USDA will be changing their loan guarantee and annual fees for mortgages and refinances coming October 2012.
From the national office in Washington DC
Advance Notice: Changes to Guarantee and Annual Fee
Effective on October 1, 2012, the start of Fiscal Year (FY) 2013, Rural Development will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:
Up-Front Guarantee Fee
FY 2012
Through
9/30/2012
FY 2013 Effective
10/01/ 2012
Purchase Transactions (no change) 2%
2%
Refinance Transactions 1.5%
2%
Annual Fee
FY 2012
Through
9/30/2012
FY 2013
Effective 10/01/2012
Purchase Transactions .30%
.40%
Refinance Transactions .30%
.40%
The FY 2013 fee structure is applicable to all Conditional Commitments (Form RD 1980-18, “Conditional Commitment for Single Family Housing Loan Guarantee”) issued by Rural Development on or after October 1, 2012. Loan guarantee requests submitted to Rural Development by September 30, 2012, in which a Conditional Commitment has not been issued, will be subject to the FY 2013 fee structure.
What does this mean to you the potential borrower using USDA financing? Classic Homes Northwest spoke with Mike DeMaio who broke it down this way. On a $150,000 USDA mortgage the increase in the Annual Fee will amount to approximately $13.00 a month. Is this enough to cause you as a buyer to not purchase? In our opinion this would not be a deal breaker.
What this does have an impact on is the length of time that it will take to get a loan approved through USDA. Currently USDA is taking longer than normal to have approvals issued. Some of this is due to lenders not submitting complete loan packages to USDA. Some is due to staffing levels and the volume of people using USDA financing. We expect that the longer than normal processing times will continue until later this fall.
Having a plan and executing the plan for using USDA financing is important.
Making sure that you are working with a lender who is well versed in USDA and the particulars of using this type of financing is a must. Having a real estate agent who is able to keep the sellers well informed is important as well.
For more information on USDA loans and how to use USDA financing in Pierce County Washington read our USDA articles
To visit the national site for USDA financing you can visit the site here.
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