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USDA Rural Loan
I am selling my home and the buyer is using USDA rural loan. When we first started negotiations (we are basically selling FSBO, we listed with a flat fee REA and the buyer is not represented) I told her I thought the Rural loan was no longer available. She insisted it was, and I recd a pre-approval letter from her lender stating they had been pre-approved(although I know that doesn't mean much). But, now the buyer told me Saturday USDA will be placing a freeze on the funds for the rural loans beginning today. So she still plans to receive a loan commitment today and still hoping to close very soon. She also informed me Saturday that even though they qualifiy for the income restrictions/guidelines and the house is right at the cut off for the value for the guidelines in our area, now they have told her she has too much $$ in the bank to qualify. So we spent all weekend and she is getting estimates for a new roof, tree removal, and new furnace and heat pump. The roof, furance and heat pump are all at their life expectancy but still in working order. She wants to give her lender these quotes and show this is why she has this $$ in the bank to cover these costs. But we are also still negotiating what portion of those costs DH and I will cover.
I guess I'm asking if anyone has heard the date of today for the USDA rural loans being frozen? Also just venting....enough is enough! Why is this whole process sooooo stressful and why do I have to give everything, up to my first born child to sell this house? : ) I keep telling myself everything we loose on this house we will make up when we buy, but the more and more we loose the less I'm believing that! Thanks for letting me vent!
Re: USDA Rural Loan
I'm a buyer who was using a USDA rural loan, but was told by our mortgage broker the same thing about funds being frozen at the moment. It's just as frustrating for your buyer. We are switching to FHA because our first loan wasn't even sent to USDA for their approval yet bc of the freeze in an effort to close on the house we're buying.
Hang in there!
They usually do freeze funds near the end of the second and fourth quarter (so May/June-ish and November/December-ish) as funds start to run out.
We have a USDA mortgage, but we closed in mid-July (a few years ago) so all of the funds had just been released. It's a big timing game from what I understand.
For the rest... have any alcohol sitting around?
http://pandce.proboards.com/index.cgi#general
Thanks for the support ladies! : ) Luckily I have dinner planned with good family and friends at a brewery and then going to see Wicked. So hopefully that will take my mind of things for a bit.
If they do freeze the funds, how long do they usually stay unavailable? And, what is the difference to the buyer between USDA and FHA? Is there a big monthly payment difference or just the down payment? Would we have to wait for a new appraisal and all of that if she switches to FHA? TIA
I think it varies on when funds become available again. It's a gov't funded loan, so the gov't has to release more funds...
There is a difference in payment. When we were buying, USDA had a slightly higher interest rate than FHA, but there is no downpayment requirement. FHA requires at least 3.5% down. It's possible that they could cancel each other out, but if they have no $$ available for a downpayment, then they're stuck unless you're willing to pay the 3.5% for them.
An appraisal shouldn't matter. An appraisal is an appraisal. The inspection is what you would need to worry about. USDA inspection =/= FHA inspection. Our inspector went ahead and did an FHA inspection but billed it as conventional since FHA wasn't required. There were a few safety points that would have needed to be addressed had we actually had an FHA loan (GFI outlets and stair railings mostly). He only did the FHA part because he knew we'd be doing some work to the house and gave us a head's up on what to update so we could have FHA buyers when we sell.
http://pandce.proboards.com/index.cgi#general
Actually, USDA and FHA had the same interest rate (in our experience), but FHA does come out slightly more expensive for the buyer. First off, they need to have 3.5% down, which we luckily were able to swing, but they are probably going with USDA because they don't have the money down.
USDA is a better deal in the sense that there is no money down and the PMI is set. Depending on the amount they are buying your house for, the PMI could make FHA unaffordable because PMI is based on a percentage of the house they're buying. For example, if your house costs $300,000 your buyer will need to spend an extra $300 a month for PMI whereas with USDA they would only need to pay around $60 in PMI.
We just sold our home and the buyer was getting a USDA loan. Funding for the loans is based off of the federal budget and if they have agreed on a budget or not. For us the fiscal year ends on September 30 and in theory the funds become available againg the next day, but if no budget, then there are no funds. My state ran out of funding mid-september this year and we had to wait until early november to close. The buyer was able to get some leftover money from the previous year.
Good luck, the process was really long and stressful. I hope that the freeze does not last long.