Saturday, September 7, 2013

Vail Daily column: Loan program benefits many local residents | VailDaily.com

Vail Daily column: Loan program benefits many local residents | VailDaily.com




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Funds in the bank after closing allow homeowners to rest a little easier knowing they have a cushion or reserve fund to cover their housing and monthly debts in the case of emergency. Properly funding retirement accounts, life insurance policies or education funds is also important. Not having to use a lot of funds for closing a transaction can allow this to happen. In fact the loan-to-value can even be extended to 102 percent to cover the mandatory 2 percent fee to the USDA for the use of the loan program.


Furthermore, the USDA financing program offers interest rates that are most often below traditional Fannie Mae and Freddie Mac-offered interest rates. Interest rates on the 30-year fixed with the USDA loan program are a quarter point if not more below those of other open market interest rates. While a monthly mortgage insurance premium is required in addition to the 2 percent upfront fee, the monthly premium is calculated at 0.4 percent per month, which is also well below other open market mortgage insurance premiums.