USDA Direct w/650+ midscore

[MelodyT]

gabbyraja:

 

I am sorry you're having such a hard time with your office. I can assure you it is worth it in the end. I am a bit further in the process than you are and I can tell you from experience you will continue to wait. The entire process is VERY slow. Each step you'll be waiting as you have been. Right now everything is done and I still have to wait 3 weeks to close. Every single inspection has been done, everything signed. The only thing left is title and they already have the preliminary done this morning. We had the certificate before we put in an offer. Our offer was submitted February 2nd. We'll be closing almost two months after putting in our offer. USDA is a great program but they move at their own pace no matter what you are going through or situation. I am very blessed and the guy running the program at my office is VERY nice and let's me email him almost daily asking for updates without getting mean about it.

 

Keep your head up. The process is brutal but in the end it will be worth it.

[gabbyraja]

APPROVED!!!!! We finally got the certificate at the minute the office closed today. The sellers of the house on which we put in an offer took the competing offer. We were kind of relieved. We'd been trying to avoid staying in our apartment the extra month and paying double rent, so we went for the thing currently on the market that made most sense, but the decision has been made for us. Some stress off our shoulders, nothing we can do. This house had no basement and only 1acre. So, now we'll look for something with the 2-5 acres we want and we have at least 3 more weeks for it to come on the market. Wish us luck!

Edited March 13, 2012 by gabbyraja

[gabbyraja]

Well, you haven't heard anything from me in a while, because there is no progress. Now that we have the certificate we are learning that everything on the market has some kind of limitation that makes it ineligible. SUUUUUUUUUUUUUUPER Frustrating! The first alternative we liked was "300 sq feet too large which I would not consider modest, even with your family size." Ok, next house had taxes that were too high. Next house has too much land. And everything else we liked had something else wrong with it. The too much land house is the one we've offered on today. She took a quick glance at the MLS and determined too much land. My realtor assures us the land is not divisible according to the area the house is in, and he'll fight like a pitbull for us. We'll see how that turns out.

 

Just as dh was signing the offer an email came in from the sellers' agent on the too high taxes house. In order to afford the house, with such high taxes, they would have to lower the price on the house by 30 grand. We assumed they would never go for it and withdrew our offer. However, they will do some kind of special deal with us where they offer a land contract on the adjacent 1 acre to make up the difference in price... We would have to sign a letter of intent until the deal closes on the house (due to the USDA's stipulation of no new debt until the house closes). But the land contract is for a low price, 2% interest (not bad at all) and a 10 yr balloon. It would increase our housing costs to what we're currently paying for rent (and have been paying for rent for 2.5 years), so we would not have any difficulty making the payments, but we were looking forward to some more savings after buying whichever house... We're strongly considering it. If the seller on the offered house doesn't want to deal, we'll go for the LC. The place was super cool. 1500 sq ft with a full finished basement, 5 bedrooms, 2 fireplaces with inserts, on a small lake, 4 acres JUST outside the city, totally secluded yet close to everything... But the offer house is 1846 above ground, 900 below, and we have plans to convert the 2.5 car garage to a family/sun room. There's a pole barn just off the house we can use for a garage. It's on 8.51 acres, fruit trees, creek on the side of the property, 15 minutes from dh's work... And LOW taxes. Cross your fingers for us that one of these deals works out, and we're not thwarted on both by the USDA. PLEASE!

[gabbyraja]

Woohoo! Offer accepted! Almost 10% under asking price and no counter, sweet! Now, we just have to get it past the USDA. Fingers crossed just a little while longer guys.

[gabbyraja]

The USDA reps checked out the house last week and determined it to be a good house. They also determined us to be an "exceptionally large family" requiring a larger than normal house. However, the additional documentation required is proving to be difficult. This house was somebody's "come up from Florida for 1 week in the summer" house, so the 12 months' utility bills is questionable. And we need to prove the land is not dividible, but the township from which to get that info is only open for 4 hours on Tues and 4 hours on Thur each week. Hopefully we'll have enough info by the EOB tomorrow to send on to them and get this out to the state director's office for approval on Wed.

