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USDA Guaranteed Loans - "No PMI" No More!
 
USDA Rural Development has long been the 100% financing leader for a lot of areas across the nation.  One of the major benefits of this loan product was that it required no monthly escrows for an annual mortgage insurance (MI).  MI is sometimes referred as PMI, and the loan is advertised many times as 100% Financing with No PMI.  That’s all going to change come October 1, 2011. USDA issued Administrative Notice 4551 on February 24, 2011 that alluded to this upcoming change.  The change has been confirmed in an email that also included instructions on how to calculate the fee.Following in the footsteps of what the Federal Housing Administration (FHA) did back in October of 2010, USDA will be lowering the up-front guarantee fee. FHA lowered their fee from 2.25% to 1%.  USDA will be lowering their up-front guarantee fee from 3.5% back down to the 2%.  That’s a nice change! Click here to read my post about FHA making a similar change.THE BIG CHANGE! However, the other change is that it will now require a 0.3% annual mortgage insurance fee.  While this fee is an annual fee, it is collected monthly in escrow like most mortgage insurance payments. ... more

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