USDA Streamline Refinance No Appraisal 2/12

February 6, 2012 by Leave a Comment

kids cost moneyNC Residents are getting an added benefit from the Obama Administration during the next 24 months.  In a program announced for the economically hardest hit counties in the Country, last week USDA announced a new Streamline Refinance Program!

Under the new program folks refinancing their USDA Home Loan will need to meet the following guidelines:

  • No appraisal required – the current residence must be in a USDA “Footprint Area” and currently be insured under the USDA program.  So refinancing from a Conventional loan or a FHA loan to USDA will not work under this program.
  • No Credit Report Required – the current mortgage must be current, and all of the previous 12 months of mortgage payments need to be made on time.  That’s all.  We just verify that you made your house payments on time.
  • Employment Verification Required – we will need to verify that you are employed, and drawing enough money to meet the underwriting guidelines… meaning we must prove that you have enough income to make your house payments.
  • Can not take cash out -  All we can do is finance your current loan balance, and the new Guarantee Fee (PMI) which is 1.5%.

This should be a pretty quick process!  We just did a comparison for a homeowner who purchased their home in June of 2009 in Johnston County.  Their current interest rate is 5.75%.  Even with the change in the USDA Guarantee fee (now there’s monthly PMI for USDA Home Loans) they are saving over $130 a month, and we are not having to charge them ANYTHING!  So the balance on their mortgage isn’t changing much, and they don’t have to worry about an appraisal… and they get to skip a mortgage payment and lower their house payment by $130 (and change) a month!  WHAT A DEAL!

If you want to see if you qualify for this program in NC – call Steve Thorne, USDA Home Loan Expert in NC 919-649-5058.  We have the best mortgage rates available, and we know how to work with USDA!

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USDA Home Loan Change in PMI 12/11

December 14, 2011 by Leave a Comment

usda home loansUSDA notified us that they are once again changing their “PMI” for their Home Loan Program.  USDA, like FHA and the Veteran’s Administration don’t actually “make” the guaranteed loans, they just insure the lender against default.  That “default” insurance is just like PMI, and unless you are putting at least a 20% down payment – you are going to have some sort of this insurance,

Earlier this year, the USDA RD Single Family Loan Department announced that for the 2012 fiscal spending year, folks who are purchasing a home would expect to pay the following:

The new fee structure for FY12 is as follows:

·         2 percent Upfront Guarantee Fee for purchase transactions.  This means that if you are purchasing a $100,000 house, the loan will be $102,000; OR, you can pay the 2% out of your pocket… or see if you can get the Seller to pay it.  We are NOT seeing many situations where the Seller is doing this, but if you have extra funds, you can go ahead and pay this off.  Unlike FHA, the Guarantee Fee (or Mortgage Insurance Fee) is not refundable.

·         0.3 percent AnnualFee for purchase transactions.  This means that if you purchase a $100,000 house, with a $102,000 loan on it, you will pay a MONTHLY Insurance fee of $25.50 ($102,000 x .3% = $306 divided by 12 months = $25.50 a month)

Even with this additional fee – USDA is still much lower than FHA!

With this newest update, as of Wednesday, December 7, 2011, refinance transactions will be issued by the Agency utilizing a 1.5 percent upfront guarantee fee and a 0.3 percent annual fee.

Unlike the FHA Streamline Refinance, some USDA Home Loans do require an appraisal.**  If you’ve been in your home for several years, this might be the time to Refinance! If you have questions about USDA Home Loans, and purchasing a home in NC – please call Steve and Eleanor Thorne, USDA Home Loan Experts in NC 919-649-5058

**UPDATE!  As of February 2012, USDA Rural Development Single Family Home Program is offering a LIMITED Streamline refinance program available.  Because of this, we MIGHT be able to refinance your USDA Home Loan to a lower rate with NO Appraisal!  Please call us for details!

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USDA Home Loan PMI Will Change 10/1/11

April 14, 2011 by Leave a Comment

If you are looking for a USDA Home Loan in North Carolina – you might want to do it before the end of September!  More Rule Changes! Okay, so you don’t HAVE to buy before October 1st.  It’s not like the 100% no money down program is going away – it’s just changing the way the PMI (which they call Guarantee Fee) is being charged.  Starting at the end of September, the  USDA Rural Guaranteed Loans will have an annual fee that is collected on a monthly basis. The upfront fee will be coming down as the guarantee fee is changed.

Currently, the guarantee fee for this loan is 3.5% of the loan amount which includes the guarantee fee, so it actually works out to about 3.63% of the net loan. If you are into algebra, the equation for that would be purchase price/.965-purchase price=guarantee fee.

The new PMI/guarantee fee will be 1% of the total loan amount plus a .3% annual fee. The calculations on this fee are a lot more complicated because it is calculated on the average yearly principal balance.   So, to do a simple back of the napkin calculation of what it will cost think about this:

$100,000 loan amount – add 1% for the upfront PMI fee.  So your monthly Principal and Interest payments are based upon $101,000.

On a monthly basis, you will be paying $25 a month for that original $100,000 loan during the first year… as your balance goes down, the amount you will be paying will diminish as well!

This will put USDA mortgage loans more in line with other low down payment programs.  However,  USDA Home Loans will still compare much better than FHA or Conventional loans due to the fact that the annual guarantee amount (the monthly payment) will be so low, and will be diminishing each year. In comparison,  FHA loans require a 3.5% down payment, and have an annual PMI (mortgage insurance) rate of .9%, three times what the guarantee fee will be with USDA home loans on a 100% down program.

If you have questions about USDA Home Loan Qualifications, Credit Score Requirements, or want to know what Counties Qualify for this program in North Carolina, Call Steve and Eleanor Thorne, NC’s USDA Home Loan Experts!  919-649-5058

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USDA Guarantee Fee Update 8/23/2010

August 24, 2010 by 1 Comment

The Single Family Housing Origination Department of the USDA Home Loan Program announced yesterday that they should have their computer systems up and running to accommodate the changes required by Congress in their fees.

Since the end of May, USDA has been issuing “Conditional” approvals… and because of that, Wells Fargo, Bank of America (and many, many others) are not doing USDA Home Loans.

We are still closing these loans... here’s what the directive says:

Rural Development also is working on a more complete system upgrade to accommodate all provisions of the new law. We expect this full enhancement to be completed as early as possible next fiscal year. While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to maintain a zero cost program. We appreciate your role as a lender in responsibly servicing loans in the SFHGLP portfolio and helping us maintain a successful program.

So here’s the headline folks… USDA has the authority to give a lower guarantee fee to “poorer families.”  They also have the authority to charge an ANNUAL (monthly) Mortgage Insurance Fee... they are NOT doing it right now, but reserve the right to do so in the future.

Almost all parts of our state qualify for the USDA Home Loan Program, which offers 100% no money down financing. You will need to meet the income requirements (which vary by county) and you need to have a credit score of at least 620.

If you are considering a USDA Home Loan, Call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-694-5058.

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USDA Lending Money 5.27.2010 With Changes

May 28, 2010 by 3 Comments

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!

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USDA Home Loans have PMI?

August 24, 2009 by 1 Comment

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!

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