On October 1st, a new fiscal year will begin for the federal government and changes to programs will be made. These changes will include changes to the major government mortgage loan programs. The changes affect FHA, VA and USDA mortgage programs and will will be effective October 1, 2011.
VA loans are changing in a favorable way. The funding fee for these loans will be reduced from 2.15% to 1.5%. VA mortgages have the least default rate of any government guaranteed loans and that lesser rate is considered in the decrease in the loan fees.
Major change to FHA loans will affect buyers, sellers and mortgage lenders. The maximum mortgage limit of FHA loans will be lowered appreciably. The highest available limit varies by location, but in some places, the amount is going to drop by higher than 35%. The drop in the highest loan amount is centered on the reduction of home prices and values during the past few years. October 1st will see these new maximum rates go into effect.
USDA home loans, or rural development loans will be affected in 3 ways. 1st, the loan funding fee will drop from 3.5% to 2.0%. The drop in the funding fee is good news, but the addition of a new requirement balances that drop.
The 2nd balancing change for USDA loans is that for the 1st time, mortgage insurance will be mandatory for USDA backed mortgages. This mortgage insurance premium (MIP) will be fixed at 0.3% annually of the mortgage amount.
Here's how these two changes come into play. For a $100,000 loan, you will initially $1,500 less in the loan funding fee, but will pay $300, or 0.3%, in mortgage insurance. This insurance payment will come out monthly at roughly $25. As you can see, the difference will be in your favor for the first 5 or so years, but then you will keep paying the MIP for the period of the mortgage.
The third change for USDA loans is in the USDA eligibility maps. These maps show housing (houses and condos) in areas eligible for USDA mortgages. On account of development in many areas, homes in suburban areas are presently eligible. This will change on October 1st. However, be sure to talk with a USDA mortgage specialist because lots of areas that you might not believe eligible will even now be included in the maps. A specialist can also tell you about homes close to your location that could permit you to take advantage of the USDA loan program.
Government mortgage loan programs provide guaranteed mortgages that require lower or no down payment and less stringent credit requirements. If you can qualify, these loans will allow you to buy a home with less money down and less money out of pocket for closing costs.
VA loans are changing in a favorable way. The funding fee for these loans will be reduced from 2.15% to 1.5%. VA mortgages have the least default rate of any government guaranteed loans and that lesser rate is considered in the decrease in the loan fees.
Major change to FHA loans will affect buyers, sellers and mortgage lenders. The maximum mortgage limit of FHA loans will be lowered appreciably. The highest available limit varies by location, but in some places, the amount is going to drop by higher than 35%. The drop in the highest loan amount is centered on the reduction of home prices and values during the past few years. October 1st will see these new maximum rates go into effect.
USDA home loans, or rural development loans will be affected in 3 ways. 1st, the loan funding fee will drop from 3.5% to 2.0%. The drop in the funding fee is good news, but the addition of a new requirement balances that drop.
The 2nd balancing change for USDA loans is that for the 1st time, mortgage insurance will be mandatory for USDA backed mortgages. This mortgage insurance premium (MIP) will be fixed at 0.3% annually of the mortgage amount.
Here's how these two changes come into play. For a $100,000 loan, you will initially $1,500 less in the loan funding fee, but will pay $300, or 0.3%, in mortgage insurance. This insurance payment will come out monthly at roughly $25. As you can see, the difference will be in your favor for the first 5 or so years, but then you will keep paying the MIP for the period of the mortgage.
The third change for USDA loans is in the USDA eligibility maps. These maps show housing (houses and condos) in areas eligible for USDA mortgages. On account of development in many areas, homes in suburban areas are presently eligible. This will change on October 1st. However, be sure to talk with a USDA mortgage specialist because lots of areas that you might not believe eligible will even now be included in the maps. A specialist can also tell you about homes close to your location that could permit you to take advantage of the USDA loan program.
Government mortgage loan programs provide guaranteed mortgages that require lower or no down payment and less stringent credit requirements. If you can qualify, these loans will allow you to buy a home with less money down and less money out of pocket for closing costs.
About the Author:
Learn more about USDA Mortgages and USDA home loans at Steve Jeppensen's USDA Loan Website.