 

In addition we have to 'provide the necessary information so that an exception can be requested from the State Office. As discussed your request must “provide actual utility costs for the last 12 months. Also you must address the age and condition of the home, and the ability to pay the higher costs associated with the larger home.”' Thing is, 1. the house is not larger than what we are renting, and the costs can not POSSIBLY be higher than what we are paying now, so we're good to prove our ability to pay the "higher costs" with our current utility bills, and 2. I have NO idea what "address the age and condition of the home" means. It was built in 1986, which is not old, and not new, so... And they said it was a very nice house in good condition when they checked it out, so...? At least this handler is MUCH more helpful than the last one we were trying to work with. He's just very busy, so slow to respond.

 

Also, for those of you confused by the sq footage limitation, here is the link to the USDA document our "handler" (as I'm calling him) sent us with the "new" requirements about sq footage to be considered "modest." Apparently this only went into effect in November of last year, but is all across the country, not just in MI. https://docs.google.com/open?id=0B4SITpxWT2dfT19EbUo0dkZRZHl6SlZjRXZuUTdPUQ

[gabbyraja]

I got to actually talk to him on the phone today to get my questions answered. He said essentially the letter is to show that we've actually looked at the costs, we have thought about whether or not we really can afford them, and this is our plan to be able to afford them. He also said it will not be analyzed with a fine tooth comb or anything, it's essentially an exercise for ourselves. Meaning they will look at it and put it in our file. Yay! So, here's the gist of the letter I up together. Will "you", the theoretical reader I imagine is still reading this thread but not responding, read my letter, ignoring fonts, grammar, etc because I copy/pasted a lot and will polish it tomorrow when I get the seller's utility numbers, and let me know if there is anything else you would address? The first paragraph is age and condition ( he specifically told me this was the info they wanted), the second paragraph addresses our current expenditures as they relate to the sellers' (the part iwill add Tomorrow when i get their numbers) and how we will cover the expenses in the new house, the third paragraph addresses the money we will save by buying the house.

 

"The house at XX road was built in 1986.  It has been upgraded with an environmentally efficient high efficiency (95%+) propane furnace, a lopi wood stove for supplemental heat, and electronic ceiling fans for heat circulation. In fact, Energy Efficiency was planned for in the house's very construction, built with 2" x 6" walls containing R/38 insulation, ceilings containing R/50  insulation, and Anderson high performance casement windows.

 

Our current rental townhome is 1452 square feet of finished space, with a 700 square foot partially finished basement which we do heat and cool. We have paid almost $3,000 in the past 12 months for electricity in this 2,152 square foot space. Heat has cost us only $800 (amounting to only about 1 tank of propane), but water and sewer cost us $1080. In this home we would completely eliminate the water/sewer bill due to it having the well and septic, and we plan to save the money instead for well and septic maintenance and repair. We understand that septic should be pumped every 2-3 years, wells should be tested periodically, and both require repair and/or replacement in the thousands of dollars at some point in their lifetimes. 

 

In addition to paying less for utilities in this home, the house payment alone will be $200 per month lower than our current rent. We will also eliminate the $360 per year we currently pay for parking and garage fees, and $300 per year in rental insurance."

 

Thank you for the anticipated advice, imaginary reader.

[MelodyT]

I think you hit every point as needed. Great letter. Good luck.

[gabbyraja]

Final verdict: Too much land, house denied. Dealing with the USDA and their incompetent people, their extremely restrictive rules, and their red tape has been the most difficult, frustrating and bewildering experience of my life. I've developed a frequent eye tick that I can't seem to get rid of and I've gained 30 pounds since this started! The sellers were FURIOUS and called the USDA rep to ask him WTF? He admitted to them that if it had had under 4 acres he would have let it pass. 3 emails, 2 phone conversations and a long face-to-face meeting with him and he wouldn't give us a straight answer/definite number. I kept saying it felt like a test in highschool. You ask the teacher a clarifying question, and he beats around the bush, because he can't TELL you the answer, you're supposed to know...

 

So, we went back to the very first house we saw. It isn't big enough as is, but we'd been planning on converting garage space in the last couple of houses we offered on, so we reevaluated if we could do this here and it would work out great. It's 1716 sq feet, 2.69 acres. Fits all of their requirements, no explanatory letter needed. It's 15 minutes out from the city, our distance limit for acceptability. It also has a pole barn we will be converting to a studio in-law apartment for my mother. Woohoo! It has a bad well and septic, we learned after they'd been inspected, but seller will repair/replace, so we're good there. The regular inspection turned out great. Very few problems, and they are all rather low-cost. So, we believe she will fix them as well. We're getting a little excited, at last. It might actually work this time. We MIGHT be in a house in about a month. Keeping fingers crossed...

