The United States of America continues to find ways to improve the economy. Included in the government’s endeavors is advancing the quality of life in rural areas. Thankfully, there is a project called USDA Loan, a U.S. Department of Agriculture housing loan program.
In fact, the USDA loans in Orem, Utah and other locations have been effectively assisting low-to-moderate income rural residents in buying a new house.
Financing a Home Purchase
There are several entities out there that can finance your home purchase and the available options include the following:
1. Fixed-Rate Mortgage
This mortgage option has an interest rate that doesn’t change for the entire duration of your loan. It gives a foreseeable monthly disbursement for a term of 10 to 30 years. If you prefer living in your home for a long time, this loan option is suitable for you. Additional features of a fixed-rate mortgage include:
- Interest rate assurance
- Monthly payment constancy
2. Adjustable-Rate Mortgage (ARM)
The basis of this mortgage option is the index when altering the interest rate. If you feel you will relocate to a different house within the next few years, this housing loan solution will work for you. Note that in every adjustment period, the monthly payment and the interest rate will vary. The life of the loan follows 5/1 rule — the first interest rate reset happens after five years, and the next reset instances will take place every year for the entire loan duration. Additional features of an ARM include:
- Provides low initial interest rate
- Lower monthly disbursements during the first term
3. Down Payment Assistance (DPA) Loans
Upfront fees can sometimes be challenging to some households. If you’re a home buyer who seeks assistance, a Down Payment Assistance (DPA) loan can make your life easier. It can be a loan or a grant. Additional features of a DPA include:
- Lower upfront fee
- State explicit programs
4. USDA Loan
All rural areas in the U.S. are always eligible for USDA loan. Some suburbs might be considered; however, there will be more rigorous underwriting standards to be met.
Here are the additional requirements to become eligible for the program:
- You must have permanent residency in the U.S.
- Your other monthly debt expenses should not be over 41% of your take-home pay.
If you have a credit score of higher than 680, your debt ratios will be higher.
USDA Loan Benefits
- Offering low-interest rate
- Does not require a down payment
USDA loan programs are divided into three types:
- Loan guarantee: Through this option, financing is being provided by a willing local lender, like how CA-backed and FHA loans work.
- Direct loan: This program is intended for individuals with low to very low earning, depending on the region. Typically, the interest rate is 1%.
- Home improvement loan and grant: As a homeowner, you can use these programs to fix or remodel your property. To give you an idea, the assistance value can be approximately $27,500.
If you need further assistance, consult a trusted home loan professional. Home loan programs will provide you and your family with the utmost convenience to live a meaningful life.