The Benefits of a USDA home Loan
The process of purchasing a new home is a challenge for most people out there. For example, we see how a lot of people struggle with making down payments. However, there are a few options available to help people who are ready to own a home but lack the down payment. The USDA home loan is a perfect example of a no money down mortgage.
The USDA Home Loan, or the Rural Housing Loan offered by the United States Department of Agriculture, is among the most prominent mortgage options available for you to consider as of now. If you are planning to purchase a home in a rural area or just outside the suburbs, this is a great option to try. The USDA Home Loan is quite popular among people as it offers multiple benefits to them. From this article, we are looking forward to sharing some of the most prominent benefits with you.
- You don’t have to have a down payment
One of the biggest obstacles that homebuyers have to face nowadays is making the down payment. But when you are getting a new house through the USDA Home Loan, you don’t need to worry about down payments. That’s because the USDA Home Loan can help you with getting 100% financing on your purchase. In other words, buying with $0 down is a real option. This is the main reason on why it is so popular among first-time homebuyers. Still, repeat homebuyers are also interested in getting the benefit that comes along with this loan program. Check out other NO Money Down Programs.
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- It offers lower interest rates
The United States Department of Agriculture provides an insurance to USDA Home Loan. Therefore, you can expect to receive a lower interest rate 0n your loan. On the other hand, the interest rate that you have to pay would not vary depending on your down payment. That’s because the Department of Agriculture is willing to absorb the risk. Hence, you may consider it as a beneficial option when compared to traditional financing. Keep in mind a 620 credit score will be needed to qualify for a USDA home loan.
- It will reduce the monthly private mortgage insurance payments
When you go for a housing loan with a down payment of under 20%, you will have to get private mortgage insurance (PMI). This is applicable for USDA Home Loan as well. However, the good news is that you will only have to pay a smaller amount on private mortgage insurance by going for with a USDA loan. In other words, the annual fee for PMI as of now for the USDA Home Loans is at 0.35%. This amount has to be paid based on the remaining principal balance amount of the loan. You will even be able to roll the PMI payments into your home financing.
- It offers flexible credit guidelines
Do you have a leass than perfect credit history? Then you will have a difficult time with obtaining traditional insurance. This is where USDA Home Loan can help you. This home loan is quite flexible in terms of the credit score that you have. Even with a 620 score, you will be eligible for the USDA Home Loan. You just need to showcase that you are willing to repay your debts with proof of paying your bills on time. Learn what programs are available by credit score.
- It provides assistance with closing costs
The closing cost of a traditional home loan is around 2% to 5% out of the purchase price. This can help you to cut down one of the biggest expenses that you have to bear at the time of closing your loan. When it comes to the USDA Home Loan, the seller will have to pay up to 6% of the closing costs. Hence, you will be able to save money with it as well.
Now you are aware about the benefits of USDA Home Loans. It is a great option available for both first-time homebuyers as well as repeat homebuyers. When you are about to buy a new home, always remember the USDA home loan can be a great option.
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