USDA loans for Michigan

Thousands of home buyers in the U.S. run from pillar to post in search of affordable financing options, only to end up feeling disappointed. Either the down payments are too high or the interest rates are out of reach. The situation worsens if you have below average credit scores. Owning to the present economic conditions, the lender and banks have also tightened the qualifying guidelines, so people with low income and bad credit have very slim chances of obtaining funding from conventional sources.

Enjoy homeownership with affordable USDA loans for Michigan Home Buyers

If you are in Michigan, you are lucky to have USDA loans within reach, since these loan programs support moderate to low income families to buy or repair a home in rural areas of Michigan. You would be thinking, why rural only? The answer is, USDA loans were designed to boost homeownership in rural areas and this is the reason they are popularly known as rural development loans. They also work towards improving the quality of life and economic condition so the rural areas, so that more people are willing to relocate to these areas.

People qualifying for USDA loans should ideally have decent credit scores and income that does not exceed 115% of the area median income.  Applicants fulfilling the above mentioned criteria are eligible to buy home without down payments along with enjoying 100% financing, low interest rates and low mortgage insurance. There are no prepayment penalties and nor PMI, so now you know why are USDA loans so popular.

Things you should know about USDA Loan Fees

All the government loan programs have mandatory loan fees, only that they are known by different names. For USDA loans this is known as ‘Guarantee Fees’. All the borrowers of USDA loans are required to pay a one-time guarantee fee which is 2% of the total loan amount. So if you buy a home which is worth $150,000, you’ll have to pay $3000 as the guarantee fee. Now since this can be included within the loan, the total loan amount becomes $153,000.

In addition to this, the borrowers have to pay an annual fee that is included within the monthly mortgage payments. This annual fee is the monthly mortgage insurance that is required to keep the program going on. Currently you have to pay 0.5% of the total loan amount. SO if you take the above example, you’ll have to pay $750 (0.5% of $15000) as annual fee. When converted into monthly mortgage insurance it becomes $62.50 ($750 divided by 12 months). This amount is added to the monthly mortgage payment.

So you see that the fees are extremely reasonable owing to the fact that you have the advantage of zero down payments. The annual fee does not increase the monthly payments to a great extent but you can help the program keep going.

Apart from the two above mentioned fess there are some other fees that would be requires to get a USDA home loan. During closing of a USDA loan you’ll have to pay:

  • Lender Fees
  • Escrow Fess
  • Origination Fees
  • Credit Repair Costs
  • Notary Fees
  • Title insurance Fees

You can negotiate with your lender about these fees and choose to pay a part of it or the full amount. None of these fees are too high for buyers to afford since all costs are imposed keeping in mind the low to moderate income borrowers.

So if you want to make Michigan your home but are worried about paying skyrocketing fees, now you have an easy financing solution minus hefty fees. But the benefits of USDA home loans are not restricted to just that. To know more about USDA home loans and why or how you should apply for it, get in touch with our USDA loan experts.