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USDA Rural Development Loan (home loan) - Is there a catch?


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Does anyone have experience with these? There are two types available: Direct or Guaranteed. The Guaranteed has a fee of 3.5%, but you deal with the bank rather than the government. (I think there is no money for this available right now, but there is for the Direct.)

 

I am not finding any "Terms." If one's income goes up, are you able to keep the loan? The direct loan paperwork has you submitting bank account numbers and everything. Maybe we'd be better off paying the extra and getting something more "conventional" through the Guaranteed loan.

 

Either loan seems like a great option for getting a home loan with low interest, with no downpayment, no pre-payment penalty (unless the bank charges it for a Guaranteed loan), no private mortgage insurance, etc.

 

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

 

Anything I'm missing? Is the paperwork only needed as you apply or do you have to keep proving income, etc. each year? (I know you do if you get subsidy.) Is there a "catch"?

 

Here is one discussion:

http://www.homesteadingtoday.com/showthread.php?t=343492

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