More Expensive Mortgages, Sneaky Style
Rural Development has announced an increase to the USDA guarantee fee for both purchase and refinance transactions that will be effective for all Conditional Commitments issued on or after October 1, 2014. The annual fee, which is paid monthly, for both purchase and refinance transactions will be increasing from .40% to .50%. The upfront guarantee fee will remain at 2%.
So, it means that if you can get through the proctology exam that the underwriting guidelines put a person through now, you are going to pay more because of the people that did wrong behind you.
If the idea is to increase sales, let’s give more people the opportunity to buy in. USDA loans are increasing not as bad as the usury rates with the FHA monthly mortgage insurance (currently at 1.55%).
FHA should make the financed upfront fee higher and lower the monthly payment. It is a simple calculation that will add more money to the coffers AND help more people buy homes.