I’ve been helping people for years to get the cheapest, easiest loan possible to buy a home in Arizona with the USDA Loan Program. Now, in a recent article in USA Today it is reported that Fannie Mae and Freddie Mac are raising their loan costs to home buyers. This will make the USDA Loan Program even cheaper than it is now. Fannie and Freddie fund home loans that are known as Conventional loans and have been the largest supply of home loans forever.
While the USDA Loan Program has limits on the fees that can be charged, Fannie and Freddie are introducing new fees to be charged to consumers based on your credit score and how much you are putting down.
If you plan to put more than 25% down and have a credit score higher than 720, you won’t notice a difference in the new Fannie and Freddie price hikes. Everyone else will see a substantial price increase, only if you apply for conventional financing.
The Fannie Mae & Freddie Mac price increases go into effect on April 1, 2011.
Just to give you an idea, for someone buying a $150,000 home with 5% down and a 620 middle credit score, Fannie Mae will charge that borrower an extra $4,631 at closing once April 1st hits.
With the USDA Loan Program, not only do you keep that 5% down payment in your bank account but you get to keep the extra fee the Fannie Mae would charge you.
Proof once again that the USDA Loan Program is the cheapest loan available to buy a home in Arizona.
We are seeing the use of the USDA Loan Program increase in popularity all over Arizona, especially in Sahuarita, Anthem, Buckeye, Maricopa and Queen Creek.
I hope you found this Arizona Home Loan tip useful and please, leave a comment below.
To find out if you qualify for a USDA Loan call (520) 225-0380 or click on the Get Started on USDA tab above and ask a question if you like. If you are ready to go ahead and get your application in, you can print out my Arizona USDA Loan Application here.
Our USDA Loans close fast, really fast. But not everybody closes the USDA Loan so quickly.
Around the real estate and mortgage communities, there is a widespread belief that the USDA Loan has to take longer than any other type of loan. In fact I have heard rumors that the USDA Loan can take 3 to 4 weeks longer than an FHA Loan to close.
WHAT? Three to four weeks longer. Are you kidding?
The reality is that a USDA Loan can close just as fast, if not faster, than an FHA Loan. We close our USDA Loans fast, really fast when compared to the other lenders I know in our area. Let’s take a moment and look at what impacts how quickly a USDA Loan can close.
Let’s look at them one item at a time:
This is the only area that YOU can help speed up the process of getting your USDA Loan funded. Basically the Prepared Borrower will have gathered all the following and have them ready to provide to the USDA Loan Originator at the time of application. Providing all the documentation at the beginning will save time during the process and remove processing questions that typically can cause delays.
The items the Prepared Borrower will have available are:
Having this information gathered and available for your USDA Loan Originator will assure that you are doing your part in speeding up the process.
After you get your application in you will get a disclosure package from your loan originator. You’ll also want to get the full disclosure set back to your loan originator as soon as possible.
In the current market, many of the sellers out there are banks. You might find a great house that is actually owned by Fannie Mae. Working with a bank as a seller is not generally a bad thing. I have had many loans close that where the seller was the bank and they have moved by quickly.
But the biggest obstacle with working with a bank as a seller is that many times they just simply require time, and lots of it in order to get the closing documents to the right party to review and sign. Many times they have 3 or 4 different departments that would need to review and approve the documents.
So, you really need to be working with a lender who can get closing documents to escrow at least a week early.
Every lender processes and underwrites loans at a different capacity and there are three turn times that you need to be aware of.
The first turn time is the processing turn time. That is how long does it take to process a file and get it ready for the underwriter once you have provided all of your documentation. A good processing system should have a file ready in about 5 days, however there are outside forces which may impact this turn time. Things such as how long it takes to get the appraisal and the title report can cause a lengthy delay.
The second turn time is the time it takes to underwrite a file for approval. After processing, most mortgage companies ship their files out to a lender to be underwritten. Some mortgage companies, like ours, have underwriters in the office and can underwrite a file for approval very quickly, sometimes even the same day.
Underwriting turn times can be anywhere from hours to 30 days. Be sure to know how long your underwriter will take, mine is usually done within a day or two if there is a heavy workload.
Choosing the right USDA Lender will assure that you are doing everything you can to close your loan on time, or even early.
Once your loan is approved, portions of it will be sent to the local Rural Development Office for review and issuance of the Conditional Commitment letter for the USDA Guarantee. In Arizona, most of the RD Offices will get this portion done in just 2-3 days. In some parts of the country it can be much longer.
Once RD has issued the Commitment, then you are ready to sign docs and close your USDA Loan.
While a streamline USDA Loan processing system like ours can help to get a USDA Loan approved and closed in as little as 15 days, most other lenders are taking 45-60 days.
I hope you found this Arizona Home Loan tip useful and would love to hear your comments.
To find out if you qualify for a USDA Loan call (520) 225-0380 or click on the Get Started on USDA tab above and ask a question if you like. If you want to go ahead and get your application in, you can fill out my Arizona Home Loan Application Online here.
Well I do quite a bit of both and for the majority of people the USDA loan will be a much better financial move for buyers in Arizona, and here’s why.
FHA has a down payment requirement, and it is currently at 3.5% of the purchase price. The USDA Loan does not require any sort of down payment at all. So right there, you get to keep that 3.5% down payment in your bank account; that is if you even have it in the first place, right?
FHA also requires a monthly mortgage insurance payment. That amount that FHA requires is 0.9 percent of the loan amount. That will give you the annual payment, so just divide it by 12 for the monthly amount.