The U.S. Department of Housing and Urban Development (HUD) is at it again. For the second time in just six months, FHA will be increasing their mortgage insurance premiums. As of April 18, 2011 home buyers that were going the FHA route may not be able to buy as much home. Even if qualifying ratios aren’t an issue, monthly payments for an FHA loan will definitely become more expensive.
The annual insurance premium, currently ranging from .85% to .90%, (depending on the down payment) after April 18th will range from 1.10% to 1.15%.
PRE - April 18, 2011
Purchase Price: $200,000
Down Payment: $7,000 (3.5%)
Interest Rate: 4.75%
Principle, interest and mortgage insurance payment: $1,163.05
POST - April 18, 2011
Purchase Price: $200,000
Down Payment: $7,000 (3.5%)
Interest Rate: 4.75%
Principle, interest and mortgage insurance payment: $1,203.66
As you can see from the example, the payment will be over $40 per month higher come April 18th. If the home buyer’s debt ratios are already tight, purchasing power could once again be affected by roughly $10,000.
The spring market has arrived and there are many sellers who’ve been waiting until now to put their homes on the market. If you’re in the market to buy a home this spring (or summer for that matter) and there’s a possibility that an FHA loan will be your best alternative, you have until April 18th to get under contract and get your loan application started. There’s a good chance that you can find your dream home, get under contract, and avoid the payment increase but only if you get moving!
Is any of this confusing? Have questions? Need help trying to get pre-approved to buy a home but don’t know where to begin? Call, email or text me today… I can help!
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