USDA loan monthly mortgage insurance

usda mortgage lenderGet ready for some upcoming changes to USDA mortgages. They are for the first time incorporating monthly mortgage insurance and its going to have an effect on how much you can borrow. The bad news is that your payment will increase however its not all bad.

USDA mortgage insurance details:

The USDA monthly mortgage insurancefor new USDA loans after October 1, 2011 will be .3% annually. The up-front mortgage insurance premium is going from 3.5% back to 2%.

What does this mean to you?

It means that although the up front premium is going down 1.5% there is now monthly mortgage insurance and your payment will go up overall. On an average 250k loan amount the increase in payment is around $44 dollars per month (at 4.5% interest.) That might not sound like a huge amount of money however if your debt to income ratio is right on the edge and you were qualified prior to October 1, you should call your USDA mortgage companyand make sure you are still qualified after the change.

Good News for USDA Loans

There is a small yet bright light in all of this seemingly endless tightening of lending restrictions of Government Programs. If you obtain a USDA loan after October 1, 2011 and sell your house before owning it for 7 years you will actually have spent less total money than under the previous guidelines (assuming you paid the minimum monthly payment and put no money down.) USDA is still 100% financing and there is still no down payment requirement so overall the program remains extremely competitive against FHA or even VA in some circumstances.

Brian Mayer USDA Mortgages in MD and VAUSDA Mortgages in MD and VABrian Mayer USDA Loans in MD and VA

USDA Mortgage Company

VA Loans in Maryland

Maryland First Time Homebuyers

 
This post has been included in Maryland Real Estate News

12 Comments on USDA loan monthly mortgage insurance is coming!

SEP
12
2011
154,520 Points

I had no idea that the people who grade the meat that I buy in the supermarket are lending money as well. Fascinating! Who get's a cut of the loan? ;)
7:12pm • #1
155,707 Points 2 Featured Posts Outside Blog

Brian, congrats on the feature - thanks for getting out important info on USDA loans - very important to the Calvert County/Southern Maryland market.
8:37pm • #2
4 Featured Posts Localism Sponsor Outside Blog

~Wieder Realty - Its always a task trying to explain that- Yes the people that approve your hamburger meat to be sold in your local grocery store are also providing insurance allowing us to lend you money to buy your home. See its even a mouthful to write!

~Susan - Thank you! Yes indeed, USDA actually increased the income limits in Calvert this spring to 1-4 persons - $97,950 and 5-8 persons to $129,300 making it a no-brainer for so many families who qualify
8:49pm • #3
1,115,748 Points 117 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hey Brian thanks for the update.  I didn't realize the changes were coming up so soon. We don't do a lot of this type of loan in Phx but there are some pockets where it's been very helpful.  And it the big picture...it's not that big of an increase....especially if they get smoking deal on a home - of which in Phoenix we're at the low low low point.
9:00pm • #4
1,652,689 Points 134 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Have been hearing a little about this but was not aware that it was around the corner.  Thank you for a timely post.
11:48pm • #5
SEP
13
2011
156,802 Points 1 Featured Post

Thanks for the update. I didn't know either. I appreciate your simple explanation of the changes.
1:11am • #6
173,260 Points Outside Blog Attended Rain Camp

Brian, thank you for the helpful information. It is interesting how we often find out about such important industry information on Active Rain first.
6:13am • #7
730,035 Points 15 Featured Posts Outside Blog Called Shot Master

Brain, even with the extra fee, this is a very good program for buyers who qualify.
8:41am • #8
1,125,605 Points 90 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Thank you for this info. Here in PA we see a lot of USDA loans on our properties. 
9:41am • #9
1 Featured Post

Great explanation of the USDA changes.  We see it used here in the Charlotte area quite frequently as well.
1:01pm • #10
OCT
11
2011

USDA mortgage insurance seems to be a good insurance policy and it think it is the best policy i ever heard USDA is still 100% financing and there is still no down payment requirement so overall the program remains extremely competitive against FHA or even VA in some circumstances.

 
Dacey
2:09am • #11
OCT
29
2011
Called Shot Master

Thanks for the post RD loans are one of the many tools we use here in NW Arkansas.
2:16pm • #12


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