USDA fees increasing for 2013 effective October 1, 2012

August 22, 2012 by Leave a Comment

Beginning October 1, 2012, USDA will be increasing their guarantee fee and annual fee.  USDA’s guarantee fee is much like a VA funding fee or FHA upfront mortgage insurance premium: it is a lump sum that is most often financed into the loan. The annual fee, like FHA, is paid monthly as part of the mortgage payment.

The guarantee fee for purchases will remain at 2% of the loan amount. For refinances, the guarantee fee will increase from 1.5% to 2%.

The annual fee for both refinances and purchases will increase from 0.3% of the base loan amount to 0.4% effective October 1, 2012.

USDA mortgages offer zero down financing for borrowers who meet income limits and properties in designated rural areas.

NOTE: The photo in this post reflects eligible rural areas for 100% financing using a USDA zero down mortgage. If the property is not located in an orange (or peach?) shaded area, it may be eligible to purchase with a zero down mortgage.

Filed Under: USDA Tagged With: ,

USDA Refinance Funds No Longer Available for 2012

August 20, 2012 by Leave a Comment

We received this notice late last week from USDA:

FY 2012 refinance funds are exhausted.

At this time, we are unable to process any GRH Refinance transactions. The applications currently awaiting review by Rural Development will be returned to the lender without action.
Refinance funding will be restored in October. The new fee structure will be 2% upfront and 0.4% annually. Because of the new fee structure, any refinance applications currently with RD will have to be re-underwritten, and resubmitted for review. Lenders may submit applications for refinance (at the new rate) at any time, however, RD will not review them until funding is restored.

Please note that funding for new applications is still available and will likely remain so through the fiscal year.

USDA offers zero down financing for residential purchases in designated rural areas to families under certain income levels.  

 

Filed Under: USDA Tagged With:

USDA Rural Development Mortgage Guarantee Fees for 2012

December 23, 2011 by Leave a Comment

USDA offers zero down financing in designated rural areas to households under certain incomes. In rural King County neighborhoods, like Carnation or Duvall, the income limit for a 1-4 family household is $92,600.

Similar to an FHA or VA insured mortgage, USDA has an upfront "funding fee" which is technically called a "guarantee fee".  Typically this cost is added to the loan amount and financed.  For 2012, the upfront USDA guarantee fee for purchases is 2% and effective December 7, 2011 and through 2012, refinances are 1.5% of the loan amount. 

USDA has supplemented this with an annual fee which is paid monthly (like FHA). The annual fee is charged with both purchase and refinance transactions at a rate of 0.3%. For example, if you have a loan amount of $300,000, the monthly cost would be $75 (300,000 x 0.3% divided by 12 months). 

If you're interested in a zero down USDA loan for a home located anywhere in rural Washington, I'm happy to help!

Filed Under: USDA

Income Limits and Property Qualifications for USDA Rural Loans in Washington

December 10, 2011 by Leave a Comment

NOTE: INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.

USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not.   To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for “debt-to-income” ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person.

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Kitsap County:  1-4 Person $85,700 | 5-8 Person $113,100
  • Thurston County: 1-4 Person $85,100 | 5-8 Person $112,350
  • Clark County: 1-4 Person $82,800 | 5-8 Person $109,300
  • Pierce County:  1-4 Person $81,450 | 5-8 Person $107,500
  • San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
  • Whatcom County: 1-4 Person $76,850 | 5-8 Person $101,450
  • Benton and Franklin Counties: 1-4 Person $75,750 | 5-8 Person $100,000
  • All other Washington counties:  1-4 Person $74,050 | 5-8 Person $98,650

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option.   Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored.

USDA_001 Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”.  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers. 

I’m pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!

Filed Under: USDA Tagged With:

October Brings Few Treats for Mortgages

August 31, 2011 by Leave a Comment

MortgagePorterOctoberEffective October 1, 2011, several changes are set to take place that will impact new mortgages, including Conforming, FHA and USDA loans. These changes will impact home buyers, home owners considering refinancing and some who are trying to sell their homes.

