First National Mortgage Services LLC

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Contact Information
Pamela Snell -Harris, NMLS #445838
Sr. Mortgage Specialist
Direct: (931) 766-3836
Cell: (931) 242-7004
Email: Send Email
FAQs for Home Buyers


FAQs by Home Buyers
United States Department of Agriculture
Rural Development Home Loan Program
Zero Down Program
Frequently Asked Questions by Home Buyers
General Questions
Q      There are a lot of home loan programs available today. Why should I choose this one?
A       A good lender will show you all your options. You should consider this loan if you are searching for a home loan with the lowest possible monthly payment and the least amount of cash out of pocket.
Q  How much is the down payment?
A   Zero Down Payment
Q      This USDA home loan program sounds too good to be true. What are the catches?
A       There are two catches and hold on tight for the first one. You can make too much money. (How often do you hear that one?) Secondly, it is not available everywhere.
How much money you can make is based on the three things:
  1. The county in which you plan to reside
  2. How many people live in your household
  3. The total amount of income from all income producers in the household 
Here are a couple of links for income limitations for Tennessee.
  1. Income Limits for Tennessee (Summary)
  2. Income Limits for Tennessee (In unbelievably great detail) 
The home loan program is not available everywhere. The USDA has devised eligible and ineligible areas. Here are two web links that help you determine whether or not the home you want to buy is eligible.
1.      Property Eligibility by Address (Type in the address of the property you want to buy to determine if it is eligible or not.)
2.      Tennessee Housing Ineligible Area Maps by County (If the County in which you want to purchase a home is not listed here, then the property you want is eligible.)
This information can be confusing....Just call or email me.
Q      It appears that I do indeed make too much money to qualify for this program. Do you have other no-down payment programs from which to choose?
A       Yes we do. We have other programs to choose from. In each case we look for the one that provides you with lowest payment and the least cash out of pocket.
Q      It appears that the home I want to buy is not in an USDA eligible area. Do you have an alternative program?
A       Yes we do. Again, we have other programs to choose from.
Q      Can I have owned a home before?
A       Yes.
Q      I thought this was a first time home buyer program. Is it not?
A       It is a great program for first time home buyers but it is not strictly for first time buyers.
Q      If I own a home now can I buy another home using this home loan program?
A       No.  There are some situation where you could use an RD program.  Please call me for more information.
Key Benefits
Q      Does this loan program have mortgage insurance?
A       No. It has a Guarantee Fee
Q      What is a Guarantee Fee?
A       A Guarantee Fee is a one time fee of 2% that is added or financed into the loan. This is a fee charged by the USDA who in return guarantees the lender that the loan will be repaid in case you don’t make your payments.  This fee is an upfront financed fee.  There is not a separate guarantee fee included in the monthly payment.
Q      What about a down payment? Can I make one if I want to?
A       Yes you can make one—up to 20%.
Q      What about a pre-payment penalty or a recapture clause?
A       There is neither one.
Questions About Qualifying for the Home Loan
Q      Okay I’m interested. I don’t make too much money for which I guess I’m supposed to be thankful. The house I want to buy is in an eligible area. So now what? How do I qualify?
A       Qualifying for the USDA Rural Development is pretty straight-forward. You must demonstrate a willingness to repay your debt. That is done by having a good credit history. You must also demonstrate the ability to repay your debt. That is you must show that you have adequate and dependable income.
Q      How do I start the application process?
A       We try to make it as easy as possible. There are several ways to apply for the USDA:
  1. Go to and click on Short Application or
  2. Call 615 893 2273 and ask for me, Becky Walker.
  3. When you call ask for a personal interview or a phone interview
  4. Ask that an application be mailed, emailed, or faxed to you
Questions About Closing Costs
Q      You said there was no down payment but what about closing costs? How much do I have to come up with for that?
A       Closing costs on average range from 3% to 4% of the purchase price. In addition there is a 2% Guarantee Fee that I mentioned above. The Guarantee Fee is usually financed into the loan in the same way as a VA loan. The seller, a relative, or a disinterested third party may pay closing costs on your behalf. (Know any disinterested third parties?) 
Q      Can closing costs be rolled into the loan?
A       Yes in most cases the closing costs can be “rolled” into or paid from the loan proceeds. It is possible, even probable, for you to purchase a home with no out-of-pocket cash with this particular program.
Q      Can I know ahead of time what the closing costs and my payment will be before I commit to anything?
A       Yes you can.
Credit Questions
Q      Just how good does my credit report have to be in order to qualify for this loan?
A       Here is a general “rule of thumb” about what cannot be on your credit report:
  1. There can be no more than one late payment during the last 12 months.
  2. There can be no accounts converted to collections in the last 12 months.
  3. There can be no classified accounts in the last 36 months. (Classified accounts include Profit & Loss write-offs, repossessions, foreclosures, etc.)
  4. Classified accounts cannot have carried a balance in the last twelve months.
  5. Bankruptcies must be discharged for 36 months.
  6. Fortunately, exceptions to the above can be made subject to what decision makers call “compensating factors”. 
Q      What about scores? Do I need them?
A       Credit scores are not required for this program. Good scores though are helpful. Bad scores will hurt your chances of getting a loan. Not having any scores however can be remedied by building four lines of alternative or non-traditional credit.
Q      What is alternative or non-traditional credit and where do I get it?
A       This type of credit comes from people or companies from which you have paid for something over a period of time. This type of credit usually comes in two forms: 
1.    A print out of a transaction history which is signed and stamped by the customer service representative that issued it.
2.    A letter from someone that you paid money to over time. The letter should be on letterhead if possible. It should state when the account opened, how much was paid, and how the account was handled by you. 
Q      I had to file for bankruptcy. Is there a waiting period after the date of discharge?
A       There is a 12 month mandatory recovery period after the date of discharge. In addition you must show that you have re-established credit.
General Property Questions
Q      Seems like I heard somewhere that USDA limits the amount of land included in the purchase. Can I buy a house with several acres of land?
A       Yes you can. The land value, however, cannot exceed 30% of the total value of the property.
Q      Is a home with an in-ground pool eligible?
A       No.  There are some exceptions, please call me for details.
Q      Is a home with an above ground pool eligible?
A       Yes.
Q      Is a home with a farm services building (farm) eligible?
A       Typically - No, but please call for details
Q      Is an existing manufactured home (doublewide) eligible?
A       No but a new manufactured home is eligible if purchased through an approved RD dealer/contractor.
Q      Is a modular home eligible?
A       Yes.
Q      Can I have a house built with this home loan program?
A       Yes but get with us before you start building.
Still have questions? Please call me, Becky Walker, at 615 893 2273 or email me at .
Pamela Snell -Harris, NMLS #445838, Sr. Mortgage Specialist NMLS #445838
First National Mortgage Services LLC, NMLS #719247
2102 North Locust Avenue, Lawrenceburg, TN  38464
Direct:  (931) 766-3836
Cell:  (931) 242-7004
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