The USDA mortgage is excellent for when you want to buy a house and put nothing down on it. When you need to close on your house quickly, though, you might want to look at other options.
USDA mortgages take longer to get approved as compared to other loans.
There’s a good reason, too — USDA mortgages are actually approved twice. Once by your lender, and once by the U.S. Department of Agriculture, which personally reviews each loan application before signing off.
This double sign-off procedure is unique to the USDA.
Other mortgage-related government agencies give lenders the right to do a final sign-off on a home loan, which helps gets things done faster. The USDA, by contrast, isn’t as concerned with your time.
When you get a USDA loan, the double-approval can add two weeks to your home buying journey, give or take a few days. The time of year will affect the speed of approval, and so will the state in which you’re buying (because some USDA offices process files more quickly than others).
However, two weeks is just an estimate. Getting you sign-off doesn’t always go according to plan.
Government shutdowns, for example, slow USDA approvals because the U.S. Department of Agriculture is a federal agency. During a shutdown, USDA loan processing stops overnight and remains that way until the government re-opens.
Also, the U.S. Department of Agriculture can run out of money.
Each year, the government appropriates funds to the USDA for its mortgages and, because the government’s fiscal year runs October 1 through September 30, by the time September rolls around, the USDA can be sometimes short on cash — or completely out of cash! — until the next fiscal year begins in October.
No cash, no approval!
So, when you’re buying a house and using USDA loans to finance it, do a bit of advance planning. The sooner you start, the less stress you’ll feel.
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