There are two basic types of USDA Loan Products, the direct and the indirect. A direct USDA loan is a low income loan with really low interest rates which a purchase is funded directly from USDA. The direct USDA loan can be a very slow and painful process as the buyer and seller at the mercy of the funding of the program, money comes and goes through this program and often times a closing can be delayed for months.
Today however, we are going to talk about an indirect USDA loan which is works very similarly to a standard loan. What makes a USDA loan appealing to many is that you can finance 100% of the purchase price. Now that does not mean you can buy a home and not have it cost you anything. There are costs associated with purchasing a home which typically run just from just under $2,000 to about $5,000 on a $150,000 purchase. The difference comes in whether or not the seller will agree to pay your closing costs.
So, what should you expect to need the funds for and when do you need them – the list below will help you understand what the costs of purchasing a Bend home with a USDA loan is;
- Earnest Money – a typical earnest money for a home that qualifies for USDA is between $500 and $1000 these funds do go towards the purchase of the property and sometimes these funds can be refunded at the time of closing but not all the time. These funds will be cashed by the title company upon acceptance and they will sit in escrow throughout the purchase process.
- Home Inspection, most home inspections run under $500 and most home inspectors want to be paid at the time of the inspection. The home inspection is typically done within 10 business days of the seller accepting your offer.
- Appraisal, the appraisal is ordered by your lender and your lender will collect the fee from you prior to ordering the appraisal. The appraisal is generally ordered about the same time as the home inspection happens. A typical appraisal will cost about $500 to $600.
- If your seller does not pay closing costs there will be closing costs at the time you close the deal which will be 30 to 45 days if all goes well after your seller accepted your offer. These costs can and should be calculated at the time you write your offer, although they will be an estimate they should be pretty close.
Not all homes in Bend qualify for the USDA loan, most of Bend in fact does not. However there are homes that do, these homes are outside the city limits generally. Deschutes River Woods is one neighborhood that does typically qualify for a USDA loan.