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2012-08-08 14:17:31
HUGE Changes to Rural Development Mortgages


Over the past several years, the USDA Rural Development loan has been a huge blessing for dozens of my clients who have purchased homes in Utah County and WEST of the Jordan River (Saratoga Springs, Eagle Mountain, etc) or SOUTH of the Spanish Fork River (Payson, Salem, Santaquin, etc). For those who qualify, this ZERO down loan, which also has about 1/4 of the mortgage insurance of a similar FHA loan, has assisted home buyers to purchase a home with nothing down and much cheaper monthly mortgage payment.


For example, the next lowest down payment loan option, FHA, on a $200,000 purchase, would require a $7,000 down payment, and result in an approximately $1200/month mortgage payment. With the RD loan, borrowers would put nothing down AND have payments around $1080/month. In addition, many homes in these 'Rural' areas provide a much bigger bang for the buck, resulting in amazing homes for amazingly cheap monthly payments. With RD interest rates around 3.25%, there has never been a better time to take advantage of this financing program!


BUT ... things are about to change!!


USDA is likely going to pass new boundaries for the RD loan, which would remove the area west of the Jordan River (Saratoga Springs, Eagle Mountain, etc). See copied documents below. If passed, it would go into effect October 1, 2012. In order to get in before the deadline, at the very latest, home buyers will need to be under contract on a home by September 8th, receive approval by their lenders underwriters by September 14th, and have the file sent into RD underwriting no later than September 15th. 


So if you are consdering purchasing a home in the Saratoga Springs/Eagle Montain area in the near future and would like to take advantage of RD financing for your mortgage, YOU MUST START ACTING NOW!!


In addition, the monthly Mortgage Insurance for RD loans will also likely increase at the same time as this boundary change from .3% to .4%, which isn't a huge increase, especially compared to the 1.1% rate of FHA financing. But why pay anything extra if it can be avoided?!

Be sure to read these documents and releases below for more information. I have three lenders that I would highly recommend as RD specialist who could assist you with details and getting pre-approved. 

Don't hesitate to contact me with any question, concerns, needs or requests!



DATE: July 31, 2012
TO: To Whom It May Concern
SUBJECT: Change in Eligible Areas for USDA Rural Development Guaranteed Loans
There is a proposed change in the eligible area boundaries that if approved, will go into effect October 1, 2012. The most likely areas that will be removed from eligibility are Eagle Mountain, Saratoga Springs, Tooele City, and Cedar City.
For those who are considering purchasing an existing home or building a home in one of these areas, please keep in mind the following items:
The loan must be completely underwritten prior to submission to Rural Development.
The loan application package must reach our office no later than September 15th to be guaranteed that a conditional commitment will be issued prior to September 30th. (Loans may be submitted after this date but will be done on a first come, first serve basis.)
The lender must have a conditional commitment dated prior to September 30th, 2012. You do not need to close the loan prior to September 30th. The conditional commitment is good for 90 days. There will not be an extension given.
Conditional Commitments can be issued on appraisals that are subject to completion for new construction. Please be aware that if the loan does not close within 90 days of issuing the conditional commitment USDA will not issue a loan note guarantee.
Kristine Dahlberg
Guaranteed Rural Housing Manager
125 South State Street, Rm 4301
Salt Lake City, Utah 84138


August 1, 2012

Advance Notice:  Changes to Guarantee and Annual Fee

Effective on October 1, 2012, the start of Fiscal Year (FY) 2013, Rural Development will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:

Up-Front Guarantee Fee

FY 2012

FY 2013 Effective
10/01/ 2012

Purchase Transactions (no change)



Refinance Transactions



Annual Fee

FY 2012

FY 2013
Effective 10/01/2012

Purchase Transactions



Refinance Transactions



The FY 2013 fee structure is applicable to all Conditional Commitments (Form RD 1980-18, 'Conditional Commitment for Single Family Housing Loan Guarantee') issued by Rural Development on or after October 1, 2012.  Loan guarantee requests submitted to Rural Development by September 30, 2012, in which a Conditional Commitment has not been issued, will be subject to the FY 2013 fee structure.

Lenders are encouraged to plan for the changes noted and should keep in mind that some Rural Development offices are experiencing extreme backlogs in loan guarantee delivery.  There are no exceptions to the FY 2013 fee structure. Therefore, starting on October 1, 2012 all Conditional Commitments will be subject to the FY 2013 fee structure, regardless of the date the request was received by Rural Development.

The FY 2013 fee structure is only applicable to Conditional Commitments issued on or after October 1, 2012, Conditional Commitments issued by Rural Development prior to this date are not subject to the new fee structure.


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