On October 1st, the
USDA is making drastic cuts to fees
The USDA mortgage
requires two types of fees: an upfront guarantee fee and a monthly fee. They are both being reduced,
allowing more buyers to qualify.
Starting on October 1, 2016, the upfront fee will be reduced.
Current upfront fee: 2.75%
New upfront fee:
1.00%
and the monthly fee will
also drop.
Current annual fee: 0.50%
New annual fee:
0.35%
The term “guarantee” simply refers to USDA’s loan backing that allows lenders
to issue loans according to its guidelines. The current upfront guarantee fee
stands at 2.75 percent of the loan amount and is seeing a drastic cut to 1.00 percent,
and the
"annual fee" is currently 0.50 percent also dropping significantly to
0.35%, paid in twelve equal installments and included in
each mortgage payment.
The changes will be in effect until September 30, 2017. Typically, USDA
re-examines financials of previous fee changes then raises, holds, or reduces
fees accordingly. If loans in USDA's portfolio perform well, another drop could
come in 2017.
But the 2016 reductions alone equal big savings for USDA home buyers.
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (
www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
USDA slashing mortgage fees: Borrowers who use the U.S. Department of Agriculture’s Rural Housing Service to get a mortgage could soon pay significantly less for their loan, as the USDA announced that it is about to cut its loan fees for lenders who use the Single Family Housing Loan Guarantee Program. Here are all the details.
According to the announcement, the USDA is set to cut its upfront guarantee fee from 2.75% of the loan-at-close amount to 1%. Additionally, the USDA is cutting its annual fee from reduced from 0.45% of the unpaid principal loan balance to 0.35%.
