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

By
Mortgage and Lending with 1st Colonial Community Bank | Bank - 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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Re-Blogged 1 time:

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  1. Bridget Cella 03/24/2010 07:29 PM
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Anonymous
Anonymous
Anonymous

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 Friday...as a safeguard...unless all appraisals and contingencies had been met on the contract.

Mar 23, 2010 09:57 PM #1
Rainer
70,388
Lori Liveston
Virtual Homes, Real Estate - Waltham, MA

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

Mar 23, 2010 09:57 PM #2
Rainmaker
342,852
Sonja Patterson
RE/MAX Realty Center - Cypress, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

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.

Mar 23, 2010 09:59 PM #3
Rainer
290,847
Richard & Carol DeGrace
1st Colonial Community Bank | Bank - New Jersey - Cherry Hill, NJ
Mortgage Loan Officers NJ 609-209-3700

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.

Mar 23, 2010 10:00 PM #4
Rainer
290,847
Richard & Carol DeGrace
1st Colonial Community Bank | Bank - New Jersey - Cherry Hill, NJ
Mortgage Loan Officers NJ 609-209-3700

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

Mar 23, 2010 10:01 PM #5
Rainmaker
133,700
Eric J
Eric J - Dream Home Financing - Freehold, NJ

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.

Mar 23, 2010 10:03 PM #6
Rainmaker
598,880
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.

Mar 23, 2010 10:13 PM #7
Ambassador
781,559
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise in NE Philadelphia & Bucks County

Steve ..This is great info ..thank you

HelpfulHannah

Mar 23, 2010 10:56 PM #8
Rainer
30,618
Mike Wilbur
Guild Mortgage Company and Oregon Homes For Heroes - Salem, OR

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

Mar 23, 2010 11:06 PM #9
Ambassador
879,247
Larry Bettag
Larry Bettag - Cherry Creek Mortgage - Saint Charles, IL
Regional Vice-President

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

Mar 23, 2010 11:28 PM #10
Rainmaker
592,578
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

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

Mar 23, 2010 11:35 PM #11
Rainmaker
1,286,300
Carla Muss-Jacobs, Principal Broker/Owner
BuyersAgentPortland.com | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% o... - Portland, OR
Buyer Focused ~ Buyer Results

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

Mar 24, 2010 01:14 AM #12
Rainmaker
718,907
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

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

Mar 24, 2010 05:40 AM #13
Rainmaker
76,224
Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

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

Mar 24, 2010 07:28 PM #14
Ambassador
170,610
Jon Sigler
Embrace Home Loans, NMLS#119288 - Rocky Hill, CT
Connecticut FHA VA USDA Mortgage

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.  

Mar 24, 2010 07:41 PM #15
Rainmaker
279,968
Chanda Barrick
Keller Williams Indy Metro Northeast - Indianapolis, IN
in referral

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.

CHANDA

Mar 26, 2010 07:52 AM #16
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Rainer
290,847

Richard & Carol DeGrace

Mortgage Loan Officers NJ 609-209-3700
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