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USDA loans have more favorable terms than FHA in that they do not require a down payment, and the monthly mortgage insurance component is .04% as opposed to FHA's .135%. (Mortgage insurance varies for different loan types for fha, i'm using the standard future 30 year rate)
However, USDA eligibility is both geographically and economically based. USDA loan-eligible areas tend to be in more rural areas - - or what were rural 5-10 years ago, depending on how well the mapping is updated.
Also, while borrowers have the same debt ratio requirements as FHA, there is also an income CEILING for USDA borrowers, usually in the $79k range, after deductions for dependents, etc.
Use this website to learn more (it is USDA's, not mine or any other bank's): Welcome
Also, USDA requires a higher credit score in addition to a 2% funding fee that they roll into your loan. You're paying 0% at closing, but when you sell, that 2% fee is getting paid somehow and it's in the back-end.
Credit score thresholds, at least where I work, are identical: 640 minimum mid-fico for FHA, VA and USDA.
There is also a large up-front Mortgage Insurance Premium for FHA loans as well.
If you make "little enough" money (yes, that sounds weird to me, too), and the home you like is in a USDA-eligible area, you would obtain the same rate as FHA, but with 1/3 of the monthly Mortgage Insurance cost.
Here's an idea: if you want to make up for that 2% funding fee when you sell (if you have to sell that quickly), go FSBO, or cut a deal with your realtor to pay them 1.5% on the sell and buy side.
We are in the middle of it right now!
Our application was going to the underwriter today !
We decided on jan 7th to buy a house,got preapproved rather quickly, ,found 2 house jan 12th,put an offer on one ,went back and forth and decided to make an offer on a foreclosure on jan 22nd.the foreclosure is a homepath house ,and only 5 years old ,in a very good shape.
Went thru the home inspection,appraisal,and now we are waiting !
Our tentative closing is set for march 8th .
The bank that owns the house was very easy to deal with : they agreed to pay 3% of the closing,a home warranty,a termite bond and more! And we are buying the house at roughly $ 45,000 under market value.
We did put $1000 earnest money that will be given back to us at closing!
And we were able to lok our rate at 3.375%
we are going through the process of closing with usda right now , its been extremely easy .. we qualified and our lender laid out the differences , our monthly payments will be lower than if we had a fha loan and we will end up paying back less as well
We are in the middle of it right now!
Our application was going to the underwriter today !
We decided on jan 7th to buy a house,got preapproved rather quickly, ,found 2 house jan 12th,put an offer on one ,went back and forth and decided to make an offer on a foreclosure on jan 22nd.the foreclosure is a homepath house ,and only 5 years old ,in a very good shape.
Went thru the home inspection,appraisal,and now we are waiting !
Our tentative closing is set for march 8th .
The bank that owns the house was very easy to deal with : they agreed to pay 3% of the closing,a home warranty,a termite bond and more! And we are buying the house at roughly $ 45,000 under market value.
We did put $1000 earnest money that will be given back to us at closing!
And we were able to lok our rate at 3.375%
What bank did you work with. We are looking for a lender but haven't seen a rate this low.
What bank did you work with. We are looking for a lender but haven't seen a rate this low.
You won't be able to see a rate this low as that rate was posted back in February. Rates went up about 1.5% last month. You're probably never going to see rates that low again...
You won't be able to see a rate this low as that rate was posted back in February. Rates went up about 1.5% last month. You're probably never going to see rates that low again...
It is funny, as we have an interest rate that is 3.875% and think that is just great. The funny thing is that I get letters from lenders asking us to refinance to there amazing low rates. When I see the rates I laugh as all are over 4%, I think the last one was close to 4.5%.
As for us, we are keeping our 3.875% loan untill it is paid off.
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