[Read more…]

Filed Under: Fannie, Freddie and FHFA, FHA, USDA, VA Mortgage Loans

Dramatic Changes proposed to USDA Rural Loans effective October 1, 2011

June 29, 2011 by 3 Comments

Beginning October 1, 2011, USDA Rural Loans may an have annual mortgage insurance (like FHA, paid monthly) and will reduce the upfront guarantee fee on purchases from 3.5% to 2%.  RD AN No. 4551 states:

Beginning October 1, 2011, it is anticipated that all purchase loans transactions will be charged (1) an up-front guarantee fee equal to 2% of the loan amount and (2) an annual fee of 0.3% of the unpaid principal balance.

Unlike FHA insured loans where the annual mortgage insurance premium ceases after 60 payments and the principal balance reaches 78% loan-to-value based on the original sales price or appraised value, USDA's annual fee NEVER terminates. It will remain a part of the monthly payment until the USDA mortgage is paid off.  The annual fee will be reduced each year as it is calculated annually from the principal balance. 

Here's a comparison: 

Currently, if someone was using a USDA zero down loan to purchase a home in Duvall for $300,000, their loan amount would be $310,500 (sales price plus 3.5% for the upfront guarantee fee).  Based on current rates of 4.375% (apr 4.786), their payment (excluding taxes and home owners insurance) would be $1550.28.

Effective October 1, 2011 and assuming mortgage rates just happen to be the same, the loan amount would be $306,000 (sales price plus 2% for the upfront guarantee fee) creating a principal and interest payment of $1,527.81 PLUS an estimated monthly premium of $75.82 = $1,603.63.  An increase of $53.35 per month!

Why would someone even consider having a USDA mortgage after October 1, 2011? Well for one, it's one of the few "zero down" mortgage programs available for homes that are located in a designated rural area (like Duvall, Gig Harbor or Maltby).  If the appraisal comes in higher than the sales price, borrowers may be able to finance closing cost… there are some perks to this unique program and it may be worth your consideration if you're income meets the guidelines and you're buying a home in a rural community.

Questions about USDA or other types of mortgage programs for homes located in Washington State? Contact me, I'm happy to help!

Filed Under: USDA

How much can Sellers contribute towards Closing Cost?

May 12, 2011 by 10 Comments

If negotiated in your purchase and sales agreement, a Seller may agree to chip in towards some or all of your bona fide closing costs, prepaids and reserves.  They cannot contribute towards your down payment.  The amount the seller can contribute varies depending on the program type and the amount of home buyer’s down payment. The percentage is based on the sales price and if the credit exceeds the closing cost, the mortgage originator can often use it towards discount points to buy down the interest rate.

[Read more…]

Filed Under: Fannie, Freddie and FHFA, FHA, First Time Home Buyer, Underwriting and Qualifying, USDA, VA Mortgage Loans Tagged With: , , , , , , ,

Income Limits and Property Qualifications for USDA Rural Loans

May 10, 2011 by Leave a Comment

NOTE: USDA INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.

USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income.  A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not.   To qualify, families must be without "adequate housing" (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  I've written more details about USDA home loans on this earlier post.

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for "debt-to-income" ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person.

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Clark, Kitsap and Thurston Counties:  1-4 Person $82,650 | 5-8 Person $109,100
  • Pierce County:  1-4 Person $80,050 | 5-8 Person $105,650
  • All other Washington counties:  1-4 Person $74,050 | 5-8 Person $97,750

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the "guaranteed" option.   Income limits can and do change.  You can also use USDA's income eligibility calculator which will factor in deductions to income.  You're looking for the "guaranteed" results and not "direct".

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they're on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored.

USDA_001 Once you've determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing.  You don't have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under "Property Eligibility" click "Single Family Dwelling".  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they'll consider for financing on their offers. 

I'm pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I'm happy to help!

Filed Under: Underwriting and Qualifying, USDA
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