By David Myers/About real estate: Agriculture department offers zero-down home loans

By David Myers

Q. You recently wrote that the U.S. Department of Agriculture is offering for sale several farms and other properties that it has foreclosed on in rural areas across the nation. But does it offer any special financing, too?

A. Yes. In fact, the Agriculture Department is one of the few government agencies left that still offers mortgage plans that do not require a down payment. Buyers of farms or even condominiums can qualify for the program, and many of the properties it will finance — whether foreclosed on or through a traditional sale — are close to big cities.

There are, of course, a few guidelines that borrowers must meet in order to obtain one of these zero-down loans.

For starters, you can’t get one if you already own a home. That may seem unfair, but it helps to keep rich folks from buying a rural property with a government-backed loan and then taking tax deductions by labeling it a “vacation house.” The rule also curbs purchases of family-operated farms by big companies that raise herds of cattle or tons of produce.

In addition, you won’t qualify for one of these government-backed mortgages if your income exceeds 115 percent of the region’s median income. The median income is a rather arbitrary figure calculated by the feds that assumes that half of all families in the area earn more each year, and the other half earn less.

There’s more. If you hope to get one of these zero-down-payment loans, your total monthly payment for principal, mortgage interest and property taxes usually cannot top more than 29 percent of your income. And total monthly debt, including the proposed mortgage payment and bills for credit cards and the like, generally cannot exceed more than 41 percent of your monthly earnings.

If you can meet these loan guidelines, though, you might be in for a pleasant surprise. Although the Agriculture Department has some tough borrowing rules, its definition of “rural properties” is fairly lenient.

Kiplinger’s Personal Finance, one of my favorite monthly publications, recently noted that buyers can qualify for a no-down loan through the ag department in many communities that are relatively near urban areas. The magazine said they include “homes as close as 20 miles to downtown Hartford, Conn.; 12 miles from Savannah, Ga.’s historic district; less than 30 miles from the White House in Washington, D.C.; and just 20 miles outside Dallas.”

For more information about the loan programs, call the Agriculture Department’s Rural Development group toll-free at (800) 670-6553 or visit www.resales.usda.gov.

Q. You often mention that homeowners must file their federal income tax returns by April 15. If my return is postmarked by April 15, will it be considered “on time” even if the Internal Revenue Service doesn’t receive it until a week or two later?

A. Yes. If your return is postmarked by the United States Post Office by April 15, you won’t face any late-payment penalty, even if the post office takes a few weeks to deliver it or workers in the Internal Revenue Service’s cavernous mail center take their time to deliver the return to the proper desk.

In an unusual twist, though, taxpayers have until April 18 to get their returns postmarked this year. That’s because federal employees in Washington, D.C., get to take the day off for “Emancipation Day” — the day that celebrates the freeing of slaves in our nation’s capitol — which happens to land this year on Friday, April 15.

Because IRS rules state that filing deadlines cannot fall on a weekend or a holiday, including Emancipation Day, you can file your return as late as 11:59 p.m. on Monday, April 18. But if you want to press this deadline, make sure you get a receipt from the post office showing you mailed your return on time.

Q. We read your column about the recent rise in mortgage rates. We were lucky because we refinanced in December and got a 4.75 percent fixed-rate loan of $210,000 for 30 years, with monthly payments for principal and interest of $1,095. Our question is, How much would we have to add each month to our payment to retire the debt in 25 years instead of 30? It would make the difference between allowing us to retire at 62 instead of 67!

A. First, let me congratulate you for including your future housing costs in your retirement plans. Too many homeowners focus on how much they’ll get from Social Security or from their private pensions without factoring their home-related expenses into the equation.

If you keep the 30-year, $1,095-per-month repayment schedule that the bank gave you, the two of you will pay a total of $184,365 in finance charges in the next three decades. To pay off the loan in 25 years instead, you’d have to add $102 to each payment. The relatively modest additional monthly payment would allow you to reach your goal of retiring at 62 rather than 67 and would also trim $35,249 from your future mortgage-interest charges.

Ÿ For the booklet “Straight Talk About Living Trusts,” or “Free and Clear: Getting the Mortgage Monkey off Your Back,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.

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