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Ask Dave

Stay away from it

Does Carl want to get involved with a subsidized mortgage loan? Dave doesn't think so, and he explains why during this call.

QUESTION: Carl and his wife are debt-free. They have their emergency fund in place, and they are looking to buy a home. Recently, they were approved by a bank for a USDA Rural Development Loan. Dave doesn’t like this idea, and he suggests they find a traditional home loan.

ANSWER: That’s a horrible loan. I’d stay completely away from it. It’s a subsidized loan, and they subsidize based on your income. The amount they pay on your behalf is recouped upon a refinance or sale with a vengeance.

No, I’d do a traditional, conventional mortgage loan. Do not get into a USDA subsidized loan. You can’t refinance it, and the pre-payment penalties are horrendous. It’s designed to get people into a house, who really should not be getting into a house. If that’s the only way you qualify, then you’re not ready to buy a home.

I think you two are ready. Your banker just gave you some bad advice.

 

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Buy a House with an Agent Who Serves, Not Sells.

You need an agent who cares more about you than their commission check.
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