USDA to lower mortgage insurance costs

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 Rural Development LoansUSDA 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.


Refinance with no appraisal

appMinneapolis, MN:  As mortgage interest rates fell to all-time lows earlier this year, even underwater homeowners were able to take advantage of refinancing through mortgage programs that do not require a property appraisal.

No appraisal refinances make the refinance process easier than ever, especially for those homeowners that own more than their home is worth.

Some of the most popular no-appraisal refinance programs include the FHA streamline refinance and the HARP (Home Affordable Refinance Program).  Other no-appraisal refinance programs include the VA streamline or VA Interest Rate Reduction Refinance Loan and the USDA streamline refinance.

While many home values are on the rise across the United States, many homeowners continue to owe more than their home is worth and are unable to qualify for a traditional refinance to lower their interest rate. Under theses streamlined no-appraisal refinance programs, homeowners are able to successfully lower their interest rates without assessing their home’s value.

On average, homeowners that take advantage of a no appraisal refinance program are able to yield a savings of about 35 percent. If your home is currently underwater and you have not been able to qualify for a traditional refinance, look into a no appraisal refinance.


Do You Qualify for a Mortgage?

Do You Qualify for a Mortgage?

Minneapolis, MN: Every year, millions of potential new home owners ask the question, “can I qualify for a mortgage?” It’s a scary question for many people, but getting the answer isn’t anywhere as hard or difficult as people think.First, ask yourself some of these basic questions, then contact a local licensed non-bank lender and fill out an application. There are no obligations to let a lender review your situation.

Can I afford the payment?

This is obviously a major questions. I always tell people if they have been comfortably making a rent payment similar to what the anticipated mortgage payment will be, you’ve passed this test!Many people on the other hand have “payment shock”, which simply means the new home payment will be significantly more than what the pay now, if anything.

Lender use a term called “debt ratio”, which is simply a measure of a percentage of your income that would go towards the house, and all other debt. There are two different ratios they measure. The first number is your “housing debt”, which they don’t like to see over 28%. This is a measure of just the cost of the house {principal, interest, taxes, insurance) versus your income.  The next number, which most people are more familiar with is your “total debt ratio”, takes in all debt. The house payment, car payments, credit cards, student loans, etc. This number they generally do not like to see over 41% of your income.

There are slight variations to these ratios depending on loan program, so be sure to consult your Licensed Mortgage Loan Officer for details. Here is a link to some popular mortgage calculators to help you determine debt ratios.

Down Payment

Mortgage lenders love it when you put at least 20% down. That down payment size or more will get you a loan without mortgage insurance, a nice money saver. Realistically many people simply can’t afford that much. Conventional loans may be available with as little as 5% down, and the very popular FHA Loan is available with as little as 3.5% down payment.  The minimum down payment can also be effected by credit score.  Someone with a 660 credit score for example, will need at least 10% down on a conventional loan, while someone with a 720 score will only need 5% down.

Zero down payment is a potential option for some people. Military veterans can possible obtain a zero down payment VA Loan, and those seeing to live in rural areas of the country may also qualify for a no down payment USDA Rural Development Loan.

Your down payment will also affect your interest rate. All other things being equal, the best interest rates go to borrowers who put down larger down payments; you’ll pay a somewhat higher rate if you put down only 5 percent or 10 percent.

Credit score

Credit scores clearly are a major factor, but it is actually pretty simple. If you have great credit (over 720), you’ll have no problems.  If you have OK or average credit (660 – 720), you’ll likely qualify for most programs, but not necessarily all, or not with the best mortgage interest rates. If you have bad credit (below 620), you will not qualify for anything, and should work on repairing your credit before attempting to get a mortgage loan.

To review your credit go to www.annualcreditreport.com. You can get a copy of your report for free once every year. This service does NOT include scores. Another free option is http://www.creditkarma.com. This DOES include scores, but they offer similar, but not the actual FICO scores lenders use, so your numbers may be different than what a lender gets, but at least it gets you an idea of where you are at.

Your Income

To qualify for a mortgage loan, you will be required to fully document all of your qualifying income. Lenders want to see your past two-years job history. Do not confuse this with needing to be at the SAME job for two-years. It is OK if you’ve changed jobs.

If you’re self-employed, get commission, or tipped income, it’s another story. You’ll need to be at the same position for at least two-years, and provide the past two-years Federal Tax returns. Your income is based on your AFTER deductions. If your income is stable, or increasing, you’re in great shape.  If your income is declining, this may be an issue.

Income from child support, alimony, social security, pensions, etc, are all acceptable.  You’ll need to fully document what is is, and that you are actually receiving it.  You will also need to prove it will continue for at least three years.

Bottom Line

If you feel you meet these basic requirements, contact a local licensed Loan Officer to submit an application. Before you do, understand who you should contact, and some of the myths:

  • 80% of Loan Officers are unlicensed application clerks. Only deal with a licensed Loan Officer. Learn How.
  • Your Bank doesn’t know you or care about you
  • Credit Unions DO make a profit
  • Get off the Internet. There are no deals there you can’t get locally – Sit down with a LOCAL Lender

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com


USDA Refinance Funds Gone for 2012 – Purchase Money Still OK!

