USDA to cut loan mortgage insurance costs
The USDA Rural Housing home loans will soon get cheaper for homeowners with lower mortgage insurance costs.
USDA announced last month that it was lowering its upfront mortgage insurance premium fee to 1 percent of the total mortgaged amount, down from the current from 2.75 percent. This amount is added to the borrowers loan. So someone today borrower needing a $100,000 loan would actually have a $102,750 loan. Under the new guidelines, the same borrower would have a $101,000 loan.
The monthly mortgage insurance on a USDA loan will also be reduced from the current .50% to just .35%. On that same sample $100,000 loan, this means a monthly mortgage insurance drop from $42.84 a month to $29.99 a month.
The change becomes effective Oct. 1, 2016, and will bring the fees and insurance premiums down to pre-recession levels.
The agency said that the cuts were possible because of the bulk of the mortgage and housing crisis is over, and foreclosure rates have fallen to back to more traditional numbers.
Learn more about USDA rural housing home loans in MN, WI, and SD.