The loans, they are a’ changing.
When I wrote that 100% USDA loans were available in parts of the New River Valley, I failed to mention that everything was changing. Well, not everything, but several items related to USDA 100% mortgages are changing, beginning October 1st, in two important ways.
First, the good news - each USDA mortgage has an upfront fee that’s used as a mortgage guarantee fee. That premium, which has been set at 3.5%, is going down to 2%.
Now, the bad news - prior to October 1st, USDA mortgages don’t have monthly mortgage insurance, but after October 1st that’s going to change. The new basis will be .30 points, which on a $200000 loan might be an extra $35 per month or so.
Does $35 a month change your life? Not likely, and if it does you might not be ready to buy a house. What it CAN do, however, is put you at risk of not qualifying for a USDA loan if your debt to income ratio is right on the edge. If you’re currently working on getting a USDA 100% mortgage, be sure to talk to your lender to see where you stand.
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