USDA Refinance funds for fiscal year (FY) 2012 are now exhausted!

St Paul, MN: Have a USDA Rural Development loan?  Thinking of getting a USDA Refinance loan? Sorry – USDA announced today that they are out of money for refinances for 2012.

For the vast majority of homeowners, this really isn’t a big issue, as many of them can lower their interest rate and refinance into many other loan products.

Looking to buy a home? USDA Rural Development Purchase Loans on the other hand have plenty of money – so there is no need to worry if you are buying a home.

As a side note, the cost of a USDA home loan in going up slightly on October 1st, 2012. Currently the loans have mortgage insurance of .030%, and will be going up to .040%.  On a $100,000 loan, the old mortgage insure would have been $25 a month, and would now be $33.33 a month.

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com


USDA Loan Eligibility Map Changes effective Oct 1, 2012

USDA is changing the property eligibility map effective Oct. 1, 2012.

Cities and towns that formally qualified for the Zero Down USDA Rural Development Loans may no longer qualify.

This change is due to a number of reason, including larger populations, elimination of special consideration zones, or they no longer meet the definition of rural.

The effected cities in MN are listed here.

Click this link to view the full list of cities across the county that are losing their ability to get a USDA Rural Development loan.

 USDA INCOME Eligibility Check
USDA Property Eligibility Check

 

 


USDA Home Loans are Zero Down Payment

USDA 100% Home Loan Financing – Best Kept Mortgage Secret! 

7 out of the 11 Twin City County Areas are eligible. These properties are closer than you think!

The USDA Guaranteed Rural Housing Mortgage Program offers individuals and families 100% financing for semi-rural to rural properties throughout the state of Minnesota and Wisconsin.

  • 100 % Financing – ZERO down payment
  • No Cash From Buyer
  • Cheap Mortgage Insurance (especially compared to FHA loans)
  • No Assets Needed – No Money left in the bank needed
  • Relaxed Credit Requirements
  • Finance Closing Costs into the Loan


ZERO DOWN USDA RURAL DEVELOPMENT LOAN – Not just for Rural Areas

ZERO DOWN USDA RURAL DEVELOPMENT LOAN – Not just for Rural Areas

Minneapolis, MN: One of the biggest difficulties many first-time home buyers face is a lack of down payment, and the necessary money to pay closing costs. Most “zero down payment programs” disappeared with the mortgage market meltdown that started in 2007, so in most parts of the country, the only true no money down programs are just the VA home loan for Veterans or the USDA Rural Development Loan.

Guaranteed by the USDA (United States Department of Agriculture), this program might make you think that you have to buy farmland or live “in the country” to qualify, but this is often not the case. In fact, you might be surprised to see just how many neighborhoods actually do qualify as rural development areas. For this program, the term “rural” really applies to those areas with a lower population, or fewer homes, not necessarily those areas or farmland far outside of the city. To see what areas qualify for the USDA Loan, click here for the property eligibility map.

There are several benefits of the USDA loan program besides no money down. The program has very low private mortgage insurance costs compared to other loans, and the seller is allowed to pay all of your closing costs and pre-paid items up to 6.00% of the total sales price of the property. While this is great news for first-time home buyers, it’s important to note that you don’t have to be a first-timer to qualify for a USDA loan.

Other than the location of the property you’re seeking to buy, there is one other important aspect to the USDA loan.  It has income guidelines. Click here to see if your family incomes qualifies for the USDA loan. Luckily, however, these numbers have recently increased to allow more potential buyers to take advantage of this special program.

For the USDA program, a great rule of thumb is no major metropolitan areas, and any town with less than 20,000 population.

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Are mortgage rates going up?

ARE MORTGAGE RATES GOING UP?

Minneapolis, MN: Mortgage interest rates jumped up last week, putting a scare in those sitting on the fence, thinking about refinancing, yet waiting form rates to drop a bit lower. Lucky for them, Minnesota mortgage interest rates moved back down slowly to about where they have been holding for some time.

The big question is how long can mortgage rates remain this low? 

Mortgage rates have been stuck at these amazingly low levels for the past five months. According to Freddie Mac weekly survey of mortgage rates, last week was the first time that interest rates on a standard 30-year fixed-rate mortgage rose above 4 percent, only to slip back below this week.
It’s very clear that mortgage rates can’t stay this low forever. It was big news when 30-year rates fell below the 5 percent mark in March 2009 – a level unimaginable just a few years before. Now we’re a full percent lower than that. When you consider that rates rarely fell below 7 percent prior to 2001, and often ranged much higher, it’s clear that rates will eventually move back toward more historical norms. When I bought my first house in 1981 – I paid 16% for an FHA 30-year fixed mortgage.
The question is, when will that happen – and what will trigger it?  So, is it smart to keep holding out for lower refinance rates? Probably not…  Is it wise to not buy a house today?  Probably not, especially with these interest rates and zero down programs like the VA loan program, and the USDA Rural Development Program.


Zero Down Home Loans Are Back

Zero down payment home loans are back. Actually, some of them never went away. VA and USDA Rural Development are two very popular home loan options. Learn more by watching this ROYAL performance… CG LIVE from London!

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