USDA Guaranteed Loan- Loan amount can't go above 100% of appraised value

[Anonymous]

Hi all.  I first want to say that these forums have helped me alot over my house hunting process with questions that I have had.  Now that I am close to closing on a USDA Guaranteed Loan, I was hit with a curveball.  My situation is as follows:

It was always my understanding that the Guarantee Fee could be financed into the loan even if the loan amount equaled 100% of the appraised value of the property.  I now got word from my lender that there is a new policy in place at USDA that says the loan can not be more than 100% of the appraised value of the property.  So that would include loan amount + guarantee fee + closing costs can not be more than 100% of the appraised value.

So under this scenario, I went from getting ~$500 back in closing to having to bring ~$1,600.  This does not make sense because in all of the good faith estimates and estimated closing costs that I got from the lender showed the guarantee fee as a closing cost.  So I don't know where the sudden bump in cost to me came from.

If anyone can offer any kind of insight to this, that would be most helpful.

Thanks so much!

[618938]

I am a USDA lender in Ga and the SE and I am not aware of any changes like this...something does not sound right...the LTV can go to 102% and that would include the FF...

[Anonymous]

Thanks for the reply.  I am having my lender send me an updated GFE so that I can see where this extra cost is coming from.

[618938]

Sounds like someone made a mistake and they are trying to cover it up...the GFE has to have a ligitmate reason for changing...

[Anonymous]

Still waiting on the updated GFE, but while I am waiting I am looking at the Itemized Fee Worksheet that the lender gave me last.  My next question is, I am already going to be paying the rest of the years home owners insurance but then there is another line item for another years worth of insurance.  Is that normal?

Thanks

[Anonymous]

Back to the original post question; could the choice of not going over 100% of the appraised value be a lender descision, no matter what USDA says?

Thanks

[Anonymous]

Your insurance situation is perfectly normal.  The way it works is part of your closing costs is the first year's insurance premium paid in full, and your escrow account is then set up with generally a 3 month reserve to begin filling your "fund" back up.  Part of your monthly payment is insurance, which goes into this "fund" so that when next year's insurance premium becomes due, it is paid in full again.  Does that make sense?

[Anonymous]

Thanks for the reply.  It does make sense.

As for the original reason for the post; it turned out the person at USDA that was procesing my loan misinterperted the was the loan was structured.  So the loan is back to the original amount and moving back along.