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USDA Financing in Jeopardy!

Posted on March 12, 2010
 

I received some news from USDA yesterday that may directly impact those buyers seeking to use this type of mortgage to finance their home purchase.  I wanted to do some checking with my investors before I posted something and here it is!

 

USDA offers what I believe to be one of the best mortgage programs out there.  It is 100% financing (which is almost unheard of these days) and does not require the buyer to pay mortgage insurance (MI) .  The reason MI does not need to be paid is the government "Guarantees" the loan to the Lender.  This means if the buyer defaults on the loan, the government is there to insure the loan to the Lender.  Hence, no need for mortgage insurance. 

The program has been around for a very long time and has provided thousands upon thousands will the opportunity to purchase a home with little money out of their pocket, low fixed rates and an extremely affordable payment.

USDA typically �runs out of funds� each year for this program.  The government then provides additional funding and off we go.  USDA must issue a Conditional Commitment to the Lender with each loan they approve.  Even when they have not had money available in the past, they continue to issue the commitments as they know money is on the way.  However, that is not the case this year.

 

USDA posted that they may be out of money by the end of April. However, unlike in years past they will NOT be issuing any committments after the funds run dry.  WIthout a Conditional Committment, Lenders will not be able to complete the loan.

 

At this time we are unsure of the status of the program.  We are working with USDA to find out more information and I will pass this along to you as soon as I have it.

 

If this program is important to you, please make contact with the following offices to express your concern over the lack of funding for this program.

 

Secretary of Agriculture: Tim Vilsack  202-720-3631

Undersecretary of Agriculture: Dallas Tonsager  202-720-458
 
If you have questions regarding USDA financing or any other type of mortgage financing, please feel free to call me at (509) 232-7725 or shoot me an email at
dgeibel@cascademortgagewa.com.
 

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