Is an earnest money deposit required on a USDA loan? 

If there is no down payment, what USDA loan out-of-pocket expenses should you prepare for in Florida, Texas, Tennessee, and Alabama? Many think that 100% financing is the same as “no money out-of-pocket”, but just because there is not a down payment involved, minimum USDA loan out-of-pocket expenses may still be required.

In today’s short video, I will discuss what expenses to be prepared for even when you are qualifying for USDA No Down Payment loan.

By the way, don’t forget to download our USDA Blueprint for Success with the link below, this complimentary guide is designed to walk you through the USDA qualifying process step-by-step and is ideal for both homebuyers and Realtors alike.

What USDA Loan Out-of-Pocket Expenses Should You Be Prepared For in Florida, Texas, Tennessee, and Alabama?

It is common for a buyer to prepare for two types of USDA loan out-of-pocket expenses. These include their down payment and settlement charges, a.k.a. closing costs.

When getting a No Down Payment USDA rural home loan, the down payment requirement is eliminated, but additional minimal USDA loan out of out-of-pocket expenses may still apply such as:

I. USDA Loan Out-of-Pocket Expenses: Earnest Money Deposit (EMD)

Per the National Association of Realtors: 

“Earnest money is a payment from the potential buyer to the seller to show good faith in their intent to complete a real estate transaction.”

While a USDA loan earnest money deposit is not required for loan qualifying, the amount of any deposit would be commonly negotiated between the buyer and seller and then listed on the sales contract.

With a USDA loan it is possible to receive all or a portion of the EMD back at closing, but this is dependent on what the home appraises for and/or how much you may be receiving from the seller towards closing costs.

Neither the appraised value or seller concessions is a guarantee so homebuyers must be prepared to account for any costs that may be owed at closing.

Please remember that as part of the approval process, we will always need to verify the USDA loan earnest money deposit.

II. USDA Loan Out-of-Pocket Expenses: Appraisal Fees & Inspections

These are customary upfront USDA loan out-of-pocket expenses that should be paid by either check or credit card when the option is available because both of these forms of payment will allow for verification if needed.

Settlement charges are made up of both closing costs & pre-paid items which may be financed into a USDA loan. USDA loan out-of-pocket expenses may be included within the loan amount only if the appraisal is higher than the sales price. A higher appraised value would then allow you to finance and include those USDA loan out-of-pocket expenses into the increased loan amount. 

III. USDA Loan Out-of-Pocket Expenses: Seller Paid Closing Costs (Seller Concessions)

USDA guidelines allow the seller to pay up to 6% of  the sales price towards a buyer’s settlement charges.

While a seller may or may not agree to this, provided it can be negotiated as part of the sales contract, this is another way to help reduce a buyer’s out-of-pocket money due at time of closing.  As mentioned above, receiving seller concessions towards your closing costs is never a guarantee so homebuyers must be prepared to account for any USDA loan out-of-pocket expenses that are owed at time of closing.

Additionally, if any funds are owed by the buyer at time of closing, the Earnest Money Deposit will be credited towards that amount.

Remember, when you think USDA loans, think Metroplex Mortgage Services!

The Metroplex team has been the trusted resource for USDA loans since 2001!

We thank you for the continued recommendations!

800-806-9836 Ext. 280
SeanS@MPLX.org

Just call or email if you have any qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2^nd opinion service which is great for those existing transactions

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

How do you calculate Florida Intangible Tax and Transfer Tax when purchasing a home?  Do you know what costs are associated on the transfer of real property and how to calculate Florida Intangible Tax?

When purchasing a home, you never want to be surprised with out-of-pocket expenses! Even if you are qualified to purchase a home with a USDA No Down Payment Loan, you still have to be prepared for other costs to complete the transaction which include Florida Intangible Tax and Transfer Tax, i.e., Documentary Stamps on the Deed.

In today’s video, I will go over the details and explain how these costs are calculated so you can be prepared prior to closing!

If you have not yet done so, remember tod click here and access our FREE USDA Resources, including our USDA Blueprint for Success. They are valuable tools to walk you through several USDA processes step by step.

