In case you didn't know, there are some changes on the horizon regarding the USDA Guaranteed Rural Housing (GRH) loan.Â
Effective October 1, 2011, there will be two significant changes:
(1)Â Â Â Decreased guarantee fee from 3.5% to 2.00% (which can still be financed into the loan â€“ 102%)
(2)Â Â Â Implementation of a .30% annual fee (like monthly mortgage insurance) which will be calculated as follows:
Â a. Â Â Initial fee for the first year will be based upon the loan amount Â and escrowed into the borrowerâ€™s mortgage payment.
Â b. Â The fee will be calculated annually based upon the unpaid principle balance.
Â c. Â Â Annual fee will paid for the life of the loan.
Even with the impending changes to the USDA GRH loan, it will still be a GREAT loan program for many borrowers.Â Here are some reasons why:
(1)Â Â Â NO down payment â€“ Based upon mainstream mortgage financing, the only other 100% mortgage is the VA loan.Â Other available mortgage products i.e. FHA, Conventional loans will require minimum down payments and/or borrowers utilizing down payment assistance programs or â€œproperlyâ€ documenting sufficient assets from acceptable sources.
(2)Â Â Â REDUCED monthly payment â€“ Although one of the big benefits of the USDA loan was â€œnoâ€ monthly mortgage insurance, the monthly mortgage payments are still â€œlowerâ€ than with FHA or Conventional financing â€“even with the new annual fee.
(3)Â Â Â NO loan limits â€“ Unlike FHA and Down Payment Assistance programs, USDA loans do not have a maximum sales price limitation.Â The maximum sales price is determined by the borrowerâ€™s own financial situation.
(4)Â Â Â Financed closing costs â€“ The borrowerâ€™s closing cost/pre-paid items can be financed into the loan as long as there is room between the purchase price and the appraised value.Â No other mainstream loan program allows for this!
If you are â€œon the fence,â€ you may want toÂ decided whether to act NOW versus waiting and it costing you more in the long run.
For more information, please contact DOUG CAPPSat (662) 429-5100 ext. 105.Â NMLS ID #68160.
Fairway Independent Mortgage Corporation, 224 West Commerce St, Hernando, MS 38632 is a "MS and TN Licensed Mortgage Company."Â NMLS ID #2289. An Equal Housing Lender.Â All loans are subject to credit approval and compliance with investor guidelines.
Know your mortgage options!