No doubt, USDA loans are a great product! Jason Sardi has blogged about them, I have blogged about them, and many others as well! However, what you MAY NOT KNOW, is the BASIC steps involved when getting approved that will save consumers, Realtors, and even OTHER LENDERS who dont understand this process very well...ALOT of time!
1. Take a COMPLETE application.
2. Pull your OWN credit!
3. IF credit score is above 620 you are golden!
(what that means is express documentation, Ill explain that further later)
4. Fill out the Express Rural Development Approval Form
5. Gather as much income documentation as possible
(generally last 2 paystubs, 2 years w2's, recent asset documents)
6. Fax in the Approval Form, Application, Credit, Income Documentation,and a Transmittal Summary (1008) to the FUNDER you have selected! Ie; JP Morgan Chase
7. Also good at this point to submit a qualify LOX if there is something 'odd' with the transacation. (this is a letter of exaplanation)
8. 48-72 hours later you get a LOAN APPROVAL from your funder! This loan approval is subject to clear title, Home Owners Insurance, Satisfactory Appraisal, and legible OTP!
YES, it is really THAT easy!!!!!
This is great because it satisfies the Financing Contingency very quickly, and PRIOR to the OFFER TO PURCHASE BEING WRITTEN!! Hurrah!!!
Now, keep in mind, the ADDRESS of the property STILL has to qualify, so take note!
These are the things that make SHORT SALES qo more quickly, as well as keep Sellers and REALTORS VERY HAPPY!! :)
Yes Folks this is 100% Financing, but there are many other issues involved prior to closing! YOU MUST choose a LENDER that knows this product inside & out!
I have heard horror stories from several different people here on Active Rain ranging from Short Sale issues, property condition issues, appraisal issues, to income qualifying issues!
I would be willing to BET YOU that 95% of these issues COULD be resolved by following the above steps, PLUS, if I were a REALTOR, or the actual Lender, I would also add the following things that I DO to avoid poetential pitfalls!
A. Look over the Property Condition Report VERY CLOSELY!
B. If there is a Home Inspection Done, anything that is brought up within it that is safety related, weather related, or Curb Appeal related, will more than likely have to be FIXED or repaired prior to closing! HOWEVER, and this is IMPORTANT, you can ESCROW for certain LENDER specific items and repair them AFTER CLOSING!! EVEN ON A PURCHASE! (see my other blog by clicking HERE)
C. Drive by the home YOURSELF!
D. Ask the Realtor, "What is WRONG with the house?"
E. If you are unsure about the property address, CALL THE LOCAL OFFICE DIRECTLY!
F. Last but not least, if the property is an REO or Foreclosure, have your title company do a "Search & Hold" on the property. This will tell you of title pitfalls early on in the transaction!
All in all, ask ALOT OF QUESTIONS! You need to know EVERYTHING pretty much on these deals in order to make them go smoothly! Lenders, notify your REALTOR that on a USDA deal it can be up to a 3 stage proces! 1. Application 2. Funder Approves the Loan 3. USDA office approves what the Funder Approves
On USDA loans, you can never know too much! Express documentation merely is once you have verified income via check stubs etc..you will only need a verbal verification of employment! GET A CONTACT NAME & NUMBER!!!
They are fantastic, but again, you must work with someone who knows what they are doing, or, is willing to raise their hand and say, "I dont know, but I will find out!"
As always, there are MANY other things I would like to say about these loans, so I ENCOURAGE everyone to leave comments, argue with me, ask questions, support, or fight me on this! LOL
This is one of the best programs out there if used correctly!
Find your State office by googling: Rural Housing, (then the state you work in)
Thanks so much!
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