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USDA Loan Program Changes October 1, 2011
The USDA loan program changes will be effective on October 1, 2011.  What changes, you ask?  Well, USDA is changing the "mortgage insurance" piece of the financing.  As of now, there is a funding fee that is financed into the loan amount and there is no monthly mortgage premium.
 
As of October 1, this will change to mirror the FHA mortgage insurance premium structure where part of it is financed and the second part is a monthly charge.  There has been talk for a long time about making this change, now that it is here, the following table demonstrates the changes to the consumer.  In this example, I did not include the taxes or hazard insurance portion of the payment since they are not related to the changes.  I also made one more assumption in that all were calculated at 4.5% interest, amortized over 30 years.
 
 
The USDA loan or Rural Development loan can be used only for a primary residence and must be in a qualifying area.  In addition, there are income restirctions that apply as well.  The biggest advantage is that this is a 100% loan and a great option for first time home buyers that ... more

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