No Mortgage Insurance with only a 5% down payment… Is it possible? Yes it is!
If you are purchasing or refinancing, you may want to consider this new option. The interest rate is slightly higher than the option with Mortgage Insurance, but your total monthly payment will be lower. Additionally, the amount of your monthly payment applied to the principal balance of your loan will increase. Therefore, so does your equity!
This program is viable with any down payment amount between 5% and 19%. At 20% down payment or above, no Mortgage Insurance is required.
Don’t hesitate to contact me with any quesitons!
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!