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?!
DATE: July 31, 2012
August 1, 2012
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