Monday, June 17, 2013

What is the USDA Rural Development Mortgage?

Home buyers once had zero-down and interest-only mortgage loan options abundantly available. In today's housing market, those loans have dried up - and for good reason. Most of them were risky loans that lead to the housing bubble burst of 2007. However, home buyers still have a couple legitimate options when it comes to buying a house with no down payment. A popular tried-and-true option is the USDA Rural Development loan.
The USDA Rural Development option allows you as the home buyer to borrow 100% of the appraised value of the qualified house. In other words, you won't have to come up with a cash-on-hand down payment. The main requirement for a USDA Rural Development mortgage is that the property must fall within certain geographical areas, outside the city limits of major metropolitan centers. There are also income limits for the borrower, but the location is the first thing we look at for the USDA Rural Development mortgage.

I have to move out to the country?

Right about now you may be asking, "So I have to live out in the country away from everything? Do I have to learn how to be a farmer?" No, you don't have to live "way out in the country." While that is an option if it appeals to you, many areas that fall under the Rural Development umbrella are actually more suburban than you'd expect. Yes, you could possibly find a house in the sticks with some land (although it can't actually be a working farm). You could even plant a garden and make it feel like you're farming.
With the Rural Development loan you might also find a nice house in a town or village with neighbors and a local market nearby. Think of small towns near you - those might very well qualify as a rural area according to the USDA.

What exactly is USDA Rural Development?

Under the Guaranteed Loan program, USDA Rural Development guarantees loans made by private sector lenders like AmeriFirst Home Mortgage. A loan guaranteed through RD means that, should the individual borrower default on the loan, RD will pay the private financier for the loan. You work with AmeriFirst and make your payments to us.
AmeriFirst Home Mortgage was recently named a top USDA Rural Development lender. In fact, right now we're in the top 10 across the country, and number one in our home state of Michigan. This option for buying a house isn't new, and it's being used all across the country. In fact, more than 150,000 families across America used a Rural Development loan to buy a home in 2012.