Florida Documentary Stamp Tax

The State of Florida can assess certain taxes on both the transfer of real property and mortgages. This boils down to the fact that a Florida homebuyer must be prepared pay additional taxes when purchasing a home.

A number of these taxes stem from Florida’s documentary stamp tax. Below is what the Florida Department of Revenue states the documentary stamp tax is:

“Documentary stamp tax is an excise tax imposed on certain documents executed, delivered, or recorded in Florida. The most common examples are:

• Documents that transfer an interest in Florida real property, such as deeds; and
• Mortgages and written obligations to pay money, such as promissory notes.

Tax is paid to the Clerk of Court when the document is recorded. When a taxable document is not recorded, the tax must be paid directly to the Florida Department of Revenue.” (Section 201, Florida Statutes)

Deeds and Other Documents that Transfer an Interest in Florida Real Property

“Deeds and other documents that transfer an interest in Florida real property are subject to documentary stamp tax. Regardless of where the deed or other document is signed and delivered, documentary stamp tax is due. The amount of tax due is computed based on the consideration for the transfer. All parties to the document are liable for the tax regardless of which party agrees to pay the tax. If a party is exempt, the tax must be paid by a non-exempt party.” (Reference: Section 201.02(1)(a), Florida Statutes)

So what does all this mean? Basically, Florida taxes are administered to cover the variety of recorded documentation needed when purchasing a home.

Calculating the Florida Transfer Tax

Section 201.02(1)(a) of the Florida Statutes states the following:

“On deeds, instruments, or writings whereby any lands, tenements, or other real property, or any interest therein, shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or any other person by his or her direction, on each $100 of the consideration therefor the tax shall be 70 cents.”

However, the one exception for this lies in Miami-Dade County where the tax rate is “60 cents on each $100 or portion thereof, of the total consideration. Miami-Dade County also has a surtax of 45 cents on each $100 or portion thereof, of the total consideration. The surtax is not due on a document that transfers only a single-family dwelling.”

Furthermore, a promissory note is the document that details the amount owed, interest rate, and the terms of your promise to repay. Florida Statue § 201.08(1)(b)) states the following regarding tax rates on promissory notes:

“On promissory notes, nonnegotiable notes, written obligations to pay money, or assignments of salaries, wages, or other compensation made, executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. The tax on any document described in this paragraph 1may not exceed $2,450.”

Florida Intangible Tax

Lastly, there is a one-time nonrecurring tax commonly referred to as the Florida Intangible Tax.

Courtesy of the Florida Department of Revenue: “Chapter 199, Florida Statutes (F.S.), imposes nonrecurring intangible tax on obligations to pay money to the extent the obligation is secured by a mortgage or lien on Florida real property. The tax is due even if the mortgage or lien is not recorded or filed in Florida. In no event will the tax be calculated on an amount greater than the fair market value of the collateralized Florida real property.”

Calculating the Florida Intangible Tax

Florida Intangible Tax is calculated at 2 mills per each dollar of the just value of the note ($.002) secured by the mortgage. (§199.133, Fla. Stat.)

Please note that intangible tax on a home equity line of credit will be calculated on the full line amount, not just the amount advanced at closing.

Example Calculation

If you are overwhelmed at this point, don’t worry. I’ll go over an example calculation and it will become clear how these taxes are applied. Here’s the situation:

Brenda, the seller, and Steve, the buyer, have agreed to the purchase and sale of a property located in Highlands County for $125,000.  After Steve’s down payment of $25,000, he obtained a promissory note for $100,000 secured by a mortgage.

Now, because the sales price is $125,000, the Florida Transfer Tax calculation on the deed would be:

• $125,000 X .0070 = $875.00 (1,250 taxable units X $.70)

Further, because there is a promissory note for $100,000 the following Transfer Tax would also be calculated:

• $100,000 X .0035 = $350 (Promissory Note)

Lastly, because of the Florida Intangible Tax, the following is also calculated:

• $100,000 X .0020 = $200 (Intangible Tax)

In total, this amounts to a potential Florida tax charge of $1,425. Now, you can see how these costs can sneak up on you. Just remember, the terms of the sales contract will usually determine who is responsible for each specific cost.

