[Ed. Note. — Lisa Fleck, a Sr. Loan Officer with Summit Funding, has provided the following information regarding changes to the USDA Rural Home Loan program.]
The common man’s VA loan, the USDA loan, is changing effective Oct 1, 2011 both in regards to upfront guarantee fees and annual fees.
For all loans originated after Oct 1, the guarantee fee is decreasing from 3.5% to 2% of the total loan amount; however they are implementing an annual fee of .3% for the life of the loan.
This fee is not being called mortgage insurance, and therefore is not tax deductible, but is simply an annual fee collected from the borrower monthly through their impound account and paid by the servicer to USDA annually.
Currently:
- $100,000 purchase price
- $103,626 loan amount
- $509.78 Principle and interest payment, no annual fee
After Oct 1, 2011:
- $100,000 purchase price
- $102,040 loan amount
- $501.98 principle and interest payment
- $25.51 monthly annual fee
While the changes do not constitute a large increase in the payment at this time, it is reflective of a trend towards increasing the payments collected from loans on a monthly basis to support the government backed programs. Additionally, effective Oct 1 you can no longer combine the USDA loan with the NV bond loan for first time homebuyers.
Please let me know if you have any questions.
Lisa Fleck
Sr. Loan Officer
Summit Funding, Inc.
100 N. Arlington #210
Reno, NV 89501
Phone: 775-824-3640
Email: lfleck@summitfunding.net
Iceburg
Just a couple of days ago somebody was talking on another thread about how there are 500 (?) houses for sale in Reno/Sparks for $100,000 or less. Looks like one of these USDA loans might be just the ticket for somebody looking to buy a house for less than a 6 figure purchase price.