Tag Archives: Rd

USDA increases its mortgage insurance fees in October

The Rural Development loan program offered through the US Department of Agriculture is increasing its monthly mortgage insurance fees starting 10/01/2014.

Right now, the Rural Development loan program charges a monthly mortgage insurance fee equal to .4% of the loan amount per year.  This will increase to .5% starting 10/01/2014.

What is the difference in payment?  On a $135,000 loan the monthly mortgage insurance goes from $45.00 per month to $56.30 per month.  This may not sound like much, but it wasn’t that long ago that RD loans didn’t have a monthly mortgage insurance fee.

RD loans in addition, still have the 2% up front Mortgage Insurance, called a “funding fee” that is typically financed on top of the loan.  That would be an extra $2700 added to the above mentioned $135,000 loan, a typical loan size for the RD eligible areas such as Star, Middleton, Kuna, Idaho.

To qualify for the additional $56 per month, a borrower would need to earn an extra $130.23 per month.

Are there alternatives to using the USDA’s Rural Development loan?  Yes, there are.  To determine if they are the best loan program for your situation, you need to call a local lender you trust and discuss your mortgage needs.

Should you not have a lender, you can always call me at 861-7579 and I will go over your individual situation and find the best mortgage program for your needs.

Will a so-called “government shutdown” affect the mortgage market?

It could, depending on the type of loan you are seeking and what still needs to be done on your loan.

There are several government agencies that come in to play when you seek a home loan.

  1. First of all, borrowers will have their tax returns verified through the IRS with a form 4506t.  The IRS has said its staff will still be operating in the event of a so-called “shutdown” but I wouldn’t take that for a definite that you can get the tax transcripts in a timely manner.  If you are seeking a mortgage, get your mortgage loan officer to order them asap!
  2.   Government insured programs such as VA Loan, FHA loans, and the USDA require a special report called CAVIRS to be run beforehand.  Once again, get it done asap.  If you don’t have a clear CAVIRS, your loan can’t be approved.
  3. Third, the USDA has indicated that its staff might be furloughed in the event of a “shutdown” and that will affect the final approval from USDA that is a part of getting an RD loan.  If you have an RD loan and it’s not ready to close right now, you should have a conversation will all parties about a possible extension if there is a “shutdown.”
  4. Furthermore, the RD’s eligibility map is in limbo over the budget.  Right now, the map is not fully accurate as to what properties are in an eligible area.  I would be hesitant to rely on an RD loan in an area such as Kuna, where they have indicated it is coming off the eligible areas.  We won’t know for sure what parts of Kuna will be eligible and what parts wont.

Anyway, the next week or two could be very exciting to say the least.  The key is to be proactive in the event of a “shutdown” of the Federal Government.

 

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