Rural Development home purchase loans remain great choice in TN and GA

We are approaching the deadline for the new fee structure for Rural Development Guaranteed Home Loan program. I spoke with the USDA area director earlier this month and he clarified that the new monthly fee structure will be applied to all loan submissions that do not receive a Rural Development commitment by September 30, 2011.

This means all files should be sent to Rural Development probably by September 25 or earlier. For Georgia properties, the files will need to be submitted even sooner.

For home buyers who may not know, Rural Development loans must receive a commitment from the area Rural Development office before the purchase transaction can close. This commitment is issued after the lender has completely finalized their loan approval.

This Rural Development commitment typically adds a few days up to an extra week or so to the loan closing time frame.

Even with this extra few days, and even with the new monthly fee, Rural Development is an excellent choice for qualified and eligible home buyers.

The basic eligibility requirements are:

1. Household income below the maximum level (in the Chattanooga area, for 1 to 4 member families this maximum is $74,050 total household income)
2. the property must be a primary residence and be within the Rural Development eligible areas. (This can be checked on the Rural Development website.)

The new fee structure that is effective October 1, 2011 adds an annual fee of .3% of the anticipated average balance. This fee is lower each year, but will be in place for the entire loan amortization. With this fee, Rural Development is lowering the initial up front fee from 3.5% to 2.0%. This upfront fee is generally added to the loan amount.

So Rural Development loan allows eligible buyers to purchase a great home with no down payment. And even with the new fee structure, payment remain lower that most other purchase options. You do not need to be a first time home buyer to take advantage of this great purchase program.

Call me with any questions about your home purchase, or specifically about qualifying for a Rural Development purchase. You can also start your purchase approval at www.RichardSmithHomeLoans.com.