Arizona USDA Home Loans Mortgage Update

photo credit: openDemocracyArizona USDA Home Loans Mortgage Update!

Yesterday, USDA funds were already below the one-billion-mark and apparently the money is going fast.  I found out this morning that USDA is expecting to run out of funds next week  (May 7th 2010).

Even though a bill was passed in the House of Representatives to appropriate more funds for loans, it may take some time to go through the red tape in Washington. With the new funding bill comes an increase in the Loan Guarantee Fee to approximately 4%.

There are two versions of the bill:

One is calling for a 4% Loan Guarantee Fee and the other has a 3.5% Loan Guarantee fee with an additional monthly fee of .50%.

USDA stated that they “may” continue to approve loans pending receipt of the funding, as they have in the past 2 years, but I wouldn’t bank on this until we have Senate approval.
As FHA guidelines are tightening, the USDA Home Loans Program is presently the only viable 100% financing solution. The only other option would be to take advantage of VA benefits (if you qualify).  USDA is seeing an upswing in delinquency rates and defaults and we should not be surprised to see higher Loan Guarantee Fees and perhaps required mortgage insurance.

Let’s just hope the bill passes  and the guidelines aren’t  getting too strict to make the American dream possible.  There are plenty of homes available in and around Phoenix that are located in areas designated by the Rural Housing Service (RHS). These eligible properties are located mainly in parts of Queen Creek, all of Casa Grande, and the City of Maricopa, Arizona.

If you are not certain whether or not a property qualifies for USDA check http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do