USDA Home Loan Change in PMI 12/11

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!

Like the FHA Streamline Refinance, As of February 2012, USDA Rural Development Single Family Home Program is offering a LIMITED Streamline refinance program.  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!

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

Comments

  1. Betty Mann says:

    If house appraises for 20% more than purchase price why PMI.
    How long does PMI go for. If next year buyer has house appraised and it is worth 20% more than the loan amt. is PMI dropped?

    • Ms. Mann – I’m hoping I’m understanding the question. Let’s say you purchase a home in Person County that was worth 150,000 – but it was being sold under stress, and you were able to buy the house for $108,000. That would seem to be a TON of equity already in the house – right? Well, the loan amount is based upon the LESSER of the Sales Price OR the Appraised Value.

      Second question – does USDA drop the PMI after the home reaches that magical “20%” mark, maybe a year later? No, USDA doesn’t. USDA SFH is really an Insurance Agency – and this is the way they do it. You might want to consider a FHA loan, which requires a 3.5% downpayment.

Speak Your Mind

*