Why Using USDA Home Loans Can Be Beneficial
Saving money for a down payment and improving your credit are vital steps in securing the right home loan. Typically, people who have no down payment and poor credit will either be denied a home loan or will have to pay an outrageous interest rate to buy a residence.
Recent studies show that nearly $2 trillion worth of mortgages are issued in the United States every year. The first thing you need to figure out when trying to a buy a home is what type of mortgage is the right fit. If the property you want to buy is considered rural, you may be able to use USDA home loans.
Read below to find out why using these types of home loans is beneficial.
You Don’t Have to Worry About Making a Down Payment
If you are like most people, it takes all of the money you make to keep you afloat each month. Playing your finances so close to the vest can make it difficult to save money. Using USDA loans to fund your home purchase will allow you to get 100 percent financing.
This means you will not have to worry about coming up with a massive amount of money to put down on the purchase of a new home. With FHA loans, you will have to put a minimum of three and a half percent down and conventional loans require five percent down.
A Lower Interest Rate
One of the most important factors to consider before signing off on a loan is the interest rate. The higher your interest rate is, the more money you will pay over time.
With a USDA loan, you can take advantage of low interest rates. These rates do not fluctuate based on your credit rating like they do with conventional loans. By getting a loan with a lower interest rate, you can pay down more of your principal each month. This will result in your getting your home paid off faster.
Affordable Private Mortgage Insurance Rates
Any loan that has less than 80 percent loan to value will require a person to get private mortgage insurance. This means that if you take advantage of a USDA loan, you will have to pay for private mortgage insurance each month.
Luckily, the United States Department of Agriculture has some of the lowest private mortgage insurance rates around. Consulting with lending professionals who are familiar with these types of loans will allow you to find out what the exact private mortgage insurance rate will be.
Highly Flexible Credit Guidelines
Some people have the misconception that you need immaculate credit in order to qualify for a USDA loan, but this is not the case. Even applicants with less than stellar credit can qualify for this type of financing.
There are some USDA lenders that will offer what is referred to as alternate tradelines. This means they will accept proof of rent, utility and cell phone payments as credit history verification if an applicant’s actual credit history is too short. Consulting with an experienced lender is the best way to get more information about the minimum credit score needed to get approved for this loan.
Are you in the market for an affordable mortgage? Getting the best deal on a mortgage is only possible with the assistance of a knowledgeable and trustworthy lender.