Why a USDA loan is a pocket friendly option for rural communities
In case you’re a first time home buyer in Dallas, you may be interested in choosing a mortgage option that is affordable. There are various mortgage programs that are available in the market. These include government backed loans, conventional mortgages and nonconforming loans. The government insured loans are affordable and popular to many groups within the US population. There’re 3 main government backed programs: VA, FHA and USDA. The VA program caters for the mortgage needs of military personnel and veterans. The FHA program targets the whole population particularly people with low scores, imperfect credit history, and those without enough down payment saving. The USDA loan on the other hand, is designed for the rural communities in the US. This article will focus on the key aspects that make the USDA program the best option for the rural communities. Zero down payment-most mortgage programs require that you put some amounts down when applying for them. A conventional loan program for instance requires that you put down at least 20% of the amount you want to borrow. An FHA loan which is government backed demand that you put 3.5% of the total amount that you want to borrow. Many first time homebuyers may not have this down payment amounts. Because a USDA loan does not require any amount to be put down it is affordable and the best for many first time home buyer incentives Dallas. Low rates- the role of USDA is to guarantee loans that have been made by accepted lenders. The agency does not set the interest rates that various lenders charge. However, because of the government guarantee, many lenders offer the USDA mortgage at affordable rates. It’s upon you to shop around and choose a lender with affordable rates. Mortgage insurance-you pay mortgage insurance to protect a lender in case you default on loan repayment. Programs that require lenders to put down an amount which is less 20% of what they are borrowing require that you pay mortgage insurance. Because the USDA program is guaranteed by the government, the amount you pay for mortgage insurance is low compared to FHA and conventional loans. This means that the cost of buying a USDA loan is low compared to conventional or FHA loans. Low income earners-The USDA mortgages are meant to assist people with low and moderate incomes to buy homes in rural areas. The USDA has redefined the word rural to enable many people to access the loan. The loan is available for people living on the outskirts of cities, small towns and exurban areas. No restrictions on loan amounts-There are no set maximum amounts that you can apply for. What will limit you is your DIT.
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