USDA Mortgage Rates Information
- Fees for the USDA federal guarantee may be passed on to the borrower
- Lenders may assess late fee charges within limits set by the USDA
- USDA mortgage rates are at a 20-year low
Like all other loans, USDA loans come with interest rates that you should know about before applying. In addition to your set interest rate, there are the associated costs of the guarantee fee and other typical closing costs. These costs may be wrapped into the loan if there is room between your property evaluation and the 90% loan cap of a USDA loan.
The total cost of your home loan will vary depending on the date on which you lock in an interest rate. Rates are set every morning by the Fed (Federal Reserve System) and can vary day to day. While there are noticeable trends in interest rate movement, there are no guarantees on which particular date the costs will be lowest for your loan. Still, given that interest rates have been hovering at 20-year lows, now is a great time to apply for the USDA loan programs.
Want to see if you qualify for the right USDA Mortgage Rate for your situation? Contact a Mortgage Advisor at (866) 984-1240 or fill out our quick 1-minute form to have a Mortgage Advisor contact you.
Advantages of USDA Mortgage Rates
Terms and Rates
All USDA loans are for a term of 30 years with principal and interest due and payable monthly over the life of the loan. In order for the lender to qualify for a USDA guaranteed loan, a non-refundable amount equal to 2% of the value of your loan must be paid to the government, which is paid upfront when the loan is secured. For those refinancing, the fee is .5% of the total loan amount.
Unlike certain variable interest loans which can change interest rates at set periods of time, a USDA loan interest rate is set for the life of the loan at the time it is originated. USDA loans tend to have much lower potential interest rates compared to traditional mortgages. According to USDA standards, lenders may not exceed their published rates for such loans. This includes the current 90-day Fannie Mae rate plus 60 basis points. Basis points are fees charged by the lender where one point is equal to 1% of the total loan amount. Points can be used as an upfront cost to lower the interest rate for the life of the loan. While this can initially be expensive, it can drastically reduce the total amount of interest paid over the life of the loan.
The fees which are required to guarantee a USDA federal backing may, and often are, passed on from the lender to the borrower in the cost of the loan. Lenders may also assess additional charges, which will be part of the total closing costs as long as they do not exceed USDA-capped limits for your loan amount. Choosing a lender who is familiar with this program and can streamline the process is paramount to receiving the lowest possible costs.
Lenders may charge late fees for any payments that are more than 30 days past due. The late payment charge may not exceed amounts set by the United States Department of Housing and Urban Development, Fannie Mae, or Freddie Mac.
Additionally, as part of your monthly payment, there will be an escrow account created, which will hold the monthly property tax amount required for the property based on the appraisal. The escrow account is also used for the purpose of paying homeowners insurance. This account is created and the money is taken into holding to assure that the home is not lost due to a lack of paying the proper taxes. Additionally, it ensures that the property is properly protected in case of disaster or accident.