Buyer Closing Costs in Florida

A buyer’s closing costs in Florida may vary from transaction to transaction. Please use us as your resource for any further questions. please please call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org to discuss your scenario. We are known for returning calls, replying to emails, and responding to your messages.

Make it a great week, download some of our FREE resources below, and I’ll see you next time!

Can Florida SHIP Funds be combined with a USDA loan?

The goal of Florida SHIP funds is to provide affordable homeownership for first-time homebuyers with very low, low, and moderate-income.

Florida SHIP Funds can be used for a variety of purposes, which include being combined with a USDA loan. In turn, SHIP funds can help maximize affordability!

In today’s video, I will review the basics of Florida SHIP funds and how they can be combined with a USDA loan to help with closing cost assistance.

If you have not yet done so, don’t forget to download our USDA Blueprint for Success. This is a great educational resource that is designed help walk you through the USDA process step-by-step.

State Housing Initiatives Partnership Program (SHIP)

Florida Housing Finance Corporation administers the State Housing Initiatives Partnership program (SHIP) to 67 counties in Florida.

A homebuyer must qualify with the local government entity or housing office that is responsible for handling the program. These 67 counties disperse funding on a first-come-first-serve basis, so you must first determine if your county currently has funding. If they do not, the next questions to ask is, “When is the funding expected to be replenished?”

SHIP qualifying requirements are handled at the local government level and can vary, but common requirements include…

• Applicants must be first-time homebuyers;
• Funding is on a first-come, first-serve basis;
• Maximum purchase prices can vary;
• Completion of a First Time Homebuyer Education course such as HomebuyerFunds.com or Freddie Mac;
• SHIP income limits will apply.

Florida SHIP Funds – Local Housing Assistance Plans (“LHAP”)

The LHAP is a three year housing plan that outlines the strategies that will be utilized by the local government SHIP office. An LHAP is required to be submitted in order to be eligible to receive funding from the State of Florida.

The various local government LHAPS can be found here:  Florida Housing Finance Corporation

Example – Highlands County SHIP Funds

For example purposes, let’s look at Highlands County and walk through important Florida SHIP Funds details:

1. As of 12/4/2022, funding was received by the SHIP office and applications began
2. Assistance is on a first come first serve basis
3. Potential applicants must be within income limits and meet eligibility requirements
4. Award amount is based upon household income and family size
5. Repayment terms include, but are not limited to, the following:
   1. All assistance is provided as a loan, secured by a recorded mortgage and promissory note.
   2. Interest Rate: 0 %
   3. Years in loan term:
      1. 10 years for $0.00-$5,000.00
      2. 15 years for $5,001.00-$10,000.00 loan amount
      3. 20 years for $10,001.00-$15,000.00 loan amount
      4. 25 years for $15,001.00-$20,000.00 loan amount
   4. Not Forgivable
   5. Deferment Period: The loan shall be deferred for 3 years, and repayment will begin after that and will be
      amortized over the term of the loan term.
   6. Remember, repayment terms can vary per SHIP office so make sure to double check!

Additionally, the Highlands County LHAP can be found here: Highlands County LHAP

This example is provided for illustration purposes only and is not a commitment to lend or determination of program eligibility.

Combining Florida SHIP Funds with a USDA Loan

SHIP funds are treated as a second mortgage (subordinate lien), so they must be combined with another mortgage type. When SHIP funds are combined with a USDA loan it offers tremendous flexibility such as being utilized to pay for closing costs as well as reducing how much your borrower on the first mortgage.

Your SHIP funds would be combined with your USDA mortgage to make up the total financing for the property.

This may allow for…

• A portion of your overall financing to be at reduced terms;
• Increased affordability;
• Permit deferred payments;
• Loan deferral or Loan forgiveness after a period of time.*

*Dependent on your local SHIP program guidelines.

How do you qualify for a Florida USDA loan?

