But, now that we are heading toward Halloween, several changes are upon us affecting the range of Government insured loans.

Trick, or Treat?

A quick review of the Georgia VA, USDA rural housing loans, and FHA loan changes. Then, you can decide.

In October, 2011, the changes are taking effect o all of these loans – and even though they are all government insured, they are managed by different goverment agencies, so the change date is simply coincidence.

• Georgia FHA Loans: Metro Atlanta FHA mortgages were available to a maximum loan amount of $346,250; but now that loan limit has been reduced to a maximum loan amount of $320,850.So, if you are looking at a home and planning to get an FHA loan due to the low down payment required, be careful, don’t get caught in the change and have to either change products or come up with a larger down payment.
• Georgia USDA Rural Housing Loans: For years, those buying in outlying areas outside of metro Atlanta have had access to a USDA rural housing loan, which does not require a down payment. The great thing about the Rural Housing loan has been that there is no monthly mortgage insurance.  Well, that is no longer. The Funding Fee, which took the place of mortgage insurance, is DROPPING from 3.5% of the loan amount to 2.0% of the loan amount. Concurrently, there will now be annual mortgage insurance.  It’s not much – adding $18 to the payment on a $100,000 loan, and adding $42 to the monthly payment on a $200,000 loan. Not bad, and still a very good loan.
• Georgia VA Mortgages:  Similar to USDA Rural Housing loans, VA loans have a ‘funding fee’ which takes the place of mortgage insurance.  Now the funding fee is simply decreasing. In general from 2.15% to 1.5%. But, the chart below will lay out the detail of the funding fee decrease for your situation. Good news for active duty military and veterans.  Oh, and remember, Georgia VA loans still do not require a down payment.

Related posts:

1. Georgia USDA Rural Housing Loans Getting Less Expensive
2. Georgia USDA Update
3. Update on Georgia USDA Rural Housing Funds

USDA Rural Housing loans are about the only option for 100% financing, but this year the program was so popular that the government agency ran out of funding quite early in the year.  But, a bill has passed Congress and will be signed soon by the president that authorizes more funding.

The details appeared in on the WSJ blog, and my friend, Sue, who is a loan officer in Florida was quoted.

The Funding Fee will rise from 2% to 3.5%. That is the fee normally rolled into the loan that insures the loan, much like PMI insures a conventional high Loan-to-Value mortgage.  Otherwise, everything else remains the same on these deals – the property being purchases must be considered ‘rural’, and the household income cannot exceed 115% of the county median income.

Where income is concerned, just call me if you are interested in applying for a USDA loan in Georgia, since it is easier to look the medians and exceptions than to calculate it.

So, good news for homeowners buying outside the metro areas – USDA loans are back as a financing option.

Related posts:

1. Georgia USDA Update
2. Georgia USDA Rural Housing Loans Getting Less Expensive
3. Georgia USDA Rural Housing Loans

Here is the note that was sent along:

Congress came back to town on Monday, and since then I am pleased to report we have had real movement fixing the 502 rural guarantee program funding problem in response to our letters and meetings. Key members of Congress have committed to us their intent to resolve the issue on a permanent basis with a modest increase in the fee structure. Based on feedback from our members who use the program, we have communicated that this is an adequate solution.

Shortly, two bills will be introduced, one Dem and one GOP which will take slightly different approaches but will both include a fee increase that would go back into the program to make it self sufficient. There is a commitment on all sides to get this done promptly. If you have any comments or concerns, let me know.

So, even though funding for Georgia USDA rural housing loans is nearly used up; we may not see much of a gap in funding for this optimal financing.  Rural Housing loans are, after all, only one of two 100% financing loans still existing.

The other being VA loans, of course.

Related posts:

1. Update on Georgia USDA Rural Housing Funds
2. USDA Loans Coming Back to Georgia
3. Georgia USDA, VA and FHA Loan Changes

So, if you are in the market for a home that qualifies for a Georgia Rural Housing loan, then you need to act quickly.  We are still accepting those loans, so long as the contract is scheduled to close before the end of April, 2010.

After that, we will all have to wait to see in Congress allocates more funding to the Rural Housing program.  And who knows when that might be.

Here is the update that I have as of today:

Related posts:

1. Georgia USDA Update
2. Georgia USDA Rural Housing Loans Getting Less Expensive
3. USDA Funding Set to Expire

Lenders just received this notice today:

This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.”  This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita.  Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you.

So, if you are in the market for a home that qualifies for rural housing, then now’s the time

Related posts:

1. Update on Georgia USDA Rural Housing Funds
2. Georgia USDA Update
3. USDA Loans Coming Back to Georgia

You see, these loans have two distinct advantages that no other loan product can compare with:

• 100% Financing for the home.  That’s right, no down payment is needed.  So, for a Georgia first time home buyer who has amassed a small savings – a few thousand dollars – may be better served to count that as their reserve funds, and finance 100% of the purchase price, at extremely low interest rates.
• No Monthly MI Payments: Right.  That dreaded PMI that protects the lender against default, but the buyer has to pay for, is not there on a USDA loan.  Too good to be true? You got me.  There is what would correspond to MI, and it is equal to 2% of the loan amount, but much like an FHA mortgage, that 2% is added to the loan amount and financed.  So, on a monthly payment basis, it is nearly painless.

Related posts:

1. Georgia USDA Rural Housing Loans Getting Less Expensive
2. USDA Rural Housing Loans
3. Update on Georgia USDA Rural Housing Funds

USDA Funds Released – $10 Billion (yes, that’s billion with a B) has been allocated. According the USDA, about 25% have already been used to fund “purchase transactions only” that have been on HOLD since January 9, 2009. When the “dust” settles, money will be released for refi’s.. Not every community qualifies—but if it does, it’s the best thing since sliced bread!.

I agree, it is the best thing since sliced bread, since a USDA loan is 100% financing, at market rates, and has NO monthly Mortgage Insurance (MI).  I just closed one for a young couple who purchased a home in Winder, GA.  They came to closing, and got a check back for nearly all their earnest money.  Nice.

Related posts:

1. Georgia USDA Rural Housing Loans
2. Georgia USDA Rural Housing Loans Getting Less Expensive
3. Update on Georgia USDA Rural Housing Funds