FHA Mortgage Insurance Premiums are going to increase, but it was just announced that home buyers will get a one month reprieve allowing them to get in before the increase.
There was a lovely message in my inbox this morning. Josephine Nicholas of the CMPS Institute reports that home buyers now have until October 4, 2010 to use an FHA loan for the purchase of their home and avoid the scheduled increase in the mortgage insurance premium (MIP) rate.
What does this increase mean for home buyers?
Ms. Nicholas put it this way: "A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01. In this example, the home buyer would lose $59.55 per month, or $7,146 over a ten year time frame." The monthly MIP will increase by 63%.
At the same time, the upfront premium paid by buyers will decrease from 2.25% to 1%, so home buyers who plan to be in the loan for less than three years and choose to pay the premium upfront by themselves will actually benefit from this change. However, how many of us really know where we will be in three years?
What should I do if I am thinking about buying a home?
Call a local lender today and set up an appointment to discuss a home loan. Ask your Realtor for a referral to a trusted loan officer. Realtors work closely with them and can refer you to one with a successful track record.
The time to buy is now. Give me a call and I will be happy to speak with you about your real estate goals and needs.