Congress is wrestling with how the USDA Rural Development Department should work. Â In the most recent changes, they dictated that the USDA Home Loan program will be entirely self-funded. Â What does that mean? Â The USDA Home Loan Program will no longer be dependent on the U.S. taxpayers to stay in business. Â Because of this, Â USDA is changing how it charges it’s form of PMI on loans. Â It also means that the “Definition” of what is considered RURAL in North Carolina could be changing Oct 1, 2012 too!
Effective October 1, 2012, USDA mortgage insurance rates are:
- For purchases, 2.00% upfront fee paid at closing, based on the loan size.
- For refinances, 2.00% upfront fee paid at closing, based on the loan size.
- For all loans, 0.40% annual fee, based on the remaining principal balance.
This is only a slight bump from the current rate – so it should not have a substantial impact for first time home buyers… meaning it’s only a few dollars more effective Oct 1, 2012.
So, for example, a $100,000 loan in Clayton, North Carolina would require a $2,000 USDA PMI that will be added to the loan. Â So the $100,000 loan would then be $102,000. Â The monthly USDA PMI charges on that $102,000 loan would be $34. Â Depending on your tax bracket, this Mortgage Insurance may be Tax deductable and it’s certainly MUCH lower than the FHA PMI charges are!
The USDA Home Loanâ€™s biggest feature is that it is aÂ No Money Down Home Loan! Â Thatâ€™s right, if you qualify â€“ this is a 100% mortgage loan. Â USDA Rural Housing Program can be used by first-time buyers and repeat buyers. Â Weâ€™ve done several loans for folks who currently have a house (in Tennessee for instance) and get transferred to NC â€“ meaning that when they buy in NCâ€¦ theyâ€™ll have 2 houses.
Closing costs vary by lender and location. In general, we are seeing more NC Home Buyers who are getting the Seller to pay the USDA Home Loan Closing Costs (we can helpÂ youÂ structure that). There are Maximum Income Limits set for each county andÂ the USDA Rural Housing Program is for primary residences only.
Effective September 30, 2013 the other BIG CHANGE to USDA Home Loans in North Carolina could be that 21 Communities will NOT qualify for the programÂ if the maps are changed!! Â Congress is considering what areas are “Rural” and weather they will Grandfather In the current maps. Â If you are negotiating a contract – CALL US!
Most Banks currently look for a 640 credit score.Â Â This is the number that GUS (the automated system) requires. Â NC Housing Finance Agency allows folks to go down to 600.. the trick is that NCHFA only accepts USDA loans that have a GUS approvalâ€¦ well, if GUS requires 640 â€“ thatâ€™s the number you need.
USDA No Money Down Loans are one of the most requested programs of ANY loan program we do.Â If you have questions about theÂ USDA Home Loan Income Calculations, or you want to know more aboutÂ No Money Down Loans, please callÂ Steve and Eleanor ThorneÂ 919 649 5058.Â We do tons of these loans every month, and we know the guidelines!