Delaware USDA Rural Housing Loans will be adding a monthly mortgage insurance premium on all loans effective October 1, 2011. The USDA announced this change in administrative notice AN 4551 which made the following changes to the Delaware Single Family Housing Guaranteed Loan Program:

1) Upfront Guarantee fee lowered from 3.5% to 2% on purchase transactions.

2) New annual fee of 0.3% added to purchase and refinances.

Overview of the new guarantee fee:

• The annual fee will be required for all loans that receive a Conditional Commitment issued by USDA on or
  after October 1, 2011
• The annual fee will be calculated based on the average unpaid principal balance (UPB) for the year
• This fee will be collected monthly as part of the borrowers housing payment
• The monthly amount must be escrowed (two months will be collected at closing)
• The USDA Annual Guarantee Fee will be required for the life of the loan
• The new fee would increase a borrower’s housing payment approximately $17/month for a $100,000
  purchase loan (as demonstrated in the table below) or approximately $25 per $100,000 for a refinance
• Borrowers whose DTI is already at the maximum USDA allowance of 29/41 may be at risk of not
  qualifying if the USDA Conditional Commitment is received on or after October 1, 2011

Example:
Purchase transaction with the Up-front Guarantee Fee being financed (rolled into the loan)
Loan Amount: $100,000
Rate: 4.75% Keep Reading...