It’s vital for you to qualify for a USDA loan in order to be able to combine it with SHIP funds. However, not all lenders work with SHIP Funds… but we do!

In fact, due to our extensive experience and as a top-ranked USDA Approved Lender, we are able to coordinate both your USDA approval and Florida SHIP Funds financing at the same time as we prepare for closing.

Call/Text: 863-593-2001
Toll Free: (800) 806-9836 Ext. 280
SeanS@MPLX.org 

See you next week!

USDA and VA Loans: Understanding 2/1 Buydowns, Discount Points, and Seller Concessions in Florida, Texas, Tennessee, and Alabama.

Due to the rapidly rising rate environment that we have experienced through the course of this year, we have received a tremendous amount of questions regarding 2/1 Buydowns, Discount Points, and Seller Concessions.

Thus, as a follow up to the online workshop I hosted this week, I have provided excerpts from the presentation, During the webinar, I reviewed updates on USDA, VA, FHA, and Conventional loan programs along with details on the differences between 2/1 Buydowns, Discount Points, and Seller Concessions.

I hope you find this presentation helpful, but please let our team know if you have any additional questions or if you would like to take advantage of our Free 2^nd Opinion Service which is great for both new pre-qualifications and those loans that are currently in progress.

Call/Text: 863-593-2001
SeanS@MPLX.org

USDA and VA Loans: Understanding 2/1 Buydowns, Discount Points, and Seller Concessions

The agenda for this online workshop covered the following topics:

1. Mortgage updates and highlights:

• USDA Rural Housing – No Down Payment Loans
  • USDA Eligible Areas
  • USDA Income Limits
  • USDA Repair Loans for those repairs to be completed after closing
  • USDA Construction Loans for Manufactured Homes (Singlewide and Doublewide)
• VA Loans – No Down Payment Loans
  • Credit Flexibility
  • Manufactured Homes (Singlewide and Doublewide)
  • Increased Loan Amounts
  • Expanded Qualifying Ability
• FHA Loans
  • Credit Flexibility
  • 3.5% Down Payment
  • Higher priced mortgage insurance premium costs
  • No area or income limit restrictions
• Conventional Loans
  • Fannie Mae and Freddie Mac
  • Maximum Financing Options:
    • 97% for Primary Residences
    • 90% for Second Homes
    • 80% for Investment Properties
• Private Road Guidelines for USDA, FHA, & Freddie Mac:
  • Private Road Maintenance Agreement not required.
  • Other conditions will be required such as evidence of permanently recorded easements for ingress and egresss.
• Private Road Guidelines for VA & Fannie Mae:
  • • Private Road Maintenance Agreement required.
    • VA does offer the potential of a waiver to the Private Road Maintenance Agreement requirement.

2. What is a 2/1 Buydown?

• What is a temporary subsidy buydown?
• Temporary Buydown Agreement
• What type of transaction could be ineligible for a temporary buydown?
• Buydown Examples

3. What are Discount Points?

• Definition
• Who can pay for discount points?
• Compare and contrast Discount Points with a Temporary Buydown

4. Seller Concessions or Interested Party Contributions

• Overview and comparison between loan programs
• Fannie Mae
• FHA
• USDA Seller Concessions
• VA Seller Concessions

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

Are there USDA home inspection requirements in Florida, Texas, Tennessee, or Alabama?

Once the sales contract has been signed, you might wonder if there are any specific USDA home inspection requirements?

In today’s video, I will discuss if a home inspection is required for a USDA home loan along with reviewing other USDA inspection requirements.

Don’t forget that in addition to our USDA expertise, we are also a VA-approved lender, work daily with low down payment conventional loans, and the FHA program.

Realtors and buyers refer to us for our overall Government loan experience, so just call or email to discuss your next pre-qualification or if you just want to take advantage of our free Second Opinion Service!

(800) 806-9836 Ext. 280
SeanS@MPLX.org

What are USDA home inspection requirements in Florida, Texas, Tennessee, or Alabama?

While not specifically required, USDA guidelines do state that applicants are “encouraged to obtain a detailed home inspection of the property….”

