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Valued Member
tsever01
Posts: 34
Registered: ‎12-30-2011
0

USDA loan interest rate tiers

I am about ready to apply for a USDA loan and have been fighting to get to a credit score of 700 so that I can get a little lower interest.  I talked to my mortgage broker and asked him what interest rate I could expect and he told me about 3.25%.  When I asked him if it would go down if I broke 700 he said that it would not matter if I had 690 or 705.  The lender would put me into the same rate and that it would go down at 720 points because it is a USDA loan rather than conventional. Is this the standard for a USDA loan or should I shop around?  3.25% is great but I am wondering if i can do better.  I know that I cannot hit 720 on my credit report anytime soon because I have done almost everything I can to get my max score.  Paying down credit cards is my only way to get a better score at this point but I dont think I can get from 696 to 720 in the next couple of months.  My credit card utilization overall is under 10% but I have about 20% on two cards.  I know that paying those down would bring my score up but I guess I just need to know if I should bother trying to get over 700 credit score to get a lower rate with another broker or if 3.25 is gonna be it.  I believe that I will hit 700 once my balances update at the end of the month which is sweet because I started in the 630s at this time last year.

New Contributor
Elcid89
Posts: 567
Registered: ‎10-04-2012
0

Re: USDA loan interest rate tiers

While every lender sets their own underwriting guidelines, 720 tends by and large to be the cutoff point for premium rates. You can shop lenders, but YMMV.

 

3.25 is not a bad rate in this environment. If you are determined to get it down further, the money you would use on paying down the cards would (IMO) be better spend on buying down the mortgage rate instead.

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New Member
ChazBoomer
Posts: 12
Registered: ‎09-08-2012
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Re: USDA loan interest rate tiers

My understanding is that, like FHA, if you qualify for USDA, you get the same rate if you had an 800 credit score as you would if you had a 580 credit score.  I just closed on a USDA guaranteed loan and the rate was the rate, regardless of my scores.  Ask your loan officer, they should be able to tell you.  If they can't get a new loan officer.

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Elcid89
Posts: 567
Registered: ‎10-04-2012
0

Re: USDA loan interest rate tiers


ChazBoomer wrote:

My understanding is that, like FHA, if you qualify for USDA, you get the same rate if you had an 800 credit score as you would if you had a 580 credit score.  I just closed on a USDA guaranteed loan and the rate was the rate, regardless of my scores.  Ask your loan officer, they should be able to tell you.  If they can't get a new loan officer.


Agreed. FHA / USDA are either above 580 / below 580 products. I got the impression that the OP was considering conventional products as well. Depending on his situation, he can possibly achieve a better rate package by buying down a conventional as opposed to going with an underwritten product.

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Valued Member
tsever01
Posts: 34
Registered: ‎12-30-2011
0

Re: USDA loan interest rate tiers

Thanks for the responses!  Even though my continued efforts will not get me a better rate on a USDA loan at least I got my credit cards paid down!  And I will still hit my goal of getting over 700 this month.  Now if I could only find a suitable house........


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