Savings for Home Buyers Under Contract Before April

Increase in Upfront Premiums for FHA Mortgage Insurance

Effective for FHA loans for which the case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. This policy change will increase premiums for purchase money and refinance transactions.

MORTGAGEE LETTER 2010-02

http://fhasecure.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf

Prospective home owners that plan to use FHA financing will have the current lower rate of 1.75% for mortgage insurance if they act before the April 5 change.

Home buyers should consider this savings as well as the home buyer tax credit when making their purchase decision. For most, earlier will be better than later for a home purchase this year.

All home buyers should seek pre-approval for mortgage financing. Loan officers will provide a worksheet detailing the anticipated loan costs and a pre-approval letter to be submitted with the contract.

When the specific property is selected, the loan officer will issue the new Good Faith Estimate that will relate to the new HUD-1 settlement statement. Consumers should take advantage of these opportunities to be fully informed on the cost and continuing obligations relating to mortgage financing.