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USDA revamps housing loan program

The changes are intended to make more homebuyers eligible for federal assistance


The United States Department of Agriculture (USDA) recently announced major changes to the Single Family Housing Guaranteed Loan Program.

The intent is to create more local jobs and expand eligibility of local home buyers’ ability to purchase a home.

“The changes will add significant capital to rural areas and give rural Americans more opportunities to make financing decisions that lay the groundwork for the future prosperity of their families,” said U.S. Department of Agriculture Secretary Tom Vilsack.

Wendy Pangle, loan officer at Evergreen Home Loans in Prineville, said that changes to the program are simply trying to make it easier for potential home buyers to participate.

“I really don’t know yet how many more home buyers will be eligible for these loans,” she said, “but anything that allows more people to get into the program is wonderful.”

According to the USDA, since 2009, more than 700,000 rural residents have bought homes with mortgages guaranteed by USDA Rural Development and the majority of those homes were financed with loans underwritten through the program.

Taking effect in September, 2014, the announcement designates small community banks and credit unions, currently unable to participate, as eligible to provide loans through the program.

Also, for the first time, borrowers will be able to select home loan terms shorter than 30 years, resulting in significant cost savings for those who qualify for higher payments and want to pay off their loan faster with less interest.

Pangle sees a more important change that she feels will be attractive to Crook County residents.

“The USDA is going to allow those that already have a non-USDA loan residence to purchase another home with 100 percent financing and sell the other one later,” she explained. “Currently, if you own a residence within 75 miles you can’t buy another house using this program.”

Pangle feels that will offer options to families that live in a home that has become too small for their growing family.

“There are people who have outgrown their home but find it hard to sell,” she said. “It could make it easier for a lot of people.”

Although guidelines for the newly announced program are not yet available, Pangle explained that current eligibility for a family of four is limited to an income of $74,000. While there are no loan amount limits on rural housing, eligibility is determined by income and debt ratios.

“As of this minute,” said Pangle, “the system accepts a debt ratio of 36 percent or less for house payments and up to 45 percent total debt ratio for all debt.”

Additionally, lenders will be able to consider a home’s energy efficiency as a compensating factor when underwriting mortgage applications.

Lenders and borrowers will also no longer be required to initiate separate construction and permanent loans for new home construction. There will be one closing for one loan, to be known as a construction-to-permanent loan.

For Pangle, the announcement is, potentially, great news for Crook County.

“We would love to see new construction here,” she said with a caveat. “It is still a year out, and who knows what will happen from now till then. It is all about timing.”




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