If you’re familiar with the U.S housing market or have purchased or rented a few different homes throughout your lifetime, chances are that you’re familiar with USDA loans.
Throughout the years, USDA loans have changed the lives of millions of Americans by offering an attractive, attainable, and effective form of financial assistance that affords anyone the opportunity to become a homeowner. In spite of how helpful USDA loans can be, however, many American homeowners don’t know enough about them.
Should you find yourself with an insatiable urge to settle down in a rural Californian community or the desire to venture into the ever-expansive U.S real estate market, this article will help you know about USDA loans.
What is a USDA loan, and what can it be used for?
A USDA Loan is a form of financial assistance offered by the United States Department of Agriculture that can be used to purchase, renovate, or refinance any property in specific rural communities.
Applicable in either single-family or multi-family home options, preservation projects, and community facilities, USDA loans can be used for a wide range of purposes that essentially benefit the less-populated areas in the country. According to the U.S Department of Agriculture, USDA loans have been designed to “promote homeownership in underserved areas” and are only available for low to moderate-income earners to keep distribution equal and fair.
Generally, USDA loans can be availed of through the U.S Department of Agriculture or through any accredited loan provider or mortgage broker!
The advantages and disadvantages of USDA loans
Thanks to years of proper planning and constant updates, USDA loans are more than capable of serving a variety of needs that potential US homeowners may have when eyeing developments in rural communities. It is worth noting, however, that USDA loans also come with a set of advantages and disadvantages that affect the entire experience as a whole.
Let’s go over the pros and cons of USDA loans in greater detail:
There are several key pros that are unique to USDA loans which have allowed them to earn the favor of millions of aspiring homeowners in the U.S, such as:
1. No need for a downpayment
As opposed to costly FHA loans that require homeowners to shell out a significant amount of cash once they avail of it, USDA Loans don’t require a downpayment. This is a key advantage that makes them one of the most affordable options on the market.
2. Lower costs
If you’ve always had difficulty with saving money or are low on cash but are in dire need of a roof over your head, then a USDA loan is an option that’s definitely worth going for. Aside from the fact that USDA loans don’t require a downpayment to be availed of, they also have significantly-lower interest rates, which manifest in the form of lower monthly payments.
3. The ability to finance closing costs
With the right planning, it will be much easier to bundle up costly closing costs or expenses into your entire loan balance. This means that you won’t have to shell out a significant amount of money on your total upfront expenses when buying a home.
Similar to any option in the housing and finance industries, USDA loans also come with a few cons that you should know before getting in touch with an accredited loan provider. Here are a few of them:
1. Limited availability
Given the sheer level of demand for affordable and beneficial home loans in the market, the number of USDA Loans is quite limited as opposed to other options on the market. For this reason, you will have to act fast!
2. Fewer options
Another key con to take note of is that there are fewer available certified loan providers to choose from. This essentially makes it harder to find an accredited carrier of USDA loans in your area.
With the use of a USDA Loan, you’ll be able to close the gap between you and your goal of owning a property in various rural developments across the country.
If you’re looking for a mortgage broker in Los Angeles to help you get a USDA loan, give us a call on (818) 601-2231. We’re happy to help!