A home inspector will generally check items that include, but are not limited to, the home’s foundation and major mechanical systems like electrical, roof, plumbing, and heating/cooling to ensure that these components are working properly.

Thus, while it is not required to have a home inspection for a USDA loan, it is highly recommended and in the buyer’s best interest to have one.

What are the advantages of a home inspection?

A home inspection will protect and improve your confidence as a buyer. It also will help you understand more about the property you wish to purchase, and its potential defects.

A home inspection will include the following benefits:

• Provide a report which details the status of all major mechanical systems
• Identify items that may need to be fixed prior to purchasing the home
• Identify potential health and safety hazards

What is the difference between an Appraisal and a Home Inspection?

While a home inspection is meant to assess the property’s conditions and any potential defects, appraisals are generally known for establishing the property’s value. Additionally, appraisals ensure minimum property conditions (as outlined per USDA and HUD Handbook guidelines) are met.

If the USDA appraisal cites the need for further inspections (i.e.. roof, foundation, plumbing, septic tank, etc.) then those specific inspections would be required.

However, remember that a USDA appraisal should not be treated as a substitute for a home inspection.

While home inspections are not required, USDA purchase transactions will require an appraisal!

The appraisal protects the lender from loaning you more than the property is worth and making sure that it meets loan program requirements. The inspection helps protect you from unknowingly buying a property with problems or issues.

What are examples of other types of inspections you should be aware of?

Individual Water Systems (Private Wells)

USDA guidelines state that “[i]ndividual water systems are owned and maintained by the homeowner and subject to compliance with all requirements of the local and/or State Health Authority codes.”

Water quality tests are required and the test must be performed through the local health authority or a state-certified laboratory.

Septic Tank

A “qualified appraiser who certifies the property meets required HUD’s Single-Family Housing Policy Handbook” would satisfy the requirement for the lender to obtain a septic evaluation.

However, the “septic evaluation may require additional inspections as a result of the inspection.”

Termite Inspections

 USDA Guidelines state the following: “Termite/pest inspections are not required unless the lender, appraiser, inspector or State law requires the inspection to confirm the property is free of active infestation.”

USDA Home Inspection Requirements – Summary

Here are some key takeaways from today’s tip about home inspections:

• While home inspections are highly encouraged, they are not required
• A home inspection will help you understand more about the property you wish to purchase, and its potential defects
• Appraisals are required, and after completion, additional inspections may be needed
• While private wells and individual water systems require a water quality test, septic tank inspections are not needed (unless specified by the appraisal).

USDA Approved Lender

I founded Metroplex Mortgage Services way back in 2001 and on top of being a top-ranked USDA Approved Lender, my team is known for their government loan expertise and dedicated service when walking homebuyers through the mortgage qualifying maze.

With that in mind, it is a great time to get qualified for a USDA Loan with many benefits, including…

• 100% financing
• Flexible credit guidelines
• The ability to finance closing costs
• And much more!

Remember to just call or email if you want to discuss a scenario, get pre-qualified, or to take advantage of our free second opinion service!

(800)806-9836 Ext. 280
Call/Text: 863-593-2001

SeanS@MPLX.org 

As always, I want everyone to make it a great day and I look forward to seeing you right here for the next tip of the week!

P.S. Don’t forget to download our USDA blueprint for success with this link below.

What are USDA well and septic distance requirements in Florida, Texas, Tennessee, and Alabama?

When dealing with rural areas, it is critical to understand how the USDA well and septic distance requirements can affect USDA loans in Florida, Texas, Tennessee, or Alabama. 

In today’s video, I will break down the USDA loan well and septic distance requirements and explain minimum property eligibility for USDA Rural Home Loans.

However, don’t forget to download our USDA Blueprint for Success. This FREE guide is designed to help walk you through the USDA process step-by-step and is great for both Realtors and homebuyers alike!

What are USDA well and septic distance requirements?

As an approved lender under the USDA Single Family Housing Guaranteed Loan Program,

USDA minimum property requirements for well and septic distance measurements follow HUD Handbook 4000.1 guidelines.