[gabbyraja]

Oh My GAWD! Why does it have to be SO hard to just buy a house?! Now the seller says the first septic inspector was wrong. They got a new inspection and the new inspector says it's fine. Big red flags to me. The county makes the final determination, but it's still worrying the crap out of me. Because, despite saying she'd do whatever to get it sold she no says she doesn't have enough money to do a whole new septic so if they say it needs a whole new septic we have to walk away. We were holding off on doing our inspection until she agreed to replace the septic so that we wouldn't be out for the inspection. Now we'll be out the $410 for inspection and >$500 for the appraisal if we have to walk away. >

 

Plus, in order to do the one little fix it takes they have to remove the above-ground pool to get at the holding tank under the pool. She won't have it reassembled afterward. One of the reasons I consented to this house that is too small and really meets none of our needs as-is, is that it had a ready-to-go pool for the kids! It would probably cost more to get someone to come out and figure out how to put it back up then it would to just buy a new one! I'm SO POed right now! We're talking about >$150, 000 houses here. They're not total pieces of crap. It shouldn't be so hard to find something acceptable. And truthfully, it wouldn't be if we didn't have to do USDA. fitting them into USDA rules ruled out our top 10 choices in our price range.

 

eta: crap houses in our area are like 60 grand and under. In MI 150 is pretty nice, actually. Usually.

Edited May 3, 2012 by gabbyraja

[twizzle]

Because, despite saying she'd do whatever to get it sold she no says she doesn't have enough money to do a whole new septic so if they say it needs a whole new septic we have to walk away.

 

Plus, in order to do the one little fix it takes they have to remove the above-ground pool to get at the holding tank under the pool. She won't have it reassembled afterward.

 

Two things: our house, it needed a new septic as well. The funds to pay for it were paid out to the septic company at closing. I don't know if this is standard, but I'd be asking the LO and realtor? We also sold a house, it needed a leach field, and same issue-it was paid out at closing. No one ever paid out of pocket for these repairs? All receipts were turned in and then paid out?

 

Second, the pool. Is it in the contract? If you bought the property w the pool, she has to compensate you or replace it, I believe. But I'm sure someone more knowledgeable will be able to answer...

Edited May 4, 2012 by twizzle

[gabbyraja]

The assertion is that she is just barely making what she owes on the mortgage, so no funds would be left to pay out at close for the septic. The pool was not specifically mentioned int he contract, but it is certainly in the disclosures and on the MLS. Yes, she has to provide the pool or replace. However, I don't know if they might try to get away with: disassembled pool parts=pool. With the way she said she will not reassemble it (which would cost less than getting us a new pool!), I'm assuming that's what she's up to. Sigh... We've been doing quite a lot of looking into the whole water table thing this week. The place may not only need a new septic, but a whole system of drainage tiles through the whole property in order to use it like we want to. We have had a couple of weeks of rain (it is April) so we went out to check out the ground today. In one spot in the back there's about 6 inches of standing water covering about 6-10 foot stretch, and all along one side of the property there is standing water, about 6 inches wide. The whole area, and I walked it all, was WET. Not just wet, but squelching water up around my feet. I'm worried this thing is not going to happen, and there is literally nothing else that will work for us on the market. So, we cross our fingers that our apartment complex lets us renew our lease next week when it's up (we lie on our lease each time because we had a new baby after moving in, which put us at one too many individuals to legally live here, and we think they are on to us and itching to evict us for it), and continue to pay $400 more than our mortgage would be, plus the 2-months-rent fee to break the lease when we finally do find ANYTHING acceptable to which to move.

[Repairerer]

I don't have clue one about septic tanks (or rural areas for that matter) but is it considered okay to put something heavy like an above ground pool right on top of a septic tank? And with so much land why would they?

[twizzle]

I don't have clue one about septic tanks (or rural areas for that matter) but is it considered okay to put something heavy like an above ground pool right on top of a septic tank? And with so much land why would they?

