If you’re looking to buy a house in Harford County, you may be eligible for a USDA loan. USDA loans are a great option for those who qualify, as they offer several benefits, including no down payment requirement and low interest rates. However, there are some things you need to know before using a USDA loan to buy a house in Harford County. In this blog post, we’ll cover seven important things you need to know about using a USDA loan to buy a house so that you can determine if it is the right choice for you.
1. Eligibility Requirements
To be eligible for a USDA loan, you must meet certain requirements. The property you’re buying must be located in a designated rural area, and you must meet certain income requirements. According to the USDA, a rural area is a city or town with less than 50,000 inhabitants. Nor can the property cannot be located in an area adjacent to a city of this size. The income requirements vary depending on the size of your household and the location of the property. You must also have a credit score of at least 640 and be able to demonstrate a stable income. In many cases, qualifying for a USDA loan can be easier than you may think.
2. Loan Limits
USDA loans have a maximum loan limit, which varies depending on the location of the property. In MD, the maximum loan limit for a USDA loan can vary. However, a good majority of single-family properties are eligible. Jedd Cheshier and the We Sell Harford Homes Team with Taylor Properties can help you find properties that meet both your requirements and that of the USDA loan program. If you’re looking to buy a more expensive property or one in a more meteor area, you may need to consider other financing options.
3. Funding Fee
One of the unique features of USDA loans is the funding fee. The funding fee is a one-time fee that is paid at closing and helps to offset the cost of the USDA loan program. The amount of the funding fee varies depending on the type of loan and the size of the down payment. The funding fee can be financed as part of the loan, but it will increase your monthly payment, impacting how much house you can afford.
4. Property Requirements
To be eligible for a USDA loan, the property you’re buying must meet certain requirements. It must be located in a designated rural area, and it must be your primary residence. The Harford County property in question must also meet specific safety and health standards, and it must be appraised by a USDA-approved appraiser.
5. USDA Appraisal
As mentioned above, the property you’re buying must be appraised by an authorized USDA-approved appraiser. The USDA appraisal is different from a traditional appraisal in that it focuses on the condition of the property and whether it meets the USDA’s minimum property requirements. The USDA appraisal is also used to determine the value of the property, which is important for determining the loan amount.
6. Closing Costs
Like any other type of mortgage, there are closing costs associated with a USDA loan. However, the USDA has strict rules about what fees can be charged to the borrower. Some fees, such as the appraisal fee and credit report fee, must be paid by the borrower, while others, such as the underwriting fee and document preparation fee, can be paid by the seller. It’s essential to work with a lender who is familiar with USDA loans and can help you understand the closing costs associated with your loan so that you aren’t surprised when you get to the closing table.
7. Choosing a Lender
Finally, it’s important to choose a lender who is experienced in USDA loans. Not all lenders offer USDA loans, and those that do may not have the same level of expertise. Look for a lender who has a good reputation and can guide you through the process of getting a USDA loan. You may also want to consider working with a lender who is familiar with the Harford County real estate market, as they may have a better understanding of the local market conditions and what you will be able to buy with your loan.
Using a USDA loan to buy a house in Harford County can be a great option for eligible homebuyers. However, it’s important to understand the eligibility requirements, loan limits, funding fees, property requirements, USDA appraisal, closing costs, and choosing a lender. By working with a knowledgeable lender and understanding the process, you can take advantage of the benefits of a USDA loan and achieve your dream of homeownership in Harford County.
Are you ready to buy a Harford County home using a USDA loan? Jedd Cheshier and the We Sell Harford Homes Team with Taylor Properties can help! Reach out to our team today to learn more about how we can help you! 443-616-5486