(A view from Saratoga Springs looking back over Utah Lake at Mt. Timpanogos)
Saratoga Springs, UT
What is the USDA Rural Development Loan? Many of you have been asking the same question. It sounds like a loan that an egg farmer would take from the government to improve his chicken coops, and in some cases that may happen on the commercial side. What many people are now finding out is that the USDA also lends on residential homes located in what is deemed to be rural areas.
Many Utah residents can benefit from these loans as over 2/3rds of Utah is deemed to be "rural". If you are looking to buy a home in Utah county in one of the following cities then pay close attention as this loan may be your very best option.
Saratoga Springs, Eagle Mountain, Payson, Elk Ridge and Santaquin are all found in the eligible areas for USDA home financing. Click this link to view the map and read more details on USDA loan programs.
The USDA mortgage is much like FHA in that it does require an upfront fee. In the case of the USDA loan it is called a guarantee fee instead of FHA's terminology which call's it upfront mortgage insurance. Ultimately it is the same thing. The upfront fee from both loans is essentially pooled in a fund that is used to guarantee the lender/investor against any future losses on the loan in case of default by the borrower.
The guarantee fee for new USDA loans is 2% of the loan amount. In the case of a $200,000 loan the borrower would pay a $4000 one time upfront fee to the USDA to guarantee their loan. The nice thing about the USDA loan is that much like FHA you are allowed to finance the fee into your loan. This loan already allows for 100% financing for credit qualifying borrowers whose job history and debt and income are in line with the underwriting requirements. This is a true 102% loan to value loan when you take in to account the fact that you can finance the 2% guarantee fee above and beyond the price of the home.
What an amazing option for those that have little or no down payment. If you can save enough money for an earnest money deposit you can be on your way to home ownership. Debt to income ratios on this loan are lower then conventional and fha loans so you may not qualify for quite as much home with the USDA loan but the USDA loan does not have monthly mortgage insurance so your monthly payment is also lower then it would be on a conventional or fha loan which does require 3.5% or 5% down respectively.
If you are looking to buy a home in Utah County and down payment is an issue, consider the USDA rural development loan, it just might be the ticket you are looking for.
Remember the USDA loan can be used in parts of if not all of Saratoga Springs, Eagle Mountain, Spanish Fork, Payson, Elk Ridge and Santaquin. If you don't have a down payment, don't give up looking all together tell your agent you would like to expand your search into one of these beautiful cities. Then lets get you pre-approved for a USDA Rural Development loan today.
Stetson Lowe - www.utahloantips.com