HUD Handbook 4000.1 minimum distance requirements between wells and sources of pollution for Existing Construction* are as follows: 

• A well must be a minimum of 10 feet from the property line.
• A well must be a minimum of 50 feet from septic tank.
• A well must be a minimum of 100 feet from the drain field.
  • However, this distance may be reduced to 75 feet if allowed by the local authority.
• If the property is adjacent to a residential property then local well distance requirements prevail.
• If the property is adjacent to non-residential property or roadway, then there needs to be a well separation distance of at least 10 feet from the property line.
• The distance requirements of the local authority will prevail if greater than what is stated in the HUD Handbook.

*Remember that this guidance is for existing properties only and different requirement will apply to new construction.

Preparing for USDA Well and Septic Distance Requirements

Generally, USDA well and septic distance requirements are not customarily measured until after the sales contract is received.  With that being said, it is critical to let us know of any upfront concerns so we can provide timely advice to help keep the transaction on track.

Don’t let USDA well and septic distance requirements overwhelm you… because we are here to help! While these properties may involve extra steps, our expertise is here to assist with opening the door to homeownership!

Just call or email if you have any qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2^nd opinion service which is great for those existing transactions.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

What are USDA and FHA Appliance Requirements in Florida, Texas, Tennessee, or Alabama? Do USDA or FHA appraisals require a stove or other appliances to be present in the property? 

In today’s short video, I will share with you the details on USDA and FHA appliance requirements so you can be prepared for that next appraisal!

However, before we get started, don’t forget to take advantage and download our “USDA Blueprint for Success.” This free guide is designed to walk you through the USDA process step-by-step. Plus, it’s an excellent tool for both homebuyers and realtors alike.

What are USDA and FHA Appliance Requirements in Florida, Texas, Tennessee, or Alabama?

As a starting point, USDA and FHA loans are both governed by minimum property requirements found in HUD Handbook 4000.1.

In turn, HUD Handbook provides the following definition for appliances:

“Appliances refer to refrigerators, ranges/ovens, dishwashers, disposals, microwaves, and washers/dryers.”

Further, the handbook also states that any appliances, from those listed above, “Are to remain and that contribute to the market value opinion must be operational.”

It also requires that the “Appraiser must note all appliances that remain and contribute to Market Value.”

Do USDA or FHA appraisals require appliances to be present on the property?

In summary, despite what many think, stoves and other appliances are not required. However, for those appliances that do remain and contribute to market value, they must be operational!

For example, while you don’t necessarily have to have a stove, if there one there, it should be in working condition!

Remember, as a USDA approved lender, let our experience go to work for you! – Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and I look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

What are USDA loan water testing requirements for a private well in Florida, Texas, Tennessee, or Alabama?

So, what are the necessary steps to meet USDA loan well water testing requirements?  As you can imagine, this is a common question that I receive from both Realtors and homebuyers alike, and in today’s video I will break down the details so you will be in the know and help keep your transaction from falling off the tracks.

However, before we get started please take advantage of our second chance review service which helps you get access to an expert second opinion and works great for both new pre-qualifications and for those loans that have been recently denied.

What are USDA loan well water testing requirements in Florida, Texas, Tennessee, or Alabama?

When working in rural communities, private wells can be common and understanding the USDA loan well water testing requirements is an important step in the process.

USDA testing requirements for individual water systems that are owned and maintained by the homeowner, must meet the requirements of the local and/or State Health Authority codes.

USDA loan water testing requirements state the following for Individual Privately Owned water systems:

• The water quality of the well must meet the requirements of the state or local authority. If the state or local authority does not have specific requirements, the maximum contaminant levels established by the Environmental Protection Agency (EPA) will apply.
• The local health authority or a state certified laboratory must perform a water quality analysis. The Safe Water Drinking Act does not apply to private wells.
• The well location for individual water supply systems must be measured to establish the distance from the septic system. The separation distance between the well and septic systems must meet the SF Handbook (HUD Handbook 4000.1.) or be found acceptable by the local and/or State Health Authority.
• Individual water systems/wells should be located on the subject property site. If located on an adjacent property, evidence of water rights and recorded maintenance agreement must be retained in the lender’s permanent loan file as acceptance of the well as the primary source of water.

