A little earlier today I had a lender from the Atlanta area send me an email to let me know about the following, “I have been researching the local market and I am reaching out to the top agents in the USDA market. I am sure you are familiar with the USDA 100% purchase program.” Yes I am as a matter of fact. The USDA rural development program has been a blessing to our area. With the exception of Watkinsville and Athens-Clarke County most of our area, including Winder-Barrow, falls into the USDA’s home eligibility map. Between this loan and FHA, these are the only loans we see written this year.
This gentleman goes on to state, “You may not be familiar with the USDA program that allows for up to $10,000 in repairs or improvements. I have this program to offer to you and your clients. I would like to give you a call in the next few days to discuss some of the details of the program and see if it is something you might use.” At this point I called my faithful lender and good friend Russ Tanner and he explained the following. This “program that allows for up to $10,000” for improvements is actually still using the same USDA rural development loan that we have come to know and love.
He went on to say, “We do not have a cap on the amount of money that the customer can pull out. The 10% deal is specific to this guy’s lender and that is not a requirement that we have. You can do true repairs, buy appliances, it is pretty broad. As far as value, usually we want the pre-closing value to support rolling in the extra funds especially if it is for buying appliances or minor repairs. If it is a major deal, ie remodeling a kitchen or bath, we will work with the appraiser as to what the appropriate value will be when the work is completed. Below is an email my underwriter sent out as to the steps involved in this type of loan. Thanks.”
Russ’ underwriting guidelines are as follows;
1) The appraiser needs to called for both items (contract appraisal and appraisal for improvements) to be done
2) The customer has to obtain invoices for the work to be done.
3) We will escrow for the EXACT amount of the invoice. So if there ends up being any additional cost once work begins, the customer has to come out of pocket for it.
4) We do not pay for the work till after the appraiser has issued a clear final inspection. So all parties involved have to agree to getting paid AFTER work is complete.
5) Your appraised value will need to be sufficient to cover the amount of the repairs. Max LTV is 102% of appraised value
If you are thinking about buying, exclusive of Athens-Clarke and Watkinsville, and you have “reasonably good” credit to good credit, you should take a look at the USDA rural development loan. This can provide you with 102% (possibly enough for closing costs) of a loan amount plus any improvements involved!
Contact Russ Tanner at www.RussTannerLoans.com for more information.
