First time homebuyer alert:  the Rural Housing loan is a great deal.  Ok, so maybe this isn't a news flash, but it's definitely worth revisiting now that folks are out and about again, looking at homes to buy.  The United States Department of Agriculture (USDA) offers a home loan guaranty program in Tennessee that is truly affordable and beneficial for moderate to low income families/borrowers.  The only catch is you have to be on the right part of the map.  Rural areas only,  please.  But you'd be surprised as to what constitutes "rural".  Did you think Powell was rural?

I think this program is often overlooked because lenders forget that some properties that don't really seem in the country still qualify for it.  How do you know if a home your considering would fit the niche?  It's super easy to figure out.  If you go to www.rurdev.usda.gov, you can click on a link that allows you to determine if a specific property address is eligible.  Lately, I've been happy to discover this program is available for more of my customers than I would have initially guessed.

Why are Rural Housing loans so fantastic?  First and foremost, they allow for 100% financing.  Yep, the elusive 100% financing still exists (at least in some counties).  Another very attractive feature is the program allows you to finance Rural Housing's 2% guarantee fee (required) into the loan amount as well.  So if you buy a $100K home, you can borrow $102K.  And perhaps the most attractive feature?  You have no monthly mortgage insurance with this product.  That's right, no monthly mortgage insurance.  Now you see what makes this product so affordable.

Of course, you have to be able to qualify.  You obviously can't be making a ton of money and qualify for this type loan.  It varies from county to county, but for example, in Knoxville, a 2 person family can't earn more than $56,600 a year.  You have to have been on the job or have recently produced a professional/educational degree or certification during the past two years.  And these days,  it should go without saying, you need a clean credit history.  You can't buy a McMansion or anything.  And cement ponds are not allowed.  Your loan size is limited by what you can afford.  As a general rule of thumb don't expect to go over $150K.

The seller can pay all of your closing costs or you can get a gift from a family member to pay your closing costs.  You can't buy an investment property-you need to plan to live in the house.  And although it's a terrific product for first time homebuyers, you don't have to be one to qualify.  However, if you are a first time homebuyer, chances are you can fund this loan through Tennessee Housing Development Agency (THDA).  That's a double whammy.  You see, THDA offers a fabulous interest rate for first time homebuyers.

So dust off your blue jeans and drive around the county roads with your realtor.  You may just find your dream home nestled down at the end of a country lane.  Now, wouldn't that be cool?

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.  For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.

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