Closing a USDA Home Loan During Gov Shutdown

If you are looking at houses in North Carolina, or you are under contract to purchase a home here, you might have a problem with USDA Home Loan financing… because all of the USDA Underwriters are furloughed, and it doesn’t look like they are coming back soon. Closing a USDA Home Loan during the Government Shutdown of 2019, is virtually impossible.

There’s a process for receiving a USDA Home Loan – and it’s not one our company set up. USDA sets the guidelines for ALL companies issuing USDA Home Loans. First your loan is sent through the Automated Underwriting System for USDA called GUS.  That system gives us the first set of Underwriting “stipulations” or requests.

Once we have all of the items required on the Automated Approval – we send that documentation to our Bank Underwriter to review.  Depending on what they think when reviewing your file, they could ask us for another set of documentation.

From there, your loan is sent to the NC USDA Home Loan Office, where another Underwriter looks at the file – and gives us a list of documentation THEY would like to see for clarification. No matter where you apply – here, Wells Fargo, Quicken Loans – we all send files directly to USDA for THEIR Underwriters to review... and they are closed.

TIME: Closing a USDA Home Loan During The Government Shutdown

Most of the folks we are helping with a USDA Home Loan are looking for a mortgage in a Rural Setting, that does not require a down payment. USDA Loans offer the cheapest interest rates, with the lowest “PMI.” The USDA Home Loan is NOT just for First Time Home Buyers.

There are other programs available in NC that do not require a down payment, and do not require you to be a first time home buyer. We just switched a borrower today to one… it’s going to cost them $43 a month more, but they are getting to purchase their Dream Home NOW. We don’t have any way of knowing how long this Government Shutdown will last! 

Just stating the obvious here, but you will not be able to close a USDA Home Loan in NC, until the Government is off of furlough, AND the Underwriters are caught up enough to see your file.  USDA Home Loan Underwriters in NC were seeing files submitted on December 18th, when they were furloughed on the 21st of December, 2018.

THOSE files will be seen and reviewed first – everybody else will remain “in line” to be seen. If this drags on for MONTHS – and we end up in Spring – it could take more than 15 days to have a file underwritten by USDA Underwriters in NC.

Options: Closing a USDA Home Loan During The Government Shutdown

The are options for those who are closing a USDA Home Loan during the Government Shutdown… besides just waiting for Washington to figure it out, and open the USDA Offices. NC Housing Finance Agency, for instance, offers five different mortgage products that provide down payment assistance.

They have slightly higher mortgage rates, but you don’t need a down payment, and after a few years (depends on the product), the down payment is forgiven. There are no monthly payments on this forgivable loan, and there’s no interest accruing on the money.

There are also other programs available from Municipalities in NC, like Gastonia and High Point offering forgivable loans. These programs all have income caps (just like NC USDA Home Loans). The minimum credit scores for most of these programs is 640.

MANY People send us messages saying:

“I have been approved for a FHA Loan, how do I get my Grant for the down payment??”

These NC Housing Programs, along with the The First Time Home Buyer Grants are provided at the time of closing, there’s some paper work involved, the loan has additional Underwriting time since it has to go to the Agency to get approved. Unlike USDA Home Loans, the NC Housing Finance Agency is OPEN – and it generally only takes 48 to 72 hours to get the loan fully approved.

The NC Housing Finance Agency “Grants” and forgivable loans can cover down payment, and closing costs.  You can use the grants for any type of mortgage loan, and each mortgage program has it’s own “quirks” or requirements.  So again, you can use these programs to get a FHA Mortgage, VA Mortgage Loan or a Conventional Loan

• The Grants can be used in “conjunction” with a Seller paying Closing Costs (for instance) and / or a Gift you might receive
• The Grants CAN be used for Down Payment
• The First Time Home Buyer Grants can also be used to pay for closing costs, or to cover Mortgage Insurance, PMI or a VA Funding Fee

With these forgivable loans and grant programs – as long as you meet the requirements… meaning you have less than $87,500 a year gross income (before taxes), your debt to income ratios are less than 45%, and you are buying a house in NC… we’re good.

HOW LONG DOES IT TAKE TO SWITCH A MORTGAGE TO A NEW PROGRAM

If you are working with a Lender that does not offer these programs, call us. We are definitely on that list with NCHFA, so dial 919 649 5058, and complete a mortgage loan application.  You can do that on this site (see the green button on the right?), or you can call us, or you can come in.  That part doesn’t matter.

We will need to order a new appraisal, or have the appraisal that was done transferred to us. Other than that we might need updated Bank Statements or pay stubs. Our internal Underwriting times are 24 hours. So once we have your documentation, we can close pretty quickly! We took a contract on Monday, that is closing on February 1st – with the Holiday next week, that’s a 12 business day closing!

This is a tough time with the Government Shutdown. Tough. We have friends that are USDA Home Loan Underwriters, and they hate it! If you are trying to buy a house, and you are stuck – please call Steve and Eleanor Thorne. We want to help with Closing a USDA Home Loan during the Government Shutdown, please call us at 919 649 5058. Connect with us on Facebook or Google + or Twitter!