There are some sweeping changes coming in the Fall of this year (2011) which will make Mortgage lenders more accountable for the loans they fund and approve; some speculate that this is the part of the reason the USDA has chosen to tack on Mortgage Insurance (just like FHA’s) to the monthly payment.
Thankfully, we the tax payers won’t be the ones needing to subsidize things. The homebuyer pays Mortgage insurance just like he/she would for an FHA loan.
Here’s how things will change , come Oct 1, 2011.
Presently the USDA Zero down loan carries with it a 3.5% Upfront Guarantee fee and no monthly mortgage insurance.
After Oct 1, the Upfront Guarantee fee drops to 2.00% and an annual Mortgage insurance of 0.3% will be added.
The annual mortgage insurance will never go away over the life of the loan. (This makes it unlike FHA, where after 5 yrs and 78% Loan-To-Value threshold, the mortgage insurance can go away).
Good news is that the annual mortgage insurance $dollar amount will decline each year because it’s recalculated at the new principal balance of the loan each year.
Overall this means an increase of about $16/mo for every $100,000 loan amount borrowed. Not a deal killer necessarily, but definitely something that affects debt ratio and qualifying ability/buying power.
Stay tuned for more updates 🙂
Be sure to use our super Mortgage Calculator (unlike any other) to compare payments at www.thezerodownloan.com/mortgage-calculator
Tags: FHA mortgage insurance, FHA UFMIP, no mortgage insurance, RD loan, rural housing loan, usda guidelines, usda MI, usda mortgage, usda mortgage insurance, usda rural housing, usda underwriting, usda zero down