USDA FINANCING UPDATES 10/1/2011
CHANGE IN UPFRONT FEE FOR USDA LOANS
USDA commitments issued on and after 10/1/2011 USDA is reducing the upfront MI premium on purchase transactions from 3.5% to 2.00%.
Refinance loans will maintain the upfront MI premium of 1.00%.
ADDITION OF ANNUAL FEE
USDA commitments issued on and after 10/1/2011 USDA will be requiring an annual MI premium of .30% of the average scheduled balance on the loan. This annual fee will apply to purchase and refinance loans.
The annual premium will apply for the life of the home loan.
The annual premium will not be calculated on the initial loan amount, but rather will be calculated based on the “average annual balance” of the loan.
Also, the future annual premiums will be based on the “scheduled” average balance on the loan and will not take into consideration any additional principal payments the borrower might make.
If you want more information on this matter, please review https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/loanorigination/Annual%20Fee%20FAQ.pdf