Additionally, USDA guidelines require the following for Individual Privately Owned Shared wells or off site facilities:

If the property is served by a shared well or off-site facility, the lender must ensure the private system will provide a continuous and adequate supply of safe and potable water. The following requirements must also be met:

• The well serves properties that cannot feasibly be connected to an acceptable public or community water supply system. It is the lender’s responsibility to make this determination.
• A shared well must have a valve on each dwelling.
• The water supply is adequate for all families served. A shared well must service no more than four living units or properties unless approved and enforced by the local code authority.
• The water quality of the well must meet the requirements of the state or local authority. If the state or local authority does not have specific requirements, the maximum contaminant levels established by the Environmental Protection Agency (EPA) will apply.
• The well must have an agreement that meets the following requirements:
  • Is binding upon all signatory parties and their successors in title;
  • Is recorded or will be recorded no later than the closing date; and
  • Makes provisions for maintenance and repair of the system and the sharing of costs to do so. These provisions must include a permanent easement that allows access for maintenance and repair.

While today’s post does not take into account all situations involving USDA loan well water testing requirements, it does provide a starting point to help with the process.

Remember, because we offer in-house underwriting and are known for our USDA experience, make sure to use my team as a resource and call if you have any specific questions about USDA loan well water testing requirements so we can review and advise.

As you know by now, USDA loans are in the blood of my entire team.  As an approved USDA lender Metroplex Mortgage Services is proud to serve our rural communities.

Just call or email if you have any USDA qualifying questions, want to discuss a new scenario, or would just like to take advantage of our second chance review service which is great for both existing transactions & pre-qualifications.

(800) 806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download the USDA Blueprint for Success HERE

What are the differences between FHA and USDA loans in Florida, Texas, Tennessee, or Alabama?

When first-time home buyers are comparing a USDA Rural Housing Loan vs. the the FHA loan program, it is important to understand the differences between FHA and USDA loans. In today’s video I will compare the benefits of a USDA Home Loan vs. an FHA loan so you can see the differences side by side.

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the USDA home loan process step-by-step and is a great educational resource for first-time homebuyers.

What are the differences between FHA and USDA loans in Florida, Texas, Tennessee, or Alabama?

How do the benefits of a USDA home loan compare to FHA loans for first-time buyers?

As a starting point, although USDA and FHA loans are both available first-time homebuyer programs, there are distinct differences between the two loan options.

Today we will compare and contrast USDA Home Loans vs. FHA loans along with discussing key benefits such as down payment requirements, closing costs, and the borrowing costs associated with each program.

Is a Down Payment Required?

One of the most well known benefits of a USDA loan is that there is  no down payment required!

However, unlike USDA loans which offer 100% financing, an FHA loan requires a minimum down payment of 3.5% of the sales price.  For example, on a sales price of $150,000 ,your minimum down payment on an FHA loan would be $5,250 compared to no down payment for a USDA loan.

How do Closing Costs compare?

Another important benefit of a USDA loan is that it allows you the flexibility to finance closing costs into the loan.  This can happen in situations where the appraised value is higher than the contract sales price.  Obviously, the ability to minimize out-of-pocket costs can be an extremely attractive feature to first-time homebuyers.

In contrast, FHA loans do not permit the financing of those out-of-pocket closing costs.

Remember that no down payment does not mean the same thing as no money-out-of pocket and closing costs will apply on both FHA or USDA loans.  However, depending on your appraised value, a USDA home loan has the ability to finance those out-of-pocket costs into your loan which can be a another key benefit for first-time homebuyers.

How is Mortgage Insurance Calculated?

While a USDA loan does not technically have mortgage insurance, it still has what is called an annual fee that is calculated at .35% of the loan amount.  Further, although this fee is for the life of the loan term, because it is over over 2X lower than the FHA Mortgage Insurance Premium (“MIP”) this results in significantly lower borrowing costs.

