Annual Fee and Decreased Upfront Fee Effective October 1, 2011!

Please note two very important changes that are scheduled to take effect with loans obligated on or after October 1, 2011.  The changes are as follows: (1) An annual fee of 0.3 percent will be charged on all loans obligated on or after this date; and (2) The up-front guarantee fee for purchase loans transaction will decrease from 3.5 percent to 2 percent of the loan amount.  Please note these changes will not be effective until October 1, 2011. 

Currently the up front “guarantee” fee is 3.5% of the loan amount.  For example, on a $150,000 loan, the fee is $5,250 which is normally added to the final loan amount.  The new fee will be lowered to 2%, or $3000 in the above example.

USDA will also begin to charge an annual fee of 3% of the outstanding loan balance.  On a $150,000 loan amount, that would be $450 the first year, or an additional $37.50 per month, added to the monthly payment.

The addition of this annual fee is to make the program “revenue neutral” and have it no longer be supported by government funding.  Hopefully, this will also make the program less dependent on congressional approval for annual funding.

Marsha Stone

Senior Mortgage Advisor

NMLS# 90796

Platinum Home Mortgage Corp

910 679-4539 Ofc/ 910-232-3221 mobile

910 679-4541 Fax

3 Keel Street Suite 3 ,Wrightsville Beach, NC 28480