Rural Development Loan

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Post Posted: Wed Jul 08, 2009 1:27 pm    Post subject: Rural Development Loan

In the process of getting a Rural Development Loan. Couple questions.
PMI/MIP will not be included in the mthly pymt. Why is there a one time PMI/MIP Funding Fee of $2600 charged and rolled into the monthly pymt?

Also, per previous blog(from what I understand). Closing cost. If the home is appraised for more than the purchase price the closing cost can be rolled into the montly pymt?

Being a first time home buyer I just want to be clear on charges upfront before the closing date.

Also I've heard that going thru a Mortgage company your loan can be sold to someone else. Maybe I did not word this correctly but you get the idea. Is there a way to keep this from happening?

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Icon Mini Profile savior70

Joined: 25 Mar 2009

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Post Posted: Thu Jul 09, 2009 3:18 am    Post subject:


Rural Development loans do not require you to pay any private mortgage insurance premium (PMI). This is one of the reasons why borrowers find these loans attractive. However, there's a requirement of an upfront funding fee or guarantee fee of 2%. The borrower can roll this fee into the loan amount.

The closing costs too can be rolled into the mortgage if the property appraises for more than the value. The mortgage holders do not generally sell off their mortgages. They sell off only when you default on the loan and they think that they cannot recover the balance loan amount from you.
Icon Mini Profile annyb27

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Post Posted: Thu Jul 09, 2009 10:08 am    Post subject:

can nayone guide me on advantages and disadvantages of Rural Development loans?
Icon Mini Profile gmakerley
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Post Posted: Thu Jul 09, 2009 10:46 am    Post subject:

pinky, i want to elaborate on what savior said about the sale of mortgages.

virtually every lender in the country sells its mortgages. what that entails is merely the "servicing" of the loan. in other words, instead of making your payments to "abc bank" you will make them to "xyz bank." that will have no impact whatsoever on how much your payments are, what your rate is, or when your payments are due. all it means is that the original lender now has additional money to lend out to someone else...and the game goes on.

i hope this is helpful.

George M. Akerley
Mortgage Consultant
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