This past week the United States Department of Agriculture (USDA) announced that effective October 1, 2011, the USDA Upfront Guarantee Fee on their RURAL Development home loan program, will be reduced from it’s current level of 3.5% of the purchase price to 2.0%. This change will reduce the borrower’s loan amount and therefore their monthly payment as well. Additionally, on October 1, 2011, USDA will begin charging a monthly Guarantee Fee equal to .3% of the loan amount.
To put this into financial perspective… on a $200,000 loan amount, the Upfront Guarantee Fee added to the borrower’s loan, would be $4,000 (instead of $7,000) and the monthly Guarantee Fee would be $50. USDA indicates they will review this new policy approximately one year from implementation to determine if changes are necessary.
FHA announced this week that they would increase the monthly Mortgage Insurance Premium charged on all FHA and Utah Housing Corporation loans effective April 18, 2011.
On a $180,000 purchase price, this increase equates to a $37 increase in the borrower’s monthly payment and may impact the borrower’s ability to qualify. So, if you’re considering financing a new home with FHA or Utah Housing Corporation, do so prior to April 18th!
In the news… interest rates for a 30-year home loan rose above 5 percent this week for the first time since last April. Freddie Mac said Thursday that the average rate was 5.05 percent, almost a full percentage point higher than in November, when it hit a 40-year low.
By historical standards, interest rates are still extremely low. Anyone who bought a house 30 years ago might remember paying 18 percent on their loan.
The economy is showing some signs of momentum… new claims for jobless benefits came in this week at the lowest in three years, and the unemployment rate has fallen nearly a full percentage point in two months. The exception is the housing market. Current market conditions have forced home prices down, yet no one seems to take advantage of the deal of a lifetime from their lenders.
Since one in three home sales happens in the spring, now is a great time to act!
Utah Housing Corporation will still finance 100% of your purchase price, plus the majority of your closing costs!
Today’s Cache Valley Mortgage Market:
The atmosphere in today’s home loan market continues to change after the negative impact of overly-aggressive mortgage programs combined with unsound or unheeded mortgage advice. Many borrowers were improperly advised or demanded loan programs that did not serve their best interest and put them at a high risk of getting “upside down”. These loan programs are now placing undue stress on ill-advised or overly aggressive buyers and investors, and higher foreclosure rates and declining home values on a national level are the end result.
How does it affect you?
Your credit scores are more important than ever before! Your interest rate may be determined by the amount of your down payment or equity, and the quality of your credit scores. In addition, the lenient programs available earlier, no longer exist. The end result is fewer options and potentially higher rates.
The Good News!
- Home loan interest rates are at historic lows!
- Loan programs sponsored by Fannie Mae and Freddie Mac as well as FHA, VA, Utah Housing, Rural Housing have changed, but are still available!
What should you do? Contact me!!!
Get the personalized mortgage advice you need to make an informed decision regarding your home purchase, construction, home equity or refinance needs. Dealing with a seasoned professional is more important than ever.