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Wednesday, July 6, 2011

Enjoy The Same Benefits as the Farmers who Produce Your Food

Guest Blog - Kevin Pearia, USDA - We welcome Kevin to the blog and are excited for his post that is very relevant information for consumers in rural America. Please enjoy!

Without farmers, families across the country would not be putting food on the table. Thousands of farmers—from cattle ranchers to dairy farmers—in the U.S. purchased their home with financing from the Rural Home Loan program. However, the program no longer requires borrowers to be farmers. Whether prospective homebuyers produce the food or serve at supper, a USDA loan may be the best home financing option.

When it took shape in 1987, the Rural Home Loan program was only for farmers. The federal government intended to fill a void in the home-financing market. Rural areas were lacking the credit needed to provide homebuyers with mortgages, so USDA loans were introduced. In time the program adopted changes to provide affordable mortgages to low- and middle-income families living in rural areas. Now, however, it is no longer a requirement of the program to be a farmer.

USDA loans come jam-packed with financial benefits. Without question, the most beloved feature is paying no money down. As long as the USDA deems the home reasonably sized for the family, it’s possible to get a loan worth 102 percent of the appraised value. The Rural Home Loan program does not have a purchase price maximum, either. The program comes with a 2-percent funding fee, which can be lumped into the total loan, hence 102 percent. There are more perks to USDA loans, such as:
  • -Fixed interest rates even for loans with 38-year lives
  • -No private mortgage insurance
  • -Lower closing costs than traditional loans
  • -Financing for a purchase, repair, construction, renovation or refinance
Nationwide, there are about 800 field offices serving people who want to buy a home in a rural area. Eligible properties must be in a rural area that meets the USDA’s requirements. Usually, such areas are in or near cities, townships or villages with fewer than 25,000 people. They also do not have enough credit per the USDA’s judgment. The department will also determine if a house hold can afford the loan’s principle, interest, taxes and insurance (PITI). USDA-lenders seek credit scores no lower than 620, and debt-to-income (DTI) ratios no higher than 41 percent. Eligible borrowers currently occupy inadequate housing for the size of their family and seek housing that is an appropriate size for their family.

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