I hope you’ve got your Rural Housing loan ready to close by the end of September 2011. The cost of financing a RH loan will go up for any loans approved by Rural Housing on or after the 1st of October. It’s not a huge increase, but you may want to know about it.
The Guaranteed Rural Housing Loan is already similar to the FHA loan, but it offers financing at 0% down, whereas the FHA loan requires at least 3.5% down. The FHA loan has an upfront fee that is rolled into the loan, and an annual fee spread across the 12 payments. A Rural Housing loan has historically only had an upfront fee. Beginning with approvals on or after Oct 1 the RH loans will have a reduced upfront fee but will be adding an annual fee. The difference in payment for loans approved after October 1 will be about $17/month higher per one hundred thousand financed.
It’s interesting to note that the annual fee is calculated every year based on the average unpaid balance for that year. In other words, the calculation is pretty complex, but makes a little bit more sense than the typical mortgage insurance model. The new RH model only charges mortgage insurance (they call it “Annual Fee”) on the unpaid principal each year, so it reduces over time. Typical mortgage insurance is a flat fee calculated upfront and doesn’t reduce regardless of how much you pay down your loan. So while the RH fee is more complicated, it’s fairer, at least in my humble opinion.
Remember the RH loan has household income limits you can access here, and is only available in some areas. To find eligible areas, click here. My primary area of business is Okaloosa County, Florida. The income limit in Okaloosa county is $102,500/year for a household of 5-8 and $77,650 for a household with 4 or less people. If your household earns more money than the household limit (kids included), you can’t get a Rural Housing loan.
The Rural Housing loan is an excellent program if you and your property are eligible!
How can I help you or your friends?