Many updates for the USDA 502 Guaranteed mortgage program as we begin October. First, the new lower USDA Guarantee Fee and Annual Fee (monthly PMI) structure is now in place as of Oct 1st. Effective October 1, 2016, program fees for USDA Rural Development’s guaranteed home loan program will be significantly reduced. The one-time upfront guarantee fee will be reduced from 2.75% to 1.0% of the loan amount. The annual fee (monthly charge) will change from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.
This is fantastic news for new home buyers utilizing 100% USDA Rural home financing. Based on a standard $150,000 home purchase price – new home buyers will see their overall closing costs reduced by $2,625 on average. In addition, new home buyers will see their monthly payment reduced by $30.00 per month on average.
Keep in mind the new USDA fee structure only applies to new USDA loans after October 1st. The lower guarantee or monthly annual fee cannot be retroactively applied to existing homeowners that already have a USDA loan. However, existing homeowners that currently have a USDA-backed home loan do have the option to refinance their loan and take advantage of lower fee structure. In addition, many homeowners may also be able to reduce their interest rate at the same time thanks to the USDA Streamline Assist refinance program. The program requires no new appraisal, home inspection or equity to be eligible. Homeowners can read more about all the USDA Refinance requirements here. Feel free to also request a formal review of your current USDA loan by calling ph: 800-691-8826 or just submit the Quick Contact Form on this page.
USDA Interest Rates October 2016:
Mortgage interest rates have remained very low overall for all loan programs – USDA, FHA, VA, and Conventional. The cost of financing a home purchase remains very affordable in October, as evidenced by the government loan programs rates that have remained in the 3.25-3.75% range over recent months. The most common factors affecting rate movement is centered around the normal economic indicators like monthly employment data, GDP, stock and bond market trends, among other factors like Federal Reserve policy comments. Home buyers shouldn’t expect too much movement (up or down) until after the election in November.
October USDA Closing Turn Times:
Exact closing times can depend greatly on the mortgage company originating the loan, plus the property state. Overall USDA loans are currently taking about 30-45 business day to close with most lenders acorss the nation. Remember, the USDA loan closing process is a two-step approval process. First the mortgage lender processing the loan must approved and underwrite the file, this time line can vary from loan provider but will generally take three weeks to complete. After this, the file must be submitted and issued a final commitment by the local USDA office. Depending on the property state, this process can take an additional 2-10 business days. Most of the higher volume states like Florida, California, Texas are currently averaging 7 business days. * Homebuyers that have questions regarding a current USDA loan in process should contact their lender, bank or broker for the latest status.
Applicants that want to learn more about the USDA purchase or refinance program can reach out to us by calling ph: 800-691-8826 ( 7 days a week)