Additionally, a USDA home loan has a one-time financed Guarantee Fee of 1%, which is also lower than the 1.75% FHA Upfront Mortgage Insurance Premium (UFMIP).

Additionally, it requires a monthly mortgage insurance premium (MIP) of .85% of your loan amount which last for the entire mortgage term when using less than 10% for down payment.

Example Scenario:

In summary, because many banks and lenders do not specialize in USDA loans, we commonly see first-time homebuyers only offered FHA or Conventional programs.

As you can see, it’s important for you to understand the differences and also to know that  we are here to help walk you through the process.

On top of being a top ranked USDA Approved Lender, my team is known for our overall government loan experience and our specific USDA loan expertise.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

As always, I want everyone to make it a great day, and I look forward to seeing you right here for the next tip of the week!

P.S. – You can download the USDA Blueprint for Success HERE

A USDA Loan Calculator for Florida, Texas, Tennessee, and Alabama is a critical tool because it helps keep your payment within budget when shopping for a home!

However, be aware! Many online USDA loan calculators are simply not designed to properly calculate USDA monthly payments. They may leave out important details such as property taxes, homeowner’s insurance, and any associated USDA fees.

As  and qualifying budgets are so critical, today’s topic is an important one because it will walk you through the steps on how to properly calculate a USDA monthly payment.

However, if you have a qualifying question or a transaction that is experiencing trouble, remember that I started Metroplex way back in 2001, so let our experience be a resource for you and take advantage of our Free Second Opinion Service (“SOS”) which can be a great way to help keep your mortgage approval headed in the right direction!

USDA Loan Calculator for Florida, Texas, Tennessee, and Alabama!

When using our USDA mortgage calculator,  it is important to remember the following:

1. Taxes and Insurance

These are two items that are sometimes overlooked but are a required part of the USDA loan qualifying process when determining qualifying ratios and monthly housing expenses.  If you are unsure about property tax estimates, a good tip is to check with your local property tax collector who can be a resource to help with questions.

2. Principal and Interest

The principal part of your payment goes towards paying down the loan balance while the interest is the cost paid for borrowing your loan amount. Remember interest rates change daily and multiple factors contribute to your interest rate calculation, so please call us if you have any specific rate and payment scenario questions.

3. The USDA Guarantee Fee and Monthly Premium

USDA home loans require 2 separate fees:

1. The USDA Guarantee Fee is a one time charge of 1.00% that is financed into the final loan amount.
2. While the USDA monthly premium of .35% is calculated on a monthly basis and is part of your total monthly housing expense.

Our USDA Loan Calculator

To help you in the process, we have created a USDA Mortgage Calculator. Let’s go over a quick example to help you get started:

1. Type in your purchase price
2. USDA Guaranteed loan terms will be for 30 years
   

   

3. Select your interest  rate (Remember that interest rates do change every day)
4. Input the estimated annual property taxes
5. Input the estimated annual homeowner’s insurance premium
   (Remember that property taxes  and insurance will vary from property to property)
6. Review your total estimated USDA monthly housing expense

Based on the numbers selected, our USDA Loan Calculator automatically factors both the USDA Guarantee Fee and the monthly premium into the housing expense estimate listed.

Feel free to use our specific USDA Loan Calculator. It is to the right if you are desktop, or scroll down to the bottom on mobile.

When it comes to government loan programs I always say, don’t be scared – be aware! Just call or email to discuss your scenario, and let us show you the “Metroplex” difference!  Learn what it means to have the strength and experience of a top ranked USDA Approved Lender working for your benefit!

(800)806-9836 Ext 280

SeanS@MPLX.org

Please note, that this calculator is for estimating purposes only, minimum credit conditions will apply on all loans, and this is not a Good Faith Estimate nor a commitment to lend. You can forward this video and share our USDA payment calculator with anyone who may benefit and remember to always call my team with questions.

Don’t forget to download our USDA Blueprint for Success educational resource.  This complimentary guide is designed to walk you through the USDA qualifying process step-by-step and is ideal for both homebuyers and Realtors alike.