Bulls & Blogs

USDA makes refinancing easier

Loan Programs, Residential Mortgage Comments Off

Jun 202016

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The USDA announced that effective 6/2, it is making its pilot streamline refinance program permanent. The program allows homeowners who currently have a USDA loan, like a Rural Development loan, to refinance that loan without going through the usual loan process.

As long you’ve been current on your mortgage for the last 12 months, meaning you’ve made the payments within 30 days of the due date, your lender won’t have to order a credit report and won’t have to analyze your income to see if you qualify. It will be assumed that if you’re making your payments on time now, you certainly can continue to make them if we lower the payment.

In addition, you won’t need an appraisal to determine the current value of your home.

Not only will the program save USDA borrowers money, it should make the refinancing process much faster.

USDA to make its loans more affordable

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

May 072016

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The USDA recently announced that for fiscal year 2017 (which begins on Oct 1st) it’s dropping the fees it charges for its guaranteed rural housing loans. Currently, USDA charges an upfront guarantee fee of 2.75% of the loan amount and an annual fee, or monthly mortgage insurance (MI), of 0.5%. On Oct 1st, those rates drop to 1% and 0.35%. That really is a huge change.

So, how would that affect a potential homebuyer? Let’s say you’re trying to buy a $180k home. Remember the USDA program doesn’t require a down payment, and most folks roll the upfront guarantee fee into the loan, so we have a roughly $185k mortgage. Using today’s fees, the monthly principal, interest, and MI payment would be about $908.

Okay, what if the fees are at 2017 levels? The monthly payment drops to $869. Over the life of the 30-year loan, that $39/m adds up to more than $14k in savings.

I find the timing of the announcement interesting. Based on our experience, USDA has lost of lot of market share to FHA, which lowered its mortgage insurance rates last year. While I suspect the announcement will shut down use of the program for the summer, maybe it will build some anticipation for it again in the fall.

USDA delays new rural maps

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 262014

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The federal government’s fiscal year ends on 9/30, and as is typical in recent years, Washington passed a Continuing Resolution (CR) rather than pass the various spending bills necessary to fund the government. In that CR is a provision that extends the use of the current USDA maps that define property eligibility for its housing programs. So, if a home is eligible today, it will remain eligible until the CR expires. And it’s entirely possible that when Congress finally passes a USDA spending bill, some legislator will slip in a provision to extend the current maps again. That said, if you’re eyeing a property that would have been ineligible on 10/1, I wouldn’t wait. Start the homebuying process now so you can take advantage of the benefits of a USDA mortgage.

USDA mortgage maps changing Oct 1st

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 102014

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The USDA Rural Development loan is a great option for homebuyers in rural locations. It requires no down payment and has lower monthly mortgage insurance than an FHA loan.

The USDA’s definition of rural may surprise you as it includes many of the exurbs of the major TX cities. As of Oct 1st, that definition narrows a little as USDA is releasing new eligibility maps based on recent census data.

The main changes I noticed were the expansion of ineligible areas in Pflugerville, Round Rock, and San Marcos in the Austin area and Denton and McKinney in the DFW area. In addition, the ineligible area on the west side of Ft. Worth expanded significantly. However, you’re still going to find some subdivisions on the outskirts of these cities are eligible. The maps changed little in the San Antonio and Houston metros. I included a link at the end of my blog to the USDA eligibility Web site where you can compare the old and new maps for yourself.

USDA bases property eligibility on the date it receives your loan file. For most lenders, this will be a couple weeks after loan application. So, if you’re buying a home using the old maps, you need to act soon to beat the changes.

USDA mortgage eligibility Web site.

USDA raising monthly mortgage insurance rate

Loan Programs, Owner-occupied, Residential Mortgage Comments Off

Sep 042014

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The USDA RD loan is a great option for homebuyers in more rural locations. The loan requires no down payment and has much lower monthly mortgage insurance than an FHA loan.

Unfortunately, the gap between the two will close a little this year. For all loan commitments after 9/30, the USDA is increasing its monthly MI rate from 0.4% to 0.5%.

That still makes it a bargain compared to FHA. While USDA does have a higher up-front fee, 2% vs. 1.75% for FHA, look at the difference in monthly payment between the two. For a $150k FHA loan, the monthly payment including mortgage insurance would be about $863. For a USDA loan, the payment would be about $757, more than $100 less.

If you’re thinking about using a USDA loan, be aware that USDA bases the fee increase on the date it commits to the loan, not the date you apply. You probably should make your loan application no later than next week if you want to beat the deadline.