Being a homeowner is something that most people desire at one point in their lives. Owning a home is for many, an indicator of how far up one has gone up the success ladder. In its usual sense, owning a house would include putting a down payment before any lender would even consider lending you a certain amount of money to purchase a property. For this reason, many potential homeowners get bogged down and will not live to see their dreams in fruition. For this reason, the USDA Loan Program was introduced. The loan is insured by the U.S. Department of Agriculture and borrowers are offered a low cost, across the board interest rate that is unaffected by their credit score or down payment. This loan has, in fact, no down payment and is very friendly on the pocket. However, the catch is that you need to look for properties in more rural areas to get these loans. This means that if you want to live in the city, this may not be an option for you. If you can look away from that, then read on below for the benefits that one may find in getting approved for such a loan.
There is no Money To Cash Out
This is one of the few programs to make it possible for homebuyers 100% financing with no downpayment involved. No money will be forthcoming from you in order to own a home and that is on top of lower than market interest rates and barely looking at one’s credit rating. With this problem and hurdle out of the way, it increasingly becomes easier for people who would not normally be able to get a loan to be granted one. With this tidbit, a USDA Loan is straightforward.
Lower Interest Rates and Low Monthly PMI (Private Mortgage Insurance)
Because this loan is government insured, home buyers and potential homeowners are offered low-interest rates that do not change depending on their credit history. However, any potential home buyer would be required to pay PMI or mortgage insurance, no matter what type of loan. A USDA loan does not require or have PMI but requires a guarantee fee and an annual fee that serves as the PMI. Despite of this, this loan is still about 3 times cheaper than other, more conventional loans. Furthermore, these are typically financed into the loan itself which means there are no upfront cashouts for the buyer.
Credit Guidelines are Flexible
If you have a not so stellar Credit Rating, the USDA loan may work for you. This loan allows for those with tarnished or limited credit history to be granted. A little explanation is what is needed for those blemishes in the credit report and this alone can be a huge help to those that face challenges in getting approved.
With no downpayment, No PMI, and very low mortgage insurance costs, this one loan can open opportunities for people who face challenges getting their own home. A USDA loan is one of the many options where potential homeowners can realize their dreams of owning property.