USDA Home loans getting more expensive in Texas

(Last Updated On: February 24, 2016)

USDA housing Loans

On February 3rd USDA Rural Development Announced that soon it will begin charging a monthly mortgage insurance premium on all USDA home loans.

What does this mean to you?

  1. Higher Payments
  2. Thousands more in Mortgage Insurance Fees

Although the stated purpose of the memo is to reduce the cost of the USDA Guaranty Fee a careful analysis of the effects of the USDA Home Loan mortgage insurance implementation outlined in the In the February 3, 2011 memo show that monthly payments will be higher and unlike FHA Mortgage Insurance which goes away after you have 20% equity in the property the USDA Home Loan Mortgage Insurance is for the life of the loan.  If you would like to avoid this increase it is important to fill out our online application here to get the ball rolling and avoid the higher costs.

After the expiration of the home buyer tax credit, the reduction in Down payment assistance with the Texas Bond 77 program the USDA Rural Development Home Loan Program is been the last true 100% financing left without monthly mortgage insurance outside of VA.  This is a first  for the USDA Home Loan Program.  Up until last year the USDA charged a 2% USDA Guaranty fee that was rolled into the loan and no monthly mortgage insurance.  The USDA home loan Guaranty fee was then raised to 3.5% or the loan amount but no monthly mortgage insurance was being charged.

Although the USDA Guaranty Fee is being set back to 2% the impact is that as USDA Monthly Mortgage Insurance analysis shows your monthly payment will be going up and staying up.  As I mentioned above unlike FHA Mortgage Insurance which goes away when you reach 20% equity in your home based on the original loan amount the USDA Mortgage Insurance is for the entire life of the loan!

There is a silver lining to this and that is the USDA Rural Development is not implementing this immediately and there is still time for you to get the home of your dreams with no down payment and lower payments.  For more information such as areas that qualify for this fantastic program and to avoid this change simply contact our office at the number, email at the right or fill out our online application here and we will be happy to assist you.

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