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7 On Your Side: Money for Home Buyers


Last Edited: Monday, 24 Nov 2008, 10:28 PM CST
Created: Monday, 24 Nov 2008, 10:28 PM CST
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AUSTIN — The ups and downs of today’s economy are making it difficult for some people to purchase a home, but some little-known and seldom-used tricks may help you get the house deal of a lifetime.

There’s no such thing as free money, but knowing how to take advantage of a good home loan these days is almost as sweet.

Jim Finegan of Taylor gave us a tour of his new two story, four bedroom house.

“It was almost like we could just move in here and keep going with our current budget, which was great for us,” Finegan said.

Finegan is using a USDA loan to purchase the house. That’s right. It’s a loan sponsored by the Department of Agriculture. USDA loans are nothing new but mortgage professionals like John McClellan say not many people know about them.

“The USDA loan is a low fixed rate with no mortgage insurance, no monthly mortgage insurance associated with it,” McClellan said.

No mortgage insurance means a borrower can save an extra $75 to $250 a month. Plus, it’s a zero down loan backed by the federal government.

“Really neat, especially for first-time homebuyers out there who want something affordable,” McClellan said.

The USDA loans come with 30 year fixed rates and unlike subprime loans with adjustable rates that got so many borrowers into financial trouble, USDA borrowers must prove they’ve had two years of continuous employment and prove they make enough money to match the house payment.

“With this loan and moving this house my actually monthly payment, including all of my taxes and escrow is only $50 a month more than what I’m paying for rent,” Finegan said.

But there are rules that you have to follow if you want to qualify for one of these loans. One of the big issues is the location of the house that you want to buy. The loans are geographically restrictive.

Finegan now lives in a part of Taylor that was recently farmland.

Cities with more than 25,000 people don’t qualify.

“If you want to live inside of Austin, you’re probably gonna have a hard time finding an area that qualifies for the USDA loan,” Finegan said.

Meantime, a homebuyer may also consider using gift money for a down payment and closing costs. That’s where an FHA gifting program can help.

“So if everybody wants to get together on your wedding day and give you money to put down on a home, I think that’s a great way to do it,” McClellan said.

You can bypass the blender and other traditional wedding gifts for cash for a house. However, be prepared to show the government a paper trail.

“They want to know where the funds come from,” McClellan said. “They want a source that the person giving the gift actually had the funds to give.”

You can learn more about USDA loans and gift programs by logging on to the following links:

www.usdanow.com
http://www.fha-guidelines.com/fha_gift_programs.htm

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