A quick update to the report we shared September 29th involving USDA’s no-down-payment loans for homes in the Birmingham and Shelby Co. area…
While USDA has announced that its loans will continue beyond the earlier announced September 30th cutoff date, the Agency now says processing of all loans is frozen because of the federal government’s October 1st shutdown.
This also means that the extension beyond September 30th is on hold, as well, until Congress gets the government going again.
If you’re wanting to buy a home with no-down-payment financing in the meantime, we’d recommend contacting some of the Lenders we know in the area who have experience helping people obtain these kind of mortgages and who know about possible alternatives to USDA.
Self-employed people who are applying for loans for home purchases are likely to be affected by the shutdown, as well. That’s because Lenders won’t be able to get tax transmittals from the Internal Revenue Service to help verify income.
If you’re thinking of buying a home in several areas near Birmingham using 100% loan financing through the U.S. Department of Agriculture, you’ll have to go a different route.
Effective October 1st, homes in Chelsea, Calera, Moody and Pleasant Grove—areas that have been eligible for USDA’s no-down-payment funding—will no longer qualify.
Current loans that are already in USDA’s processing system as of October 1st will be honored.
The removal of these areas comes as a result of a decision that these communities are no longer considered rural.
USDA’s loan program has been very popular…Colleen and I have helped many first time Buyers over the years with purchasing a home using this financing.
This does not necessarily mean that you’re out of options if you’re trying to get a 100% financed loan for a home in these areas.
A new 100% conventional loan program has just been announced that may be a suitable alternative.
Offered by several area Lenders, the new loan program is currently available at a fixed rate of 4.75% to Buyers who qualify, and has reduced mortgage insurance. And, unlike USDA loans, this new loan is not restricted by area.
Here are a few Lenders in the area you can contact for more information:
First Federal Mortgage
Home Mortgage of America, Inc.
With two days left to spare, the government has decided not to allow a change to take effect that would have meant the removal of Calera as one of the communities eligible for no-down-payment home mortgage financing.
Congress has passed a resolution that preserves the areas where homes are eligible for USDA loans. The bill must be signed by the President before becoming law, but that is expected to happen shortly.
USDA loans are popular with many Buyers because they can be an affordable way of purchasing a home. The loans are available for properties in specific geographical areas designated by the government.
The decision by Congress means that the home we currently have listed in Calera will continue to be eligible for USDA’s no-down-payment financing:
If you want to buy a home in Birmingham’s Chelsea or Calera area using USDA no-down-payment financing, you may be wise to buy sooner, rather than later.
March 27th is the deadline by which earlier reports indicated that USDA would be dropping those areas from its list of eligibility.
But Gloria Jackson, a Lender with First Federal Mortgage in Birmingham who has spoken with USDA, says exactly what will happen by the end of the month remains unclear:
You can reach Gloria by calling 205-965-2167. Click here for her website and e-mail link…
If you’ve been thinking of buying a home in the Birmingham/Shelby Co. area using the popular USDA loan program which allows you to buy with no down payment, you may be fast running out of luck.
USDA says the program is projected to run out of money by the end of April, and no new funding is currently anticipated.
In Shelby County, USDA loans have been responsible for many people buying homes in areas like Calera and Montevallo, as well as across many other parts of Alabama.
Because USDA loans are so attractive to many buyers—mortgage insurance isn’t required, either—they have often meant the difference between whether a Buyer is able to purchase property.
Carmell Cantrell is a Loan Officer with First Federal Mortgage in Birmingham, and has been following what may be the demise of the program she and other Lenders have worked with extensively over the years.
USDA loans could be revived if Congress acts, but whether that will happen remains unknown. If the program does, in fact, end, it will stand as a major point in real estate sales history, signaling the end of the so-called easy credit era.
Click the player below to listen to our interview with Carmell now…
…or click here if you’d like to download and listen on your personal listening device.
So … what to do if you’ve been thinking of buying a home using USDA loan program?
Experts have two words to suggest: Start saving.