NJ First-Time Home Buyers

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Do Not Accept Offers from Buyers Pre-Approved for USDA Financing

Thumbs DownShould Realtors Advise Their Clients to Not Accept Offers from Buyers Pre-Approved for USDA Financing?

If you don't know by now, USDA plans to be out of funds by the end of April of this year. So the question begs to be asked; Should listing agents advise their sellers go under contract with buyers purchasing using a USDA mortgage?

Without doubt there is a portion of buyers that can only finance a home using 100% USDA financing. Even the 3.5% FHA required down-payment is too much for some buyers. So should buyers be required to also be approved for alternate financing? Some lenders refuse to even write these loans out of fear. Or maybe ignorance.

With the first time buyer tax credit coming to an end soon, and most likely the number of home buyers thinning to some degree, all bases should be covered. At the very least a lender, buyer, and Realtor should all be on the same page and have their buyer's facts disclosed. If a buyer can only utilize USDA financing, then everyone needs to notified of how fast things must move, and the potential negative consequences.

Thumbs UpUSDA financing is a fanastic program. Denying a home buyer and seller to go to contract out of fear can be just as bad as going into a contract blindly. Lay out the facts; No surprises for buyer or seller. Keep the lines of communication constantly open. The reality is that you may have only one buyer to ever go under contract for a particular home. Can you risk saying "no"?

Steve Kappre is a mortgage loan officer in New Jersey. For more info or questions feel free to contact Steve.

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Comment balloon 16 commentsRichard & Carol DeGrace • March 23 2010 09:54PM

Comments

Steve, Not only do not accept those, but remove those USDA loans from listing comments! We were advisd to consider that money gone by this Friday...as a safeguard...unless all appraisals and contingencies had been met on the contract.

Posted by Jane Cross (Homes By Cross serving Charlotte NC Real Estate Needs) over 7 years ago

Great info Steve!  Let's hope for quick closings to get the last few through. 

Posted by Lori Liveston (Virtual Homes, Real Estate) over 7 years ago

Never have had a USDA financed buyer...though I know anything about 3 miles west of me qualifies for USDA...Good warning for those accepting offers. I would be leary of accepting an offer if they couldn't come down with the 3.5% downpayment.

Posted by Sonja Patterson, Texas Monthly 5-Star Realtor Recipient for the Hou (Executive Real Estate Services) over 7 years ago

Jane - I'm still doing them as of right now - but you are right ... some homes still have the advertising on the lawn for USDA loans!! SAME PAGE EVERYONE ;)

Lori - Right on.

Posted by Richard & Carol DeGrace, Mortgage Loan Officers NJ 609-209-3700 (1st Colonial Community Bank | Bank - New Jersey) over 7 years ago

Sonja - We are coming to the "finish line" - we'll see how things pan out.

Posted by Richard & Carol DeGrace, Mortgage Loan Officers NJ 609-209-3700 (1st Colonial Community Bank | Bank - New Jersey) over 7 years ago

I agree, it will be a risky situation going into contract on a home right now with USDA as the only financing option for you.

Posted by Eric J, Flannel Guy DIY (Eric J - Dream Home Financing) over 7 years ago

Steve - Last week, I submitted a reservation for a USDA loan.  I have to admit that I'm a little worried the money may not be there even though we have a reservation.

Posted by Donne Knudsen, CalState Realty Services (Los Angeles & Ventura Counties in CA) over 7 years ago

Steve ..This is great info ..thank you

HelpfulHannah

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) over 7 years ago

I am telling my clients they will have to wait if they want USDA.  Not worth the pain and suffering.  I did hear they are making progress and will maybe have funds by mid May.........let's hope

Posted by Mike Wilbur (Guild Mortgage Company and Oregon Homes For Heroes) over 7 years ago

Steve-O.  I'm withya.  It's a great program, but the days are limited until Congress re-ups.....

Posted by Larry Bettag, Regional Vice-President (Larry Bettag - Cherry Creek Mortgage) over 7 years ago

This is one of the worst programs to lose. It can only do more damage to an already horrible real estate climate =(

Posted by Lisa Hill, Daytona Beach Real Estate (Florida Property Experts) over 7 years ago

Something the listing agent should know, absolutely.  And BUYER AGENTS need to talk to their clients about this type of funding too.

Posted by Carla Muss-Jacobs, Principal Broker (503) 810-7192, Buyer Focused ~ Buyer Results (BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time) over 7 years ago

Hi Steve, I never came across those but it's great to know about so thank you!

Posted by Jackie Connelly-Fornuff, "Moving at The Speed of YOU!" (Douglas Elliman Real Estate in Babylon NY) over 7 years ago

Thanks for passing this on!  Great info especially for those towards the shore (not at the shore).

Posted by Bridget Cella, e-Pro, Realtor (Re/Max Connection) about 7 years ago

We should all contact our congressmen and women and tell them how much of a priority it is to increase the funding available for USDA loans this year and to do so before the current funds run out.  We all stand to benefit if more funds are made available for USDA buyers.  

Posted by Jon Sigler, CT Loan Officer 860-306-8029 (Citizens Bank, NMLS#119288) about 7 years ago

It's interesting to see the homes/areas that qualify for these loans.  We've got a very affluent area just north of us that is just as congested and built up as being right here in Indy (nothing rural about it), yet they can get USDA loans.  If the USDA were not going away, they would definitely need to reevaluate what properties qualify for this type of loan.

CHANDA

Posted by Chanda Barrick, in referral (Keller Williams Indy Metro Northeast) about 7 years ago

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