Rural Development
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What is Rural Development Loan? 

First off; RD (Rural Development) is actually a "quasi" Grant that Insures 100% payment of a loan should the buyer default. This "Loan" is provided by the Department of Agriculture. When a loan is "Going RD", here is how it works:

1. Every lender is different and the borrower (home buyer) MUST meet the "Lender Requirements".  (Often Lender is more stringent than Rural Development)

2. Upon Underwriter approval of the loan, the documents are then submitted to RD Underwriting for "RD Commitment". 

       *Rural Development can often run behind on processing. This will slow up the process*

       *Rural Development will review appraisal, Home Inspection and ALL Documents. RD can then ask for repairs to be done as a contingency to approval* if they feel there is an issue with an item.

3. Upon Rural Development Commitment you are then ready to go to Closing.

Rural Development Direct Loan 

This is a mortgage loan provided by US Department of Agriculture. This loan and all processing is handled by USDA. Through this loan loan terms can extend out beyond 30 years. With this loan the USDA can be a little more flexible in lending guidelines. What you need to think about with this loan is "Your rate is fixed, however, extended term over 30 years is how they subsidize the loan. If your income increases the term of your loan can be shortend which in turn raises your mortgage payment."

 

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