (on this page click "Single Family Housing" under "Property Eligibility"). You will also find credit score requirements and income limits with the USDA Rural Development loan. 

 

Budget-friendly benefits:

  • No Down Payment Option (100% financing)
  • No cash reserves required
  • Flexible credit and qualifying guidelines
  • Seller can pay closing costs
  • Low fixed interest rate
  • Ability to finance repairs and closing costs into the loan
  • No maximum purchase price

Do you qualify?

  • Home must be located within a designated geographical area.
  • Eligible property types include existing and new construction single-family homes and condominiums
  • Household income must not exceed the adjusted income limit for the area
  • You must be a citizen, permanent resident or qualified alien

If you're wondering if you and your proposed property qualify for a USDA Rural Development loan, contact an Amerifirst branch close to you or send us a message. One of our friendly loan officers will be happy to give you more details about it. We're always happy to help!

 

Compare the USDA Rural Development Loan and the FHA Loan - two popular options for first-time homebuyers. 

 

Wondering what it takes to buy your first home? Download our free Get Mortgage Ready eBook. 

 

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5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

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Buying a home may be the American dream. But with escalating home prices, rising interest rates, low inventory, and inflation, as a first-time buyer, you may be wondering if that dream is out of reach.

Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 

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