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).
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!