Going through the process of purchasing a home can get confusing, long, and drawn out. There are so many questions to ask and answer, along with all of the paperwork to sign. In the end, though, you have the satisfaction of walking into your new home.
You can help speed up the process by preparing yourself ahead of time. By taking a look at the different mortgage options available, you can have a better understanding of what the lender is talking about, so that you know you’re getting the best mortgage for your purchase.
One mortgage to look at is the USDA loan. Backed by the United States Department of Agriculture for Rural Development, the loan helps assist those who live in rural and suburban areas of the country. If you qualify for this loan, it’s worth considering.
Here are four reasons why you should think about the different options and apply for a USDA loan.
No Down Payment Required
A down payment on a mortgage can be difficult for some families. They may be able to pay the monthly mortgage payments, but just not be able to front thousands, if not tens of thousands of dollars at once.
The USDA loan requires no down payment. The lender finances 100 percent of the mortgage. This makes getting a loan much easier if you do not have enough money saved up.
The USDA loan still has fees associated with it. However, when compared to other conventional loans, the fees for the USDA mortgage is significantly lower.
Each month when you make your mortgage payments, there are additional fees added to it. Interest rates and mortgage insurance premiums are some of those fees. The USDA loan has an upfront guarantee fee of 1 percent, compared to the FHA loan which is at 1.75 percent.
Although when you look at it this way, it doesn’t seem like much of a difference. Once you start comparing numbers in the hundreds of thousands of dollars range, the USDA loan fees can be half the price of others.
Competitive Interest Rates
The interest rates on a mortgage can get expensive very quickly. That is why the lower the interest rate, the cheaper the mortgage is over a long period of time.
The USDA loan has some of the most competitive interest rates compared to other mortgage options. Although lenders can offer you different interest rates, the USDA loan ones will likely be lower than other loans.
The guidelines for approval are more flexible compared to other mortgages. One of the guidelines that can cause someone to be denied a loan is their credit score. The higher the credit score, the less of a risk you are to the lender. That is why conventional loans tend to have a minimum credit score of around 660.
With a USDA loan, there is no minimum credit score requirement. So, if you have poor credit, you still could be eligible for this loan.
As you can see, there are many benefits to a USDA loan that make it worth your attention. Speak to your trusted lender on this option, and to see if you’re eligible.