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.