For a USDA Rural Development loan with a monthly payment of $1,500, what would be the monthly annual guarantee fee?
Correct Answer
C) It cannot be determined without knowing the loan amount
The annual guarantee fee is 0.35% of the outstanding loan balance, not the monthly payment. To calculate the monthly fee, you need to know the loan amount: (Loan Amount × 0.35%) ÷ 12 months. The monthly payment alone is insufficient information.
Why This Is the Correct Answer
The annual guarantee fee is 0.35% of the outstanding loan balance, not the monthly payment. To calculate the monthly fee, you need to know the loan amount: (Loan Amount × 0.35%) ÷ 12 months. The monthly payment alone is insufficient information.
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