Question: I was reading about the USDA program restrictions and it says 102% financing. Does this mean that we can receive 100% financing on the home we buy, then receive 2% cash back to pay off debts or something similar?
Thank you – L. Gifford / Sarasota, FL
Answer: Thank you for your question. The additional 2% is used for the one time USDA guarantee fee and cannot be used for anything else. This USDA fee is always rolled into to your loan regardless of appraised value or purchase price. However, USDA Rural Development will permit a home buyer to roll in their closing costs up to the appraised value and not sales price. Example below –
Home purchase price/contract price – $100,000
Home Appraisal amount – $107,000
Approximate USDA closing cost and pre paid expenses needed – $5,000
Home buyers in this case CAN roll in their closing costs and pre paid into their loan because their new loan amount of $105,000 does not exceed the appraised value of $107,000
Note – in addition to this, the 2% guarantee fee noted above is always included into the home buyer’s loan REGARDLESS of the appraised value.
The USDA home loan program offers more flexibility than any other loan today. 100% mortgage financing is hard to find – all first time homebuyers and current home owners in Florida should take a close look into the USDA rural housing mortgage option. Many surrounding communities just outside of Jacksonville FL, Sarasota FL, Naples FL, Orlando FL, Tampa FL, Gainesville FL, Ocala FL, Tallahassee FL and Daytona Beach FL contain USDA approved locations.
Learn more by visiting www.UsdaMortgageSource.com or by calling 800-743-7556. USDA Mortgage Source is Florida’s leading USDA Rural Housing resource servicing all of Florida 7 days a week.