 

It's definitely not okay. Not on the septic or leach. But I'm guessing they didn't know this (or didn't care?). I imagine they put it there because it's flat. They would have leveled the area when they installed the system. But who knows.

 

Sorry to hear about the complications, gabbyraja. Hopefully it works out.

Edited May 8, 2012 by twizzle

[gabbyraja]

Actually, at this point, we're just pretty much looking for a good reason to cancel the contract. Sure seems it's not meant to be, like the Universe is telling us something. We're hoping the fact that she sold us a pool and the house will now not have a pool is a good enough reason. Otherwise we'll have to brainstorm. We want to revisit an option we passed up earlier thinking we couldn't afford it, but was perfect for us. But we're also looking at a few more houses today that MIGHT be possibilities. Keep sending good vibes this way, guys.

[gabbyraja]

Septic failed and we can get out of the contract no problem. Problem is, the old option is not an option at all, the one we saw this weekend is no tacceptable to the USDA because there are 3 houses on the shared drive and they will only allow 2. Dumbest rule we've encountered yet. Nothing left to do now but wait for something good to come on the market. 4 months of duds so far makes me think it'll probably be this time next yr before we have to move.

[gabbyraja]

We found one last week and are under contract. 1380sq feet ranch, but with almost 1000 finished sq ft in the basement, including for grandma the fourth bed, full bath, and room for a kitchenette. That finished sq ftage in the basement brings it to 2200, making it too big for USDA rules, but I don't think by so much that we would be rejected, due to our "extremely large family size". It has an acre and a half, but possibilities to add adjoining land in the future. We also plan to convert the garage to the living room (adding 600-800 more sq ft), and the change the current living room to dining room, all open to each other and the kitchen. The utilities are MUCH lower than our current utilities, so the letter they want will work, as long as we can get it by the local guy. He should get out there at some point this week to check it out, so fingers are crossed, as they have been for months. Then we can get our inspection and finally get on with moving into a house!

Edited May 28, 2012 by gabbyraja

[gabbyraja]

In case anyone is still following this thread:

 

We found the stumbling block, as we always do. The taxes are just high enough that, along with the lowest insurance quote I've been able to get (and I've checked everywhere I can think of) the monthly payment would be $16 higher than the max payment they will allow. The USDA guy hasn't told us yet that the deal is dead, and I'm playing every angle I can, but I'm bracing my heart against having to start all over again. Sigh...:_(

Edited May 31, 2012 by gabbyraja

[major pain]

does both the direct and guaranteed program have the same restrictions?

[gabbyraja]

No, guaranteed has few restrictions. It's basically the same as an FHA loan. I think if we weren't such a large family, and we weren't wanting to homestead so wanting land and privacy, we wouldn't be having such a hard time.

Edited May 31, 2012 by gabbyraja

[Credithater]

Why not go guaranteed..

[gabbyraja]

Guaranteed doesn't subsidize your interest rate, so at our income level we would qualify for half the amount.

[gabbyraja]

Approved! USDA says the house is good, but has some issue with a path next to the driveway that is used by kids to access the school behind the house. "Encroachment". Oh well, I'm enjoying this little victory while I can. He said the $16 on the insurance was not an issue, because we had a little breathing room based on dh's income being high enough to allow a tiny stretch. Dh got overtime and a bonus last week, so the updated pay stubs they want will look good and the utilization will look even better than when he applied. Inspection is on Monday. Fingers crossed!

Edited May 31, 2012 by gabbyraja

[gabbyraja]

We had our inspection today. The house came out pretty great. It has a few damaged roof shingles and the flashing around the chimney need to be replaced. That's it as far as necessary repairs. However, the inspector said the roof was within 5 yrs of needing to be replaced, so we're going to ask the seller to do it. Do I think they will do the whole thing? No. But, if they'll do anything that's great for us. Fingers still crossed. We still have the encroachment thing to deal with, and still have to get through undewriting...

[Repairerer]

Good luck!

[gabbyraja]

Turns out the USDA interpreted the inspection report wrong. The roof does not need to be replaced. Yay! And the seller said the school does have some paperwork on the easement, so she's trying to get her hands on that and that and a mortgage survey SHOULD satisfy the USDA on the "encroachment." So, appraisal should be this week, then seller can fix the few tiny things found in the inspection, then we only have underwriting... This is closer than we've been yet!