Usda Funding Fee | NC FHA Expert

USDA Lending Money 5.27.2010 With Changes

Great News! USDA Rural Economic Development has money to lend and they are working around the clock to get loan underwritten! Unlike other programs, USDA must ALSO underwrite all mortgage loans prior to funding. Since they were out of money for @3 weeks – they are behind.

So that’s the GOOD NEWS… Here’s part of the bad news:

The Funding Fee is now 3.5%. That’s up from @2% with funds that ran out in May, 2010. So if you purchase a $100,000 your loan will now be $103,500.

Here’s the OTHER Bad News:

Most Brokers will not be able to close these loans. We close on a warehouse line, so I’m good to go – but with law changes earlier this year… Brokers must meet a 5% High Cost rule. In that rule, a Broker can not make more than 5% on a loan. Origiantion Fee, credits we give to a borrower, attorney fees, title insurance, funding fees, application fees, underwriting fees and several other things go into the calculation. This will make it literally impossible for BROKERS to do these deals… I personally think it is sad that Consumers just lost so many options.

Again, we are making these loans, and will be glad to help you with purchasing and qualifying for a USDA home loan! Call us! Steve and Eleanor Thorne, Mortgage Banker in Cary 919-649-5058 Remember, if you are considering a NEW HOME – the builder has to let you use the mortgage company of your choice… and offer the SAME incentives!

USDA Home Loans have PMI?

USDA loans are the coolest loans on the planet right now, and most people don’t understand that it has a form of mortgage insurance…

Mortgage Insurance does not pay your mortgage off when you die (well, maybe there’s a kind that does, but that’s not what I’m talking about). The PMI-type mortgage insurance is default insurance. It covers a small portion to the bank if you default on the loan.

With Conventional loans, it’s referred to as Private Mortgage Insurance, or PMI. This insurance generally cost @ .58%of the loan amount on a monthly basis (assuming you have 10% to put down and really good credit scores).

FHA has Mortgage Insurance Premium, or MIP, which is 2.25% of the loan amount PLUS a monthly amount of .90% of the loan amount (think it’s kinda’ expensive?).

VA has a Guarantee Fee. So if you are Veteran using your VA benefits the fee could be as much as 3%! (For details click here).

USDA Home Loans also have a form of default insurance (PMI), and it’s a Guarantee Fee. The actual dollar amount is a rather complicated formula, and it ends up being about 3.5% – but most people use 3.5% as a rule of thumb for prequalifying purposes. (updated 5.27.2010 from 2% which is what they charged earlier) USDA Home Loans are AFFORDABLE!

Note that starting October 1, 2011 USDA Home Loan will change it’s PMI calculations. Starting in October – there will be a 1% upfront fee and a MONTHLY CHARGE!

If you want more information about USDA Home Loans in NC - please call Steve and Eleanor Thorne, 919-649-5058. We are Mortgage Lenders in the Triangle that specialize in these types of mortgage loans. Ask us about your Tax Credit! We have the lowest rates!