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USDA Loan Updates and Guidelines

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USDA Loan Terms

General Loan Terms

USDA - United States Department of Agriculture

RD - Rural Development

APPLICATION - Initial statement of personal and financial information which is required to approve your home loan.

APPRAISAL - Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property (usually market value). Appraisals are required and are usually around $400 to $500 to be paid by purchaser.

CLOSING COSTS - These are fees paid by the seller or borrowers at the closing of the loan. This usually includes items which must be prepaid such as taxes and insurance payments to be placed in escrow along with origination fee, attorney fees, title insurance and survey. (Closing costs are not limited to just these items; contact your lender directly for closing cost breakdown.)

GROSS INCOME - For loan qualification purposes, the income of the borrower before taxes and expenses are deducted from the total.

INTEREST RATE - the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding. Interest rates fluctuate and have varying factors due to credit, income, loan type and more.

UNDERWRITING - The process of verifying data and approving the loan.

TITLE - Written evidence that proves the right of ownership of a specific property.

TITLE INSURANCE - Protection for the lenders and/or the homeowner against financial loss resulting from legal defects in the title on a property. 

MORTGAGE INSURANCE -  (also known as mortgage guarantee and home-loan insurance) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. 

GUARANTEE FEE - Effective October 1, 2016, USDA Rural Development announced that fees for mortgage loans originated for the Guarantee Rural Housing Program (GRH) were reduced from 2.75% upfront fee down to a 1% fee. The monthly mortgage insurance premium was also reduced from .50% to .35%.

Tina Wiles