Do Not Accept Offers from Buyers Pre-Approved for USDA Financing

Mortgage and Lending with Aurora Financial Group | Mortgage Company - New Jersey NMLS# 149277 & 149276

Thumbs DownShould Realtors Advise Their Clients to Not Accept Offers from Buyers Pre-Approved for USDA Financing?

If you don't know by now, USDA plans to be out of funds by the end of April of this year. So the question begs to be asked; Should listing agents advise their sellers go under contract with buyers purchasing using a USDA mortgage?

Without doubt there is a portion of buyers that can only finance a home using 100% USDA financing. Even the 3.5% FHA required down-payment is too much for some buyers. So should buyers be required to also be approved for alternate financing? Some lenders refuse to even write these loans out of fear. Or maybe ignorance.

With the first time buyer tax credit coming to an end soon, and most likely the number of home buyers thinning to some degree, all bases should be covered. At the very least a lender, buyer, and Realtor should all be on the same page and have their buyer's facts disclosed. If a buyer can only utilize USDA financing, then everyone needs to notified of how fast things must move, and the potential negative consequences.

Thumbs UpUSDA financing is a fanastic program. Denying a home buyer and seller to go to contract out of fear can be just as bad as going into a contract blindly. Lay out the facts; No surprises for buyer or seller. Keep the lines of communication constantly open. The reality is that you may have only one buyer to ever go under contract for a particular home. Can you risk saying "no"?

Steve Kappre is a mortgage loan officer in New Jersey. For more info or questions feel free to contact Steve.

  • NJ First Time Home Buyer
  • Purchase, refinance, rehab loans
  • Conventional, FHA, USDA, VA, HMFA, First Time Home Buyer, Police and Fire, Live Where You Work, and more

Call direct @ 856-419-3561 | Subscribe to Steve's blog via e-mail | NJ Loan Officer .com

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Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

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  1. Bridget Cella 03/24/2010 07:29 PM
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ActiveRain Community
New Jersey
Club Chaos
NJ First Time Home Buyer
gloucester county
nj first time home buyer

Comments 16 New Comment

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Anonymous #1

Steve, Not only do not accept those, but remove those USDA loans from listing comments! We were advisd to consider that money gone by this a safeguard...unless all appraisals and contingencies had been met on the contract.

March 23, 2010 09:57 PM
Lori Liveston
Virtual Homes, Real Estate

Great info Steve!  Let's hope for quick closings to get the last few through. 

March 23, 2010 09:57 PM
Sonja Patterson
Texas Monthly 5-Star Realtor Recipient for the Hou
RE/MAX Realty Center

Never have had a USDA financed buyer...though I know anything about 3 miles west of me qualifies for USDA...Good warning for those accepting offers. I would be leary of accepting an offer if they couldn't come down with the 3.5% downpayment.

March 23, 2010 09:59 PM
Richard & Carol DeGrace
Mortgage Loan Officers NJ 609-209-3700
Aurora Financial Group | Mortgage Company - New Jersey

Jane - I'm still doing them as of right now - but you are right ... some homes still have the advertising on the lawn for USDA loans!! SAME PAGE EVERYONE ;)

Lori - Right on.

March 23, 2010 10:00 PM
Richard & Carol DeGrace
Mortgage Loan Officers NJ 609-209-3700
Aurora Financial Group | Mortgage Company - New Jersey

Sonja - We are coming to the "finish line" - we'll see how things pan out.

March 23, 2010 10:01 PM
Eric J
Eric J - Dream Home Financing

I agree, it will be a risky situation going into contract on a home right now with USDA as the only financing option for you.

March 23, 2010 10:03 PM
Donne Knudsen
CalState Realty Services
Los Angeles & Ventura Counties in CA

Steve - Last week, I submitted a reservation for a USDA loan.  I have to admit that I'm a little worried the money may not be there even though we have a reservation.

March 23, 2010 10:13 PM
Hannah Williams
Expertise in NE Philadelphia & Bucks County
Re/Max Eastern inc.

Steve ..This is great info ..thank you


March 23, 2010 10:56 PM
Mike Wilbur
Guild Mortgage Company and Oregon Homes For Heroes

I am telling my clients they will have to wait if they want USDA.  Not worth the pain and suffering.  I did hear they are making progress and will maybe have funds by mid May.........let's hope

March 23, 2010 11:06 PM
Larry Bettag
Regional Vice-President
Larry Bettag - Cherry Creek Mortgage

Steve-O.  I'm withya.  It's a great program, but the days are limited until Congress re-ups.....

March 23, 2010 11:28 PM
Lisa Hill
Daytona Beach Real Estate
Florida Property Experts

This is one of the worst programs to lose. It can only do more damage to an already horrible real estate climate =(

March 23, 2010 11:35 PM
Carla Muss-Jacobs, Principal Broker/Owner
Buyer Focused ~ Buyer Results | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time

Something the listing agent should know, absolutely.  And BUYER AGENTS need to talk to their clients about this type of funding too.

March 24, 2010 01:14 AM
Jackie Connelly-Fornuff
Century 21 AA Lindenhurst NY
Long Island NY Real Estate Agent

Hi Steve, I never came across those but it's great to know about so thank you!

March 24, 2010 05:40 AM
Bridget Cella
e-Pro, Realtor
Re/Max Connection

Thanks for passing this on!  Great info especially for those towards the shore (not at the shore).

March 24, 2010 07:28 PM
Jon Sigler
Connecticut FHA VA USDA Mortgage
Embrace Home Loans, NMLS#119288

We should all contact our congressmen and women and tell them how much of a priority it is to increase the funding available for USDA loans this year and to do so before the current funds run out.  We all stand to benefit if more funds are made available for USDA buyers.  

March 24, 2010 07:41 PM
Chanda Barrick
in referral
Keller Williams Indy Metro Northeast

It's interesting to see the homes/areas that qualify for these loans.  We've got a very affluent area just north of us that is just as congested and built up as being right here in Indy (nothing rural about it), yet they can get USDA loans.  If the USDA were not going away, they would definitely need to reevaluate what properties qualify for this type of loan.


March 26, 2010 07:52 AM
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Richard & Carol DeGrace

Mortgage Loan Officers NJ 609-209-3700
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