Virginia Mortgage News and Views

The New USDA/Rural Housing Guidelines for the Greater Richmond and Surrounding Areas.

USDA? What the heck is that?

You may not have heard about this great loan program for Richmond area properties. It is one of the few true 100% financing programs available in today's time.

These U.S.D.A loans are also known as "Rural Housing Loans." As this name implies, this loan is specifically designed to finance properties in rural type areas. With that said, I like to call this loan "geographic specific." One of the first things that needs to be done in considering this program is to determine if the property you are interested in is defined, by USDA, as a rural property.

Assuming your property meets that test, we move on to other aspects of qualifying.

Obviously, this great program is based on your income and your credit rating. A credit score of 640 is generally considered to be the minimum, however, scores as low as 620 will be allowed with compensating factors. USDA loans are income specific as well. What that means is that your family household income cannot exceed current limits. Please notice I said household income. This is different than borrower income.

Let's say for example you would like to borrow $ 100,000 for a home priced at $ 100,000. You would financing 100% of the purchase price. (No money Down)

The payment would be based on market interest rates on any given day. Additionally, USDA charges a reservation fee. This is also known as an upfront mortgage insurance premium that can be financed along with your new loan. The new upfront fee has been reduced from 3.15 % to 2% effective October 1, 2011. Another new aspect of the USDA loan is the fact that effective October 1, 2011, a monthly mortgage insurance premium will now be charged as well.

So here's what you get on that $100,000 purchase price/loan amount I mentioned. Let's say the rate is 4.5% 30 yr fixed.

Amount Financed as a Base Amount = 100,000
Add the new upfront fee= 100,000/.98 - 100,000                                       =   2040.82    
New Total Loan amount = $ 102,040.82

Payment at 4.5% would be = $ 517.03

Add to that the new monthly mtg. insurance payment.
100,000 (.30%)/12 = $25 per month.

Total Payment = $ 542.03 (P/I only)

The above may sound a little confusing. If you are planning to buy a new home soon, I would recommend that we set up a time to meet or you may simply call me. "The most important aspect of buying a home is for you to know your options and understand the money."

Jamie Lee Chafin
Village Bank Mortgage  
Richmond,Va.

804-897-1000
http://www.villagebankmortgage.net