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.

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