USDA is changing their fee structure. A monthly fee is being added to the payment. It is similar to the way FHA is set up. Fortunately, the monthly factor is quite low (much lower that FHA’s Monthly MIP). The new USDA monthly factor will be .3%, compared to FHA’s 1.15%. In addition, USDA is lowering the existing financed Guaranty Fee. That will now go from 3.5% down to 2% of the loan amount. These two changes will affect the monthly payments for a prospective client, but not really that much. For every $100,000 financed, the monthly amount added to the payment will be $25.
$100,000 * .3% = $300/ 12 months = $25/mo
Also, the new monthly amount will be for the LIFE of the loan. It will not drop off after 20% or 22% equity is achieve as with a Conventional or FHA loan. In addition, the new USDA monthly fee will be collected in an escrow account. So basically there will be 3 months of the monthly USDA fee collected along with the usual 3 months of taxes and insurance to start up the escrow account.
This is effective for loans that receiveUSDA Commitment Letters October 1, 2011 and on. The current fee structure cannot be “locked in” with an interest rate lock, contract date or loan application date. Loans currently in process, CAN be impacted by this change so check your pipeline. Clear communication is the key to having a smooth transaction.
TheSecond change is to the maximum FHA loan amount. Currently the maximum FHA loan amount in the Austin area is $288,750. That will be dropping back down to $271,050. The temporary legislation that had increased the FHA loan limits is expiring. That legislation was a temporary measure intended to help stimulate the economy. Now the loan limits will go back to where they were previously. This is also effective for loans that close after September 30. The good news is that this only represents a small percentage of the business in Central Texas. The new loan limits are listed below for nearby counties.
Travis County $271,050, down from $288,750
Williamson County $271,050, down from $288,7
Hays County $271,050, down from $288,7
Bastrop County $271,050, down from $288,7
Bexar County $